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Insurance brokers professionally underinsured, finds regulator

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  • 05/12/2016
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Insurance brokers professionally underinsured, finds regulator
A thematic review of general insurance advisers’ professional indemnity insurance (PII) arrangements revealed many brokers are under-insured.

A project was launched to see how the policies of 200 general insurance intermediaries complied with the MPIRU Prudential sourcebook for Mortgage and Home Finance Firms, and Insurance Intermediaries handbook.

The regulator was keen to assess how compliant these brokers were, the breadth of the market and the availability of cover in its first review of this market.

The review found that in some cases, whether by mistake or intentionally, policies failed to provide the cover for all of a firm’s activities that the FCA’s rules require.

For a small number of firms’ policies there were inadequate limits of indemnity or exclusions which removed all cover or certain types of claim.

More widely, it was unclear whether policies provided the proper cover for awards made by the Financial Ombudsman Service against firms or Appointed Representatives the firm might have, said the regulator.

All of this, taken together with the number of policies which included basic errors in wordings and out of date references, meant that the review has concluded that improvement is required.

The regulator said: “The obligation to ensure their PII cover is right rests on the firms which buy it. We have already taken action on clear examples of non-compliance and will consider further regulatory action in cases of significant MIPRU breach.”

The regulator said it planned to engage with the sector through its trade bodies to raise standards.

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