Changes To Accountants Professional Indemnity Insurance Limits Effective 1st September 2024

10 Sept

Written By Helen Murphy

These changes will take effect on 1 September 2024. Here’s a summary of the main points:

Main Changes:

Increased Minimum Indemnity Limits:
- The minimum indemnity limit rises from €2.14m to €2.34m.
- Firms with gross fee income below €936,000 must have a minimum limit of 2.5 times their gross fee income, subject to a minimum of €290,000 (increased from €142,000).
Exemption for Larger Firms:
- Larger firms with gross fee income over €58.5m are exempt from the ‘qualifying insurance’ requirement, but they must have appropriate arrangements in place. Previously, this applied only to firms with over 50 principals.
Excess Limits:
- For firms required to have qualifying insurance, the maximum aggregate excess must not exceed the higher of €3,500 (£3,000) or 3% of gross fee income.
Group Arrangements:
- Firms insuring under a group arrangement can be treated as a single entity for regulatory purposes, provided they demonstrate common ownership, management, and co-operation, and meet specific criteria like profit sharing, common branding, or shared quality control policies.
Run-off Cover:
- Firms must maintain run-off cover for two years after cessation and take reasonable steps to extend it for an additional four years.
Additional Requirements for Certain Firms:
- Firms licensed under the Designated Professional Body Handbook or authorised by the UK Financial Conduct Authority (FCA) for insurance distribution activities must continue to meet existing PII requirements. For firms subject to Investment Business Regulations (except referral-only firms), higher prescribed limits will apply to policies renewing after 1 January 2025.