3 SEP 2018
RICS has released the response to the Professional Indemnity Insurance (PII) run-off (UK) consultation that ran from November 2017 to January 2018.
The consultation asked respondents to consider the options through which we would seek to expand access to PII run-off for the profession and to protect consumers from any possible gaps in cover. Both professionals and insurers provided valuable insight in how these options would work in practice.
One of the core findings was that there was a strong appetite for a fully prepaid PII run-off product that would provide assurance for all parties without requiring ongoing premium payments.
After considering the responses, the UK and Ireland Regulatory Sub-Board has decided to publish a final consultation on the proposed changes to PII run-off requirements for firms. These would include introducing the option for firms to purchase PII run-off through what is known as the Assigned Risks Pool. Normally this is used to procure PII for firms that are having difficulty in gaining cover. This would expand availability of insurance for firms while allowing insurers to spread their risk.
The requirement to have “adequate and appropriate” run-off cover will be retained, but with a minimum requirement of six years cover, fully prepaid, with a minimum of £2,000,000 aggregate limit of cover on a claims-made basis with £500,000 ringfenced for consumer claims.
Feedback can be provided on the Sub-Board's proposals through our consultation website.