The FSA has modified Professional Indemnity cover regulations to allow the current rules on excess l...
The FSA has modified Professional Indemnity cover regulations to allow the current rules on excess levels to be varied on a firm-by-firm basis.
The regulations currently stipulate excess levels can be no more than the higher of £5,000 or 3% of relevant company earnings. But to help intermediaries struggling to cope with rising premium levels for PI cover, the FSA is willing to tolerate higher excess levels in some cases.
It will only accept such cover if it satisfies itself the intermediary's capital adequacy, financial position and past complaints do not suggest the its business poses a significant risk.
The move, which shifts the burden of risk away from PI insurers towards intermediary firms, also requires advisers submitting non-compliant PI cover to complete a self-certified Waiver of Consent declaring they recognise the changes agreed with insurers.
The changes are being tested for nine months and could be made permanent if the trial is successful.
Full details of the modifications are not available on the FSA website at this stage so Aifa is preparing an explanation of the proposed revisions for its members.
Business PI rules can be checked by calling the FSA Investment Firms Division Contact Centre on 0845 606 9966.
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