The FCA has reviewed the Professional Indemnity Insurance (PII) policies of 200 general insurance intermediaries and compared the cover of those policies against the rule requirements detailed in the Prudential Sourcebook for Mortgage and Home Finance Firms, and Insurance Intermediaries (MIPRU).

This thematic review is of relevance not only for intermediaries’ own policies, but for those insurance brokers who place PII for other firms.

The review showed that there is sufficient choice within the market. Firms are able to obtain high levels of indemnity where required.

However, in a number of cases, rule breaches or significant concerns were identified:

• Firms did not have the minimum level of cover required by the rules;
• Policy excesses that were greater than permitted by the rules;
• Policies that contained exclusion clauses which gave the FCA significant concerns as their effect could be to reduce the scope of the cover below that required by MIPRU. The four types of exclusion clause were:
  – Suitability of insurer (11 policies)
  – Unrated insurers (2 policies)
  – Non-admitted insurers (13 policies)
  – Insurer insolvency (140 policies);
• A high level of inaccuracies in policies, particularly the scope of cover for Financial Ombudsman awards and for appointed representatives.