The FSA says 40 per cent of intermediaries now have professional indemnity cover which is compliant with the requirements of the insurance mediation directive.
Katharine Lynch, a member of the retail intermediary sector team at the FSA, says: “Things are getting slightly better for IFAs on PI but the market has not improved dramatically and we do not want to be complacent. However, we are finding that firms are getting cover a bit more quickly, and that it is IMD-compliant.”
Chubb Insurance, believed to have almost a quarter of the IFA PI market, opened its books to new IFA business for the first time in a year in July.
The IMD comes into effect in January 2005 and requires firms to have £1m in PI cover. It will be followed in April 2006 by the market in financial instruments directive, which requires firms to have £500,000 extra cover, set aside £30,000 capital or have a combination of the two in place.
The IMD is set to be reviewed by the European Commission by April 2005 and Lynch says the FSA is aiming to take an active role in the review.