MIGI 8.4 Obtaining PII cover

Broadly, you can obtain a PII policy from:

1. (1)

   any insurance company authorised to underwrite professional indemnity insurance policies in the European Economic Area (EEA); or

2. (2)

   a non-EEA insurance company authorised in a Zone A country, the Channel Islands, Gibraltar, Bermuda or the Isle of Man.

(For further details see PRU 9.2.7 R and PRU 9.2.9 G. 'Zone A country' is defined in the Handbook Glossary.)

Our rules allow firms to benefit from a policy that covers more than one firm, provided that:

1. (1)

   the minimum levels of cover of the policy are calculated on the basis of the combined annual income of all the firms named on the policy; and

2. (2)

   each firm named on the policy has the benefit of the required minimum levels of cover.

However, the maximum level of excess permitted must be calculated on the basis of the annual income of each firm individually, not the combined income of all the firms covered by the policy. So if the excess on the policy exceeds the maximum permitted for a firm named on the policy it will not meet our requirements. In such a case it may be open to a firm to satisfy the alternative requirement of holding additional capital as explained at paragraph 8.3.10 above. Example 2 below shows how to calculate the required minimum levels of cover and the maximum permitted level of excess for a PII policy that covers more than one firm.

As well as these requirements, if you decide to participate in such an arrangement you should ensure that the PII policy meets your needs. This will include assessing that the combined levels of cover are appropriate. Also, you should ensure that you are a named party to the PII policy, to avoid any doubt about whether or not you are covered by the policy.