Insurance Intermediaries

Since 14th January 2005, the Financial Services Authority (FSA) has been regulating most insurance activities undertaken by firms based in the UK and, as a result, all authorised insurance intermediaries are required to hold PI insurance. This insurance must incorporate terms which make provision for the following:

• Cover in respect of claims for which the intermediary may be liable as a result of its own conduct and the conduct of its employees
• Cover in respect of legal defence costs
• Cover in respect of Financial Ombudsman awards made against the intermediary

The FSA also stipulates a minimum limit of indemnity which can be summarised as follows:

• For a single claim (ie ‘any one claim’ or ‘each and every claim’ during the period of insurance) EUR 1 million and
• In aggregate (ie a single limit during the period of insurance) EUR 1.5 million

Essentially, most firms will carry a minimum limit of indemnity of £1 million any one claim (which is readily available for most firms at a cost effective premium) and larger firms will purchase higher limits up to a level they feel adequate based upon the type of insurance transactions they are broking (usually the largest single sum insured placed).

Regarding the level of excess, the FSA stipulate that for those firms that are authorised to hold client money, the excess should not be more than the higher of £5,000 or 3% of annual income. For those firms that are not authorised to hold client money, the excess should not be more than the higher of £2,500 or 1.5% of annual income

Quercus PI has many years of experience in placing PI policies for both individual brokers and networks of brokers. Competitive premiums are available together with a review of policy coverage and advice in relation to claims matters.

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