FCA to crack down on deficient Insurance Broker PI Policies

In December 2016, the FCA published the findings of a review of general insurance intermediaries’ professional indemnity insurance. As part of the review, the FCA contacted 200 firms to assess PII arrangements.

The results, which could affect any broking firm, are most interesting, and in some respects shocking. Please read what the FCA found: https://www.fca.org.uk/publication/thematic-reviews/tr16-9.pdf

Amongst their findings are exclusions in policies relating to:

• Suitability of insurer

• Unrated insurers

• Insolvent insurers

• Appointed representatives

There were also policies which did not meet the minimum limit of indemnity, or had policy deductibles in excess of permitted levels.

There were out of date wordings referring to the FSA as regulator (in one case GISC) and some inadvertent or unintentional exclusions.

Following on from the review, the FCA will be taking a closer look at General Insurance Intermediaries’ PII arrangements, and could contact any firm regarding this.

Key considerations:

RWA’s view is that you should place your PI insurance through a specialist insurance broker. If you already do this, when was the last time you sat down with them (as you would with clients) and went through the wording?

Your PI policy needs to be compliant with FCA rules (RWA can advise if you ask us), and sensibly it should not leave foreseeable gaps in cover that could mean a negligence claim might destroy your business and possibly expose your personal assets as well. 

Finally, your policy must meet legal minimum levels. Check that your policy fully protects you in all circumstances, as limitation of liability clauses are only likely to be effective in certain cases.


The choice of cover and the level of indemnity might be a balance between the advice of your specialist insurance broker and how you choose to cover your potential liabilities.


In short, take action before the FCA come calling, but perhaps more importantly, do something now before a claim arises that is not covered.


If you have the right cover then the public are better protected and that is the FCA’s main objective.


So, as this is likely to be my last contribution this year, Merry Xmas to all RWA clients. Now click on the link and take any necessary steps to protect your business.

About the author

Ian has over 50 years’ experience in the insurance business, as insurer, owner/director of an insurance broking firm which ultimately employed 36 people and which was sold in 2001. Subsequently he was a co-founding director of RWA, alongside Robin Wood and Kate Foreman.

His years spent as a broker made Ian ideally placed to empathise with brokers over the requirements and needs of their firms in terms of FSA/FCA compliance.

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