The International Underwriting Association has welcomed modified changes to professional indemnity insurance arrangements for accountants in the UK.
The Regulatory Board of the Institute of Chartered Accountants in England and Wales last year issued a consultation, on which the IUA submitted views from its member companies.
The IUA supported plans to increase minimum limits of cover to £2m, and to give smaller firms more flexibility in the minimum limits of cover they can purchase. It also backed proposals to link cover to the fee income of a firm rather than the number of partners it has.
At the same time, the IUA strongly disagreed with suggestions that ICAEW firms should have non-cancellable run-off cover of six years, which would effectively mean that insurers could still be forced to cover risks regardless of whether or not a company paid their policy premium. In addition, the IUA criticised proposals for insurers to pay claims without guarantees that they would receive any excess payments.
Both these proposals would have had a significant impact on the availability and affordability of insurance for many accountants, especially smaller firms, and both proposals were withdrawn in the ICAEW’s revised response.
Chris Jones, director of Legal, Underwriting and Claims at the IUA said: “IUA member companies underwrite a significant majority of professional indemnity insurance cover for accountants, auditors and other professionals subject to ICAEW regulation.
“We were pleased to participate in this review and strongly support its broad aims of providing clarity on what compliant insurance for accountants look like and to ensure appropriate liability protections are retained.
“The revised proposals will benefit firms and consumers. They are thoughtfully constructed to prevent both a reduction in the number of insurers providing cover and ensure that insurance premiums continue to be a reasonable cost for accountants.”
The new ICAEW regulations on professional indemnity insurance will be in place from 1st September 2024.
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