Professional indemnity insurance—accountants and auditors (ICAEW)

As of September 2018, the following limits of PI cover are required by the following regulation bodies: ICAEW (Institute Of Chartered Accountants In England and Wales) If the firms turnover is in excess of £600,000, the minimum level of professional indemnity required is £1,500,000 for each and every claim and in total, unless. However, there are some additional points you will want to note: If the income of a firm is less than £600,000, the minimum limit of indemnity for any one claim and in total must be equal to two and a half times its gross fee income, with a minimum of £100,000 If the firm undertakes insurance mediation activities, the minimum level of cover required will be €1,120,200 for any one claim and €1,680,300 in total. If a firm is an accredited probate firm, the minimum limit of indemnity required for authorised work (ie, probate and estate administration) is £500,000 for any one claim. The ACCA regulation body defines the limit of indemnity held by its members by the level of turnover the firm produce If, however, the sum of 25 times the largest fee raised during the previous accounting year is greater than the above amounts, the limit of indemnity should be 25 times the largest fee. All policies must meet the following minimum level of cover: The policy is written on an ‘any one claim’ basis Cover is written on a full civil liability basis In addition to these requirements, the AAT also stipulate that the indemnity limit should be the greater of: Unregulated accountants are not required to have any form of insurance in place, however, this is not recommended. All it takes is for one calculation be slightly wrong or for a disgruntled customer to make a complaint against you and you could potentially be liable for hundreds, if not, thousands of pounds just to defend yourself. Even if you provide advice to someone and they don’t actually use your services, you can still be sued for providing negligent advice. Professional Indemnity insurance provides you with cover to defend yourself, regardless as to whether you are found at fault for being negligent or if the allegations being made against you turn out to be false.

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It is important to understand the differences between each policy. For example, some policies will automatically provide cover for the dishonesty of senior executive employees or computer virus and hacking attacks as well as the basic risks you. Because of the way claims work under a professional indemnity policy, claims will be made on the policy that is in place at the time the claim is bought to the attention of the policyholder, not the policy that was in place when the work was done. It is therefore particularly important to make sure that the retroactive date on your policy is correct. The retroactive date on a professional indemnity policy is an agreement with the insurer that states that the insurer will provide cover for all of you work from that date during the policy period.

4.5 Run-off

So if a policy has a retroactive date of 1st April 2014, any work done on or after the 1st April 2014 will be covered, but no cover will be provided for work done prior to this date. Some policies will state “None” as their retroactive date or they won’t provide a retroactive date at all. In these circumstances, the insurer is providing what is referred to as “Full Retroactive Cover” so all past work is being covered, this is typical of policies issued to entities that have been trading for a while. In order for the retroactive cover to apply, insurers will expect for you to have held professional indemnity insurance in place continuously from that date in order for an claim during that period to be honoured. Professional Indemnity Insurance (PII) covers you for civil liability claims arising from your work in private legal practice. As most of the regulators base their requirements on your turnover, you might be tempted to reduce your cover limit from year to year. You should resist the temptation to do this as the limit that is current will be the amount that applies to all claims, even if the work was carried out in the past. This is especially important if you have a contract with a third party which stipulates that you carry certain limit of cover in place. The ICAEW require you to update them every year with details of your insurance policy. On occasion, they may ask for a copy of your insurance documents for their records The only time you need to get in touch with the ACCA is when: You first take out a professional indemnity policy You move to a different insurer at your renewal If you renew your policy with your existing insurer and your policy number doesn’t change, you will not be required to discuss this with the ACCA.

What questions do PI underwriters ask accountancy firms at proposal?

These claims most commonly involve professional negligence. Having appropriate PII in place is important because it: helps ensure that consumers do not suffer loss, which might otherwise be uncompensated maintains public confidence in the integrity and standing of entities regulated by us If your entity is authorised and regulated by us, you are required to take out and maintain PII in accordance with the Professional Indemnity Insurance Rules. Prior to authorisation from us you will have to demonstrate that you have or are obtaining an insurance policy. You are bet betting sites that offers sign up bonus unable to practise until you have the PII in place and this should remain in place throughout all the time that you practise. If you are running an unregulated business, you should consider the benefit of having PII in place.

5.2 Excess

Select a broker to help you secure insurance and advise them who our qualifying insurers are. Decide whether the minimum level of cover of £2 million is sufficient. Complete the Professional Indemnity Application Form once, which can then be used with all our qualifying insurers. Once you have agreed a quote, do not put the cover on risk until you have received provisional authorisation. Once you have received provisional authorisation, put your PII on risk and arrange for a copy of the insurance certificate to be sent to us. You are only required to inform the AAT of your insurance policy details when you first apply for membership with the AAT. Unless specifically asked, when you renew your membership every year, you are not required to advise the AAT of your specific insurance details. PI Expert is independent and all of the policies we recommend are compliant with the regulator’s requirements. We do not pay introducers fees or commissions to any of the regulatory bodies. The regulators are very clear to both their members and other insurers in respect of the cover that is required to be in place. Many insurers have individual insurance wordings and products which are designed specifically to meet the requirements of the ICEAW and the ACCA as well as a general wording for accountants who are not regulated. The first thing you should know is that not all policies are the same, although a lot of accountancy wordings are going to be very similar in the cover that is being provided and when moving from one insurer to another. It is important to understand the differences between each policy. For example, some policies will automatically provide cover for the dishonesty of senior executive employees or computer virus and hacking attacks as well as the basic risks you. Because of the way claims work under a professional indemnity policy, claims will be made on the policy that is in place at the time the claim is bought to the attention of the policyholder, not the policy that was in place when the work was done. It is therefore particularly important to make sure that the retroactive date on your policy is correct. The retroactive date on a professional indemnity policy is an agreement with the insurer that states that the insurer will provide cover for all of you work from that date during the policy period. So if a policy has a retroactive date of 1st April 2014, any work done on or after the 1st April 2014 will be covered, but no cover will be provided for work done prior to this date. Some policies will state “None” as their retroactive date or they won’t provide a retroactive date at all.

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If you seek to limit your liability to a level above the minimum level of cover, the limitation should be set out in writing and you should bring it to your client’s attention. How do I inform consumers about my PII? There are two specific rules that require our Authorised Entities to inform consumers that they have Professional Indemnity Insurance. The Regulations require that you provide clients with information about the insurance you have in place including the contact details for the insurer and the territorial coverage of the insurance. You have a choice of four methods by which to make this information available to your client: You provide your clients with such information on your own initiative You make it easily available to your clients at the place where you provide the service by displaying your certificate, or where the contract for the service is concluded You make it easily available to your client electronically (for example, on your website) Make it available in any information document you supply to your client in which you give a detailed description of the service The CILEx Regulation Transparency Rules (Transparency Rules) state that you are required to have Professional Indemnity Insurance (PII) to cover all legal services you provide, and it must be clear which legal services are covered by your PII. In these circumstances, the insurer is providing what is referred to as “Full Retroactive Cover” so all past work is being covered, this is typical of policies issued to entities that have been trading for a while. In order for the retroactive cover to apply, insurers will expect for you to have held professional indemnity insurance in place continuously from that date in order for an claim during that period to be honoured. Professional Indemnity Insurance (PII) covers you for civil liability claims arising from your work in private legal practice.

Does PI cover advice on cryptoassets?

This is especially important if you have a contract with a third party which stipulates that you carry certain limit of cover in place. The ICAEW require you to update them every year with details of your insurance policy. On occasion, they may ask for a copy of your insurance documents for their records The only time you need to get in touch with the ACCA is when: You first take out a professional indemnity policy You move to a different insurer at your renewal If you renew your policy with your existing insurer and your policy number doesn’t change, you will not be required to discuss this with the ACCA. You are only required to inform the AAT of your insurance policy details when you first apply for membership with the AAT. Unless specifically asked, when you renew your membership every year, you are not required to advise the AAT of your specific insurance details.

Essentials Members – £100k Cover

PI Expert is independent and all of the policies we recommend are compliant with the regulator’s requirements. We do not pay introducers fees or commissions to any of the regulatory bodies. The regulators are very clear to both their members and other insurers in respect of the cover that is required to be in place. Many insurers have individual insurance wordings and products which are designed specifically to meet the requirements of the ICEAW and the ACCA as well as a general wording for accountants who are not regulated. The first thing you should know is that not all policies are the same, although a lot of accountancy wordings are going to be very similar in the cover that is being provided and when moving from one insurer to another. These claims most commonly involve professional negligence. Having appropriate PII in place is important because it: helps ensure that consumers do not suffer loss, which might otherwise be uncompensated maintains public confidence in the integrity and standing of entities regulated by us If your entity is authorised and regulated by us, you are required to take out and maintain PII in accordance with the Professional Indemnity Insurance Rules. Prior to authorisation from us you will have to demonstrate that you have or are obtaining an insurance policy.

• For office-based businesses, minimum often includes EL, Public Liability, and contents insurance.
• For construction contractors, minimum typically includes EL, Public Liability, and Contract Works insurance.
• For consultants, minimum often includes Professional Indemnity and Public Liability insurance.
• For retail businesses, minimum includes EL, Public Liability, and Product Liability insurance.
• For hospitality, minimum includes EL, Public Liability, and Employers' Liability.

You are bet betting sites that offers sign up bonus unable to practise until you have the PII in place and this should remain in place throughout all the time that you practise. If you are running an unregulated business, you should consider the benefit of having PII in place.

Insurance requirements for chartered accountants

The links to the left will help you obtain your PII. We recommend that you instruct a broker to help you secure insurance. Our Buyers’ Guide to Professional Indemnity on the left-hand side of this page provides you with further information on instructing a broker. Under our Rules, PII cover must be obtained from a qualifying insurer. A qualifying insurer is an insurer that: Is authorised and regulated to conduct insurance business in the UK by the Financial Conduct Authority (FCA) Has a credit rating from AM Best of at least B+ or, Standards & Poor’s rating of at least Category BBB (CILEx Regulation does not undertake any additional steps to regulate, vet or approve qualifying insurers) Has signed the CILEx Qualifying Insurers Agreement We provide a list of qualifying insurers which can be found on the left-hand side of this page The minimum level of cover is £2 million and applies regardless of the actual wording of the policies.

6.1 The CIOT minimum

The minimum level of cover is contained within the Qualifying Insurers Agreement (QIA). Each of our insurers sign up to the QIA, which requires qualifying insurers to offer a level of cover which should meet the CILEx Minimum Wording (found on the left-hand side of this page) What if £2 million is not enough? The minimum level of cover you are required to take is for £2 million however the total amount of PII you need will depend on the size of your entity and exposure to risk. You should seek advice from your broker and/or insurer to ensure that you have a sufficient level of cover for your entity. You must not exclude or attempt to exclude liability below the minimum level of cover of £2 million. Select a broker to help you secure insurance and advise them who our qualifying insurers are.

• When hiring subcontractors, ensure they hold their own EL insurance to avoid liability transferring to you.
• For joint ventures, a project-specific insurance package meeting all parties' minimums is often required.
• When working overseas, local statutory insurance minimums must be met, which can differ significantly.
• For mergers and acquisitions, due diligence must verify all target company insurance meets legal minimums.
• Temporary event insurance must meet local authority requirements for public safety and liability.

Decide whether the minimum level of cover of £2 million is sufficient. Complete the Professional Indemnity Application Form once, which can then be used with all our qualifying insurers. Once you have agreed a quote, do not put the cover on risk until you have received provisional authorisation. Once you have received provisional authorisation, put your PII on risk and arrange for a copy of the insurance certificate to be sent to us. The links to the left will help you obtain your PII.

We recommend that you instruct a broker to help you secure insurance. Our Buyers’ Guide to Professional Indemnity on the left-hand side of this page provides you with further information on instructing a broker. Under our Rules, PII cover must be obtained from a qualifying insurer.

• Fines for non-compliance with Employers' Liability insurance are enforced by the Health and Safety Executive (HSE).
• Operating without required motor insurance can lead to vehicle seizure, fines, and penalty points.
• Breaching contractually agreed insurance levels can lead to contract termination and legal claims.
• Operating without mandated Professional Indemnity can result in disciplinary action from your regulatory body.
• Inadequate insurance can lead to personal liability for directors if the company cannot cover claims.

A qualifying insurer is an insurer that: Is authorised and regulated to conduct insurance business in the UK by the Financial Conduct Authority (FCA) Has a credit rating from AM Best of at least B+ or, Standards & Poor’s rating of at least Category BBB (CILEx Regulation does not undertake any additional steps to regulate, vet or approve qualifying insurers) Has signed the CILEx Qualifying Insurers Agreement We provide a list of qualifying insurers which can be found on the left-hand side of this page The minimum level of cover is £2 million and applies regardless of the actual wording of the policies. The minimum level of cover is contained within the Qualifying Insurers Agreement (QIA). Each of our insurers sign up to the QIA, which requires qualifying insurers to offer a level of cover which should meet the CILEx Minimum Wording (found on the left-hand side of this page) What if £2 million is not enough?

The regulatory backdrop — what ICAEW, ACCA and AAT require

As of September 2018, the following limits of PI cover are required by the following regulation bodies: ICAEW (Institute Of Chartered Accountants In England and Wales) If the firms turnover is in excess of £600,000, the minimum level of professional indemnity required is £1,500,000 for each and every claim and in total, unless. However, there are some additional points you will want to note: If the income of a firm is less than £600,000, the minimum limit of indemnity for any one claim and in total must be equal to two and a half times its gross fee income, with a minimum of £100,000 If the firm undertakes insurance mediation activities, the minimum level of cover required will be €1,120,200 for any one claim and €1,680,300 in total. If a firm is an accredited probate firm, the minimum limit of indemnity required for authorised work (ie, probate and estate administration) is £500,000 for any one claim. The ACCA regulation body defines the limit of indemnity held by its members by the level of turnover the firm produce If, however, the sum of 25 times the largest fee raised during the previous accounting year is greater than the above amounts, the limit of indemnity should be 25 times the largest fee. All policies must meet the following minimum level of cover: The policy is written on an ‘any one claim’ basis Cover is written on a full civil liability basis In addition to these requirements, the AAT also stipulate that the indemnity limit should be the greater of: Unregulated accountants are not required to have any form of insurance in place, however, this is not recommended.

Additional Premiums for Higher Fees or Specific Work

All it takes is for one calculation be slightly wrong or for a disgruntled customer to make a complaint against you and you could potentially be liable for hundreds, if not, thousands of pounds just to defend yourself. Even if you provide advice to someone and they don’t actually use your services, you can still be sued for providing negligent advice. Professional Indemnity insurance provides you with cover to defend yourself, regardless as to whether you are found at fault for being negligent or if the allegations being made against you turn out to be false. As most of the regulators base their requirements on your turnover, you might be tempted to reduce your cover limit from year to year. You should resist the temptation to do this as the limit that is current will be the amount that applies to all claims, even if the work was carried out in the past. The minimum level of cover you are required to take is for £2 million however the total amount of PII you need will depend on the size of your entity and exposure to risk. You should seek advice from your broker and/or insurer to ensure that you have a sufficient level of cover for your entity. You must not exclude or attempt to exclude liability below the minimum level of cover of £2 million. If you seek to limit your liability to a level above the minimum level of cover, the limitation should be set out in writing and you should bring it to your client’s attention. How do I inform consumers about my PII? There are two specific rules that require our Authorised Entities to inform consumers that they have Professional Indemnity Insurance.

• Insurance policies must be reviewed annually to ensure they meet updated legal minimums.
• Notify your insurer immediately if your business activities change to avoid invalidating cover.
• Keep all insurance certificates and policy documents accessible for inspection by authorities.
• Use a broker specializing in your industry to navigate complex minimum requirement landscapes.

The Regulations require that you provide clients with information about the insurance you have in place including the contact details for the insurer and the territorial coverage of the insurance.

Insurance requirements for non-chartered accountants

You have a choice of four methods by which to make this information available to your client: You provide your clients with such information on your own initiative You make it easily available to your clients at the place where you provide the service by displaying your certificate, or where the contract for the service is concluded You make it easily available to your client electronically (for example, on your website) Make it available in any information document you supply to your client in which you give a detailed description of the service The CILEx Regulation Transparency Rules (Transparency Rules) state that you are required to have Professional Indemnity Insurance (PII) to cover all legal services you provide, and it must be clear which legal services are covered by your PII.