PII Loan: Five Critical Things to Check on Your Policy

Earlier this year, an assessment by the Financial Conduct Authority (FCA) revealed that almost 10% of principal firms did not have correct Professional Indemnity Insurance (PII) cover in place. The FCA reviewed the documentation of 269 firms, with some companies even having to pause trading until compliant cover was obtained.

Since PII is essential for consumer protection and gives firms the financial backing to pay compensation when things go wrong, not having adequate cover is a costly and risky mistake.

The FCA confirmed that most PII policies were suitable. However, some had gaps in coverage that could leave firms exposed. A common issue was policies that excluded the activities of appointed representatives, leaving businesses—particularly smaller legal, accountancy, or advisory firms, open to significant liability.

To help you avoid these pitfalls, here are five critical checks you should make on your PII policy and how a PII loan can help you secure the right level of cover.

*  Does Your PII Cover Extend to Representatives?

FCA-regulated firms must hold PII that covers the activities of their Appointed Representatives (ARs) and Introducer Appointed Representatives (IARs).

If your firm uses representatives but your policy does not extend cover to them, you could be non-compliant. Even though the FCA has not disclosed how many firms failed in this area, their findings highlight the need for a thorough policy review with your broker.

*  Are You Keeping Track of Your Renewals?

Failure to track renewals can cause gaps in cover, leaving your firm unprotected if a claim arises during the uncovered period.

Common reasons for renewal delays include:

• Late renewal applications.

• Insurers are requesting additional information on new or developing claims.

• Insurers are re-evaluating the risk profile of specific activities.

The solution is simple: stay organised, monitor your renewal deadlines, and act early to avoid policy lapses.

* Are There Any Exclusion Clauses?

Exclusion clauses limit or alter the standard cover provided in a policy. While they reduce insurer risk, they may leave your business exposed.

For example, if a legal firm has a history of claims in property transactions, an insurer may impose sub-limits and higher excesses in this area. This means your £1m policy might not actually provide £1m of effective protection.

Always check the fine print of your policy and discuss exclusions with your broker.

* Does Your PII Policy Cover Data Breaches and Emerging Risks?

With the rise of cybercrime and evolving requirements for data handling, it is vital to ensure your PII policy includes cyber and data breach cover.

Some policies offer broad protection, such as covering third-party hacking incidents. However, not all policies keep pace with modern risks, including the use of AI-driven services, where liability can shift due to platform indemnity clauses.

Review your cover to confirm that your firm is protected against these emerging threats.

*  Are Multiple Claims Covered?

PII policies cover claims in one of two ways:

• Any One Claim Basis – Each claim is covered up to the full policy limit.

• Aggregate Basis – The total of all claims in a policy year cannot exceed the policy limit.

For example:

• A £4m any one claim policy covers two separate £3m claims in full.

• A £4m aggregate policy would only cover the first claim(s) up to £4m total.

Additionally, beware of the aggregation clause, which can group related claims into one potentially limiting payout. For higher-risk firms, excess layer cover may be necessary.

* Secure Adequate PII with a Flexible PII Loan

While PII premiums can be a significant expense, cutting corners is a dangerous strategy. Your policy must provide:

• A sufficient cover limit to protect against high-value claims.

• An insurer with strong financial stability and ratings.

• Protection against both traditional and emerging risks.

With a PII loan, you can spread the cost of your policy into manageable payments without compromising cover. This ensures you remain compliant with FCA requirements and can access the most comprehensive protection available.

* Why Choose a PII Loan?

✔ Spread the cost of your premium over affordable monthly instalments.
✔ Secure cover from reputable, FCA-recognised insurers.
✔ Access fast, flexible financing tailored to your business.
✔ Avoid the risk of underinsurance due to budget limitations.

Find Out More

Don’t let funding constraints limit your protection. A PII loan can give your firm the flexibility to stay compliant and safeguarded against claims.

📞 Call us today on 0333 014 9000 to learn more about our tailored PII financing solutions.

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