Insurance brokers provide services to clients of all shapes and sizes. Just like other professionals such as solicitors and surveyors, they can be held liable for damages if they fail to meet a client’s expectations. Firms must therefore have a back-up financial resource to cover potential claims against the business. Generally this takes the form of a Professional Indemnity Insurance (PII) policy which meets strict criteria set out by the financial services regulator, the FCA. The policy must cover all the firm’s insurance distribution activities and provide minimum levels of cover (indemnity limits). The minimum indemnity limits are reviewed every 5 years in line with the European Index of Consumer Pricing.
As from 12 June 2020, the required minimum indemnity for insurance brokers increased by just over 4% to EUR 1,300,380 for each claim and EUR 1,924,560 in aggregate (for all claims in a policy year). Firms may already have policies with these or significantly higher indemnity limits, while others will have to upgrade their cover levels. Either way, in a rapidly changing business environment it makes sense to regularly review PII arrangements.