What type of businesses need PII?
In addition to its basic requirement that authorised firms have adequate financial resources and appropriate systems and controls in place to mitigate operational risk, the FCA also expects many regulated firms to back this up with Professional Indemnity Insurance.
Therefore PI cover should be implemented as a core risk management tool by any firm providing a professional service.
How much does PII cost?
This varies from business to business. The FCA stipulates certain types of firms hold PI insurance with a specific minimum limit of liability.
Buying a cover based on price alone can be a risky strategy and it is easy to pay more than you need to for a PI policy that is not tailored to the nature and activities of your business.
When might my business need PII?
Simple human error can leave even the best-run firm facing potentially ruinous costs. Even if you have done nothing wrong, the costs of defending a baseless claim can be a major drain on your firm’s finances.
PI insurance can also provide financial services firms with protection against claims for other professional failings such as dishonesty, loss of customer documents or data, defamation, or infringement of intellectual property rights.
What limit of indemnity is required?
In some cases, the FCA will demand a minimum policy limit, otherwise it is a case of looking at the scale of the firm and the activities carried out. We will be able to provide industry benchmarking information. However, you should always discuss with your compliance officer to confirm your exact regulatory requirement.