UK Regulator the Financial Conduct Authority has revealed it has been working with the London market over fears that the COVID-19 pandemic has created a withdrawal of professional indemnity insurance (PII) for financial advisers.
The FCA said it had recognised that while the PII market is evolving, firms may be concerned that the current coronavirus situation may affect their ability to renew PII in a timely manner, impacting their operational resilience.
As such the regulator said it has been working with the International Underwriting Association (IUA) and have spoken directly with individual insurers and brokers, in an effort to understand the scale of the issues the market faces in the light of the pandemic.
“Our discussions indicate that PII cover remains available in the market and the crisis is not preventing insurers from undertaking the renewals process,” they added. “We are continuing to assess how insurers have been reviewing their approach to underwriting. And we are aware that they may seek more detailed information to understand the risk of a particular firm.”
The FCA said that firms had to have access to cover and that cover was required for financial advisers to operate.
“Our position remains that firms need to have PII policies in place in accordance with our rules to support their ability to meet liabilities as they fall due and to protect their consumers,” explained the regulator. “It is ultimately a commercial decision for insurers about what cover they will offer including cost and on what terms. But they need to meet their regulatory obligations, including when manufacturing, distributing and writing a contract of insurance.”
The FCA said it will continue to monitor the impact that coronavirus has on all firms’ operational resilience, including insurers.
“Where we see evidence that insurers’ ability to process renewals is being affected, we will consider taking action in line with our approach to supervision,” it warned.