The Financial Conduct Authority (“FCA”) requires all regulated firms to take out and maintain professional indemnity insurance (“PII”) to cover the financial losses that may be suffered as a result of customer claims and complaints against the firm. The FCA also mandates limits of indemnity for the PII.
It is currently renewal season for many PII policies and the FCA last week reminded firms of their obligations in that regard.
The regulator says that, following discussions with the International Underwriting Association, insurers and brokers, it has concluded that PII is widely available in the market and COVID-19 is not preventing insurers from renewing policies:
“Our position remains that firms need to have PII policies in place in accordance with our rules to support their ability to meet liabilities as they fall due and to protect their consumers. It is ultimately a commercial decision for insurers about what cover they will offer including cost and on what terms. But they need to meet their regulatory obligations, including when manufacturing, distributing and writing a contract of insurance.”
The FCA concluded its announcement by noting that it will continue to monitor the impact of the pandemic on all firms’ operational resilience, including insurers, and may take supervisory action if it considers that renewal processes are being affected.
The FCA invites firms who have concerns about obtaining PII to notify it.