YOUR COMPLIANCE MATTERS – FCA increases minimum limits for PII cover

YOUR COMPLIANCE MATTERS – FCA increases minimum limits for PII cover

Relevance:                   All Firms. 

Action required:         Ensure increased limits are applied to all PII covers from 01 August 2021. 

A recently issued Handbook Notice from the FCA includes an amendment to the minimum levels of professional indemnity insurance (PII) cover required for insurance intermediaries. 

The new minimum levels of PII cover are as follows:

·        For a single claim against the firm, the limit was increased from €1,250,000 to €1,300,380 (sterling equivalent being approximately £1,102,600);

·        For the total aggregate of claims against a firm, the limit was increased from €1,850,000 to €1,924,560 (£1,631,879).

·        The higher amount equivalent to 10% of annual income (this amount being subject to a maximum of £30 million) remains unchanged. 

The changes are deemed necessary to ensure that consumers will not see the real value of any claims above the indemnity limits being eroded by inflation over time. 

They are also consistent with Insurance Distribution Directive (IDD)-revised minimum levels of PII cover. 

The new requirements apply to any PII policy or guarantee commenced, renewed or extended with effect from or after 1 August 2021. Non-annual arrangements must also be aligned with the new requirements before 1 August 2022. 

If you need any further guidance, please call us and we will be happy to provide more help.