Professional indemnity insurance

Professional indemnity insurance (PII) is liability insurance that covers firms when a third party claims to have suffered a loss, usually due to professional negligence.

We require certain firms to hold this kind of cover because:

  • it provides an extra financial resource that you can pay justified claims from
  • it helps prevent insolvency and excessive claims on the Financial Services Compensation Scheme, which is funded by firms that are still trading

Minimum requirements

It is your responsibility to take out adequate cover, as set out in our rules, and to think about the effect that your PII policy's terms and conditions might have on your business.

Our minimum limits for firms are €1,250,000 for a single claim and €1,850,000 in aggregate. Indemnity limits for firms not subject to the Insurance Distribution Directive are not affected.

If you do not take out cover in euros, it should still meet our minimum limits when converted back into euros – both when the policy is first agreed and when it is renewed.

You should have:

  • continuous cover since the start of your firm’s authorisation
  • a policy excess (retention) that is no higher than the minimum level specified
  • cover in respect of Financial Ombudsman Service awards made against the firm

The policy details must be reported correctly on the Retail Mediation Activities Return (RMAR), which is the relevant FCA regulatory report.

Getting cover

Check if your broker:

  • is a specialist or knowledgeable about your sector

And find out:

  • what service the broker is offering, eg, will they provide an advised or non-advised service?
  • which insurers can be accessed

How insurers calculate your premium

Insurers assess risks differently but often look at four areas of your firm’s business when they calculate the premium:

  • total income
  • required limit of indemnity and level of excess
  • its risk profile
  • its nature