Professional Indemnity Insurance Levels Are Changing

Tue Dec 17 2019

Professional Indemnity Insurance Levels Are Changing – Effective June 2020

There has been a change to the Professional Indemnity Insurance (PII) levels of indemnity.  A Commission Delegated Regulation (Commission Delegated Regulation (EU) 2019/1935) which came into force on 12 December 2019 has amended the base amounts for PII of intermediaries registered under the IDR.  These changes will apply from 12 June 2020.

Additionally, for members authorised under the Investment Intermediaries Act only, the Central Bank has advised that the Handbook of Prudential Requirements for Investment Intermediaries (2014), will be amended to align the PII requirements of Insurance Intermediaries with that for Investment Intermediaries, authorised under the Investment Intermediaries Act, 1995.

Therefore, all insurance and investment intermediaries (whether registered under the IDR or authorised under the IIA) will be required to have in place the new limits by 12 June 2020.

The new levels are as follows:-

  • Current PII requirements: €1,250,000 per claim and €1,850,000 in aggregate;
  • New PII requirements: €1,300,380 per claim and €1,924,560 in aggregate.
Where an aggregate limit applies to a policy, firms are required to hold separate, ring-fenced cover in relation to each authorised activity where there is a requirement to hold PII cover. For example, a firm authorised under the IDR and also authorised as a debt management firm is required to hold ring-fenced, aggregate PII cover of a minimum of €1,924,560 in relation to each activity.
PII Insurers should be well aware of the changes and the effective date however, we urge Brokers to check their PII schedule/cover note to ensure it reflects the new amounts effective 12 June, and each that authorised activity, as applicable, is ring-fenced.

The Central Bank has also advised the reason for the increase is to keep pace with the European index of consumer prices which has increased by 4.03 % between January 2013 and December 2017.

Brokers Ireland will continue to remind members over the coming months to review their PII levels.  Brokers should in due course ensure with their PII provider that their PII levels will be amended in line with the new requirements by 12 June next year, whether that means a mid-year adjustment or amended on renewal (if renewal is before the effective date).