Report of Committee for standardization of professional indemnity insurance policy – Insurance intermediaries

Insurance Regulatory and Development Authority of India

Date:19-01-2021

Ref. No: IRDAI/INT/ PI Pol/ 01/ 21

Re: Report of the Committee for standardization of professional indemnity insurance policy – insurance intermediaries

A Committee for standardization of professional indemnity insurance policy – insurance intermediaries was set up by the Authority vide order Ref: IRDA/ INT/ ORD/ MISC/ 103/ 05/ 2020 dated 4^th May, 2020.

The Committee has submitted its report in which it has made recommendations with regard to preparation of standard professional indemnity policy which covers all the contingencies and conditions (retroactive date, indemnity limits, excess, etc) mentioned in the regulations which can be issued by all insurers.

The report of the Committee is placed for all stakeholders to give their feedback in the attached word format on or before 7^th February, 2021 to brokers@irdai[dot]gov[dot]in and k[dot]srinivas@irdai[dot]gov[dot]in

Randip Singh Jagpal
Chief General Manager (Distn)

Format

Name   : Organisation :
Sl. No.	Page No. & Para No.	Comment	Reason

LETTER OF TRANSMITTAL

19th October, 2020

Ms. T.L. Alamelu
Member (Non-life)
Insurance Regulatory and Development Authority of India
Hyderabad

Respected Madam,

In terms of the Order Ref. IRDA/INT/ORD/MISC/103/05/2020 dated 4th May, 2020 constituting the ‘Committee for standardization of Professional Indemnity Insurance Policy—Insurance Intermediaries’, I, on behalf of the entire Committee, am pleased to submit the report containing our recommendations on the subject.

We thank you very much for the opportunity given to us to work on this important requirement of the Intermediaries. We would also like to thank you for the extension of time granted to submit our report and recommendations. The pandemic situation and developments associated with it threw quite a few things out of gear in terms of the plans and timelines we had set for ourselves to complete the task assigned to us.

Thanking you,

Yours faithfully,
(YEGNAPRIYA BHARATH)

CHIEF GENERAL MANAGER (NON-LIFE) REPORT OF THE COMMITTEE ON STANDARDIZATION OF PROFESSIONAL INDEMNITY INSURANCE POLICY — INSURANCE INTERMEDIARIES

COMMITTEE MEMBERS

1. MRS. YEGNAPRIYA BHARATH, CGM (NON-LIFE), IRDAI, CHAIR

2. MR. UMESH RATHOD, MANAGER, THE NEW INDIA ASSURANCE COMPANY LIMITED, MEMBER

3. MRS. KASTURI SENGUPTA, CHIEF MANAGER, NATIONAL INSURANCE COMPANY LIMITED, MEMBER

4. MRS. SURBHI GOEL, HEAD, REINSURANCE AND LIABILITY UNDERWRITING, HDFC ERGO GI CO. LTD, MEMBER

5. MR. NAJM B, HEAD, FINANCIAL LINES, TATA AIG GENERAL INSURANCE CO LTD

6. MR. SASIDHAR KATARI, ASSISTANT, IRDAI, CONVENER

CONTENTS

ACKNOWLEDGEMENTS

Chapter	Particulars	Page no.
	Acknowledgements	6
	Executive Summary	7- 8
	Abbreviations	9
1	Introduction	10
2	Regulations In India on Professional Indemnity Policy for Intermediaries	11-19
3	International Regulations on Professional Indemnity Policy for Intermediaries	20-23
4	The Need for a Standard Product and other recommendations	24-34
5	Recommendations on Standard Policy Wordings for Professional Indemnity Policy for the Intermediaries	35-36
6	The Reinsurance Perspective and Recommendations regarding Market Cooperation for Professional Indemnity Policy for Intermediaries	37-39
Appendices
1	The Market Agreement	40-76
2	Views of Brokers and Reinsurers	77-79
3	Analysis of case studies on claims	80-83
4	Order constituting the Committee	84

I gratefully acknowledge the contribution of each and every member of the Committee for the inputs that have gone into the making of this report and the recommendations contained herein, by bringing in their professional expertise and experience.

I thank Chairman, IRDAI and Member (Non-life), IRDAI for giving me and the rest of the members of the Committee the opportunity to work on the important aspect of developing a standard professional indemnity cover for Intermediaries, which clearly is the need of the hour. I acknowledge the inputs provided by Mr. Randip Singh Jagpal, CGM (Intermediaries), IRDAI on the current issues relating to compliance of the regulatory requirements of the PI cover, which gave the Committee a perspective of what needs to be done, and I thank him for it.

I cannot thank Mr. Sashidhar Katari, PS to Member (Non-life) enough for his support with regard to conduct of the meetings and his assistance in giving the report its final shape. I must make a special mention of Mr. Sagar Bangal, AM, who is the creative find of Non-life Department! Thank you Sagar for the cover page.

EXECUTIVE SUMMARY

1. The introductory chapter explains the concept of Professional Indemnity insurance and the coverage offered under such policies. The need for the cover, the regulatory requirements regarding it and most importantly the need for a standard professional indemnity policy for Brokers, Corporate Agents, Web Aggregators and Insurance Marketing Firms, covering the various contingencies and conditions spelt out in the regulations are briefly discussed under this chapter.

2. Chapter 2 sets the context to the whole exercise carried out by the Committee, by discussing the regulatory framework laid down by IRDAI for Brokers, Corporate Agents, Web Aggregators and Insurance Marketing Firms.

3. Chapter 3 covers the international scenario relating to the regulatory framework around the requirement of a professional indemnity insurance policy, of distributors of insurance. Singapore, Hong Kong, Mauritius, UAE, United Kingdom and Trinidad and Tobago are discussed here.

4. Chapter 4 makes out the case for a standard product and makes specific recommendations. Certain concerns that are currently existing are discussed here. These concerns relate to the risks that are expected to be covered as per the IRDAI regulatory requirements which are either not part of the coverage offered in the market today or are actually appearing in the list of exclusions. While some policies seek to cover some of these, the exact requirements are not covered; some others do not offer the required coverage in any manner— coverage for former employees, directors, coverage for dishonesty, fraudulent activities etc, to name a few. Further, the ratio of Any One Year: Any One Accident is not 1:1 as required. Also, the retroactive date does not cover the period commencing from the date of issuance of the Certificate of Registration for the first time. Again, different indemnity limits are given for different Retroactive dates. Policies are not renewed continuously giving rise to gaps in coverage. The excess imposed in the products is also not in line with the regulations. The chapter then goes on to discuss the solutions offered by the Committee, all of which are reflected in the Market Agreement being recommended. The Market Agreement is a detailed document covering the recommended General Rules and Regulations, suggested Rating, the Standard Proposal Form, the Standard Policy Form, the Prospectus, the claim form and recommended provisions relating to General Administration relating to Premium, Co-Insurance and Claims Processing. Apart from recommending coverage for risks that have not been covered hitherto, the standard product recommended addresses the AOY: AOA limit. The recommendation also is that the Retroactive date would be the date of issuance of Certificate of Registration. The issue relating to different indemnity limit for different retroactive date will also not arise with this recommendation. The excess also has been revisited and the recommendation is to align it with the policy limit based on the territory of operation.

5. Chapter 5 spells out certain specific risks which are to be covered and which form part of the standard product recommended by the Working Group. The risks include coverage for defamation, fraud/dishonesty, court attendance, the need to have Extended Reporting period as an extension, coverage for lost documents etc. The chapter also suggests that certain terms need to be specifically defined —‘Breach of Duty’, ‘Claim’, ‘Damages’, ‘Documents, ‘Employees’ and so on. The recommendations relating to coverage and definitions mentioned in this chapter are all reflected in the standard product recommended (part of the Market Agreement attached as Appendix 1).

6. Chapter 6 deals with other perspectives—reinsurance and the need for market cooperation which concept discusses policy issuance, premium collections and declaration and claims processing apart from standard proposal form, standard policy wordings and general administration.

ABBREVIATIONS

AED	Arab Emirates Dirham
AOA	Any One Accident
AON	AON Insurance Broker
AOY	Any One Year
CA	Corporate Agents
ETASS	Electronic Transaction Administration and Settlement System
FDI	Foreign Direct Investment
FRB	Foreign Reinsurance Branches
FSE	Financial Service Executive
GST	Goods and Services Tax
IBAI	Insurance Brokers Association of India
IMF	Insurance Marketing Firms
IRDA	Insurance Regulatory and Development Authority
ISP	Insurance Sales Person
LOI	Limits of Indemnity
MCA	Market Cooperation Agreement
PI	Professional Indemnity
RI	Reinsurance
ROW	Rest of World
UAE	United Arab Emirates
USA	United States of America
WA	Web Aggregators

CHAPTER I: INTRODUCTION

1. Professionals and professional entities may be sued by their clients for errors or negligence during the course of their professional duties. To cover such risks, one may opt for a professional indemnity policy.

2. A professional indemnity policy is a liability insurance product that protects individuals giving professional advice as well as professional entities who are service providers, against negligence claims by their clients for the errors and omissions that the professionals might make and for damages awarded in a civil lawsuit. It is a legal liability policy that covers financial loss suffered by the client/s resulting from breach of professional duty.

3. Thus, professional indemnity policies provide indemnity against losses arising due to errors or omissions on the part of professionals and professional entities including the employees and directors. Professional indemnity insurance can cover a broad range of risks. Apart from professional negligence, it can also cover unintentional breaches of confidentiality, loss of documents, loss of database etc. It also covers legal expenses incurred in defence of the civil suits filed on these aspects.

4. Professional indemnity covers, however, do not offer cover for certain instances such as claims arising out of contractual liability, liabilities arising out of terrorism, liabilities arising out of criminal acts etc.

5. Insurance Intermediaries have a professional duty to perform, in a time bound manner. They are expected to exercise reasonable skill and care in the performance of their duties. However, to err is human. Errors and omissions are bound to happen. Professional Indemnity insurance offers the right solution for all professionals including insurance intermediaries.

6. With a view to ensuring that insurance intermediaries are protected in respect of claims made against them for errors and omissions, IRDAI requires them to take professional indemnity cover. The relevant regulations stipulate the indemnity limit, coverage, excess, the retroactive date etc.

7. Vide order dated 4th May, 2020, the Authority constituted this Committee to devise a standard professional indemnity policy which would cover all the contingencies and conditions spelt out in the regulations, even while including in the Terms of Reference, any other matter relating to Professional Indemnity policy for intermediaries.

The Committee had 8 meetings on 6th May 2020, 12th May 2020, 29th May 2020, 22nd June 2020, 23rd July 2020, 22nd August 2020, 23rd September, 2020, 30th September 2020 and the Sub Committee had 3 meetings on 9th July 2020, 27th August 2020, and 28th September 2020. On firming up its views, the Committee met with representatives of the IBAI and representatives of Reinsurers, GIC Re and FRBs and had discussions on the proposals. The views are attached to this report.

9. The recommendations of the Committee for the standard product as well as the modus operandi for underwriting are contained in the various chapters that follow as well as the appendices to this report.

CHAPTER II: REGULATIONS IN INDIA ON PROFESSIONAL INDEMNITY POLICY FOR INTERMEDIARIES

1. Regulatory provisions

1.1 IRDAI has enunciated specific regulatory framework for each of the following types of Insurance intermediaries:

a. Brokers

b. Corporate Agents

c. Web Aggregators

d. Insurance Marketing Firms

1.2 The regulations that require a PI policy for various intermediaries are as follows:

Sr no	Type of Intermediary	Name of the Regulation	Regulation No	Specific Schedule & Form no
1	Broker (Direct, RI and Composite	INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY OF INDIA (Insurance Brokers) Regulations, 2018	24	Schedule II Form S
2	Corporate Agent	INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY OF INDIA (Corporate Agents) Regulations, 2015	19	Schedule II
3	Web Aggregator	INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY OF INDIA (Web Aggregator) Regulations, 2016	18	Schedule III Form K
4	Insurance Marketing Firm	INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY OF INDIA (Insurance Marketing Firm) Regulations, 2015	9	Schedule X

1.3 Limits of Indemnity (LOI) for various intermediaries

Sr no	Intermediary type	Limit of Indemnity prescribed by regulation Twice the remuneration received at the end of every financial year subject to
1	Broker (Direct, RI and Composite)	Direct – Minimum Rs. 1 Crore and at least Rs. 50 Crores if twice the remuneration is >= Rs. 50 Crores Reinsurance – Minimum Rs. 4 Crores and at least Rs. 75 Crores if twice the remuneration is >= Rs 75 Crores Composite – Minimum Rs. 5 Crores and at least Rs. 100 Crores if twice the remuneration is >= Rs. 100 Crores
2	Corporate Agent	Between Rs. 15 lacs and Rs. 100 Crores
3	Web Aggregator	Between Rs. 25 lacs and Rs 100 Crores
4	Insurance Marketing Firm	Minimum Rs 10 lacs

1.4 Regulatory provisions relating to compliance

1.4.1 Brokers

Type of Intermediary	IRDA Regulation details	Type of Regulation	Provision
Insurance/ Reinsurance Broker	Annexure – I-C INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY OF INDIA (Insurance Brokers) Regulations, 2018 (reference Regulation 39 on Filing of Returns section 1 (c)	Certificate to be issued by Auditors of the Insurance Broker on maintenance of Professional Indemnity Insurance required under regulation 24 to be submitted half-yearly	Verification and certification of the Professional Indemnity policy held by the Insurance broker Brokers details Name of the Insurance Broker: Certificate of Registration No. Category of registration: Validity of registration: Insurance co details Name and address of the Insurance Company; Policy No. & Date of commencement of the policy; Date of expiry of the policy; Limit of Indemnity and the total remuneration received during the year; Un-insured excess; Ratio of AOA : AOY A confirmation that the insurance broker has/has not received any intimation of claim under the policy and the same has/has not been informed to the insurance company which has issued the PI Policy in writing.
Insurance/ Reinsurance broker	Regulation 24	Professional indemnity insurance	1) Every insurance broker shall take out and maintain at all times a professional indemnity insurance cover throughout the validity of the period of the Certificate of Registration issued to them by the Authority, as specified in Schedule II – Form S of these regulations: Provided that the Authority shall in appropriate cases allow a newly registered insurance broker to produce such a policy within twelve months from the date of issue of certificate of registration.

1.4.1.1 SCHEDULE II – Form S [ref regulation 24 (1) as above]

Maintenance of Professional Indemnity Insurance

(1) The insurance cover must indemnify an insurance broker against

a. any error or omission or negligence on their part or on the part of their employees and directors;

b. any loss of money or other property for which the insurance broker is legally liable in consequence of any financial or fraudulent act or omission;

c. any loss of documents and costs and expenses incurred in replacing or restoring such documents;

d. dishonest or fraudulent acts or omissions by insurance brokers’ employees or former employees.

(2) The indemnity cover —

a. shall be on a yearly basis for the entire period of registration;

b. shall not contain any terms to the effect that payments of claims depend upon the insurance broker having first met the liability;

c. shall indemnify in respect of all claims made during the period of the insurance regardless of the time at which the event giving rise to the claim may have occurred.

Provided that an indemnity insurance cover not fully conforming to the above requirements may be permitted by the Authority in special cases for reasons to be recorded by it in writing.

(3) Limit of indemnity for any one claim and in the aggregate for the year in the case of insurance brokers shall be as follows:

Category of insurance broker Limit of indemnity

(a) Direct broker Two times remuneration received at the end of every financial year subject to a minimum limit of rupees one crore and atleast Rs 50 crores, if twice the remuneration limit is equal to or more than Rs 50 crores

(b) Reinsurance broker Two times remuneration received at the end of every financial year subject to a minimum limit of rupees four crore and atleast Rs 75 crores, if twice the remuneration limit is equal to or more than Rs 75 crores.

(c) Composite broker Two times remuneration received at the end of every financial year subject to a minimum limit of rupees five crore and atleast Rs 100 crores, if twice the remuneration limit is equal to or more than Rs 100 crores

(4) The un-insured excess in respect of each claim shall not exceed five percent of the capital employed by the insurance broker in the business.

(5) The AOA: AOY limit shall be 1:1

(6) The retroactive date shall begin from the date of grant of license/ certificate of registration.

(7) The insurance policy shall be obtained from any registered insurer in India who has agreed to —

a. provide the insurance broker with an annual certificate containing the name and address, including the registration number of the insurance broker, the policy number, the limit of indemnity, the excess and the name of the insurer as evidence that the cover meets the requirements of the Authority;

b. Send a duplicate certificate to the Authority at the time the certificate is issued to the insurance broker; and

c. Inform the broker immediately of any case of voidance, non-renewal or cancellation of cover mid-term.

(8) Every insurance broker shall—

a. Inform immediately the Authority should any cover be cancelled or voided or if any policy is not renewed;

b. Inform immediately the insurer in writing of any claim made by or against it;

c. Advise immediately the insurer of all circumstances or occurrences that may give rise to a claim under the policy; and

d. Advise the Authority as soon as an insurer has notified that it intends to decline indemnity in respect of a claim under the policy.

1.4.2 Corporate Agents, Web Aggregators and Insurance Marketing Firms

Type of Intermediary	IRDA Regulation details	Type of Regulation	Provision
Corporate Agents	INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY OF INDIA (REGISTRATION OF CORPORATE AGENTS) REGULATIONS, 2015 Regulation 19	Requirement of Professional Indemnity Insurance Policy	(1) Every corporate agent, where the revenues from their insurance intermediation activities is more than fifty per cent of their total revenue from all the activities, shall take out and maintain at all times a professional indemnity insurance cover throughout the validity of the period of the registration granted to it by the Authority.Provided that the Authority shall in suitable cases allow a newly registered corporate agent to produce such a policy within twelve months from the date of issue of original registration.(2) The limit of indemnity shall be two times the total annual remuneration of the corporate agent derived from their insurance intermediation activities in a year subject to a minimum of Rupees fifteen lakhs and a maximum of Rupees one hundred crores.(3) The scope of cover and other terms and conditions of the Professional Indemnity Policy is specified in Schedule II of these regulations.
Web aggregator	INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY OF INDIA (Insurance Web Aggregators) Regulations, 2017 SCHEDULE III FORM K [Regulation 18]	Professional Indemnity Insurance-Maintenance of Professional Indemnity Insurance	(1) The insurance cover must indemnify an Insurance Web Aggregator against any error or omission or negligence on their part or on the part of their employees and directors; any loss of money or other property for which the insurance Web Aggregator is legally liable in consequence of any financial or fraudulent act or omission; any loss of documents and costs and expenses incurred in replacing or restoring such documents; dishonest or fraudulent acts or omissions by Insurance Web Aggregator employees or former employees. (2) The indemnity cover — shall be on a yearly basis for the entire period of certificate of registration; shall not contain any terms to the effect that payments of claims depend upon the Insurance Web Aggregator having first met the liability; shall indemnify in respect of all claims made during the period of the insurance regardless of the time at which the event giving rise to the claim may have occurred. Provided that an indemnity insurance cover not fully conforming to the above requirements shall be permitted by the Authority in special cases for reasons to be recorded by it in writing. (3) Limit of indemnity for any one claim and in the aggregate for the year in the case of Insurance Web Aggregators shall be two times remuneration received at the end of every financial year subject to a minimum limit of rupees twenty-five lakhs and a maximum of rupees one hundred crores. (4) The un-insured excess in respect of each claim shall not exceed five percent of the capital employed by the Insurance Web Aggregator in the business. (5) The insurance policy shall be obtained from any registered insurer in India who has agreed to — provide the Insurance Web Aggregator with an annual certificate containing the name and address, including the certificate of registration number of the Insurance Web Aggregator, the policy number, the limit of indemnity, the excess and the name of the insurer as evidence that the cover meets the requirements of the Authority.
Insurance Marketing Firms	INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY OF INDIA (REGISTRATION OF INSURANCE MARKETING FIRMS) REGULATIONS, 2015 Regulation 9 – Schedule X	Professional Indemnity Policy	9.1. Every insurance marketing firm shall take out and maintain at all times a professional indemnity insurance cover throughout the validity of the period of the registration granted to it by the Authority. Provided that the Authority shall in suitable cases allow a newly registered insurance marketing firm to produce such a policy within twelve months from the date of issue of original registration and with minimum sum insured of Rs. 10 lakhs. 9.2. The limit of indemnity shall be two times the total remuneration of the insurance marketing firm subject to a minimum of Rupees ten lakh. For the purpose of this sub regulation, the total remuneration includes remuneration from their insurance solicitation/procuring activities, insurance servicing activities and marketing of other financial products activities as specified in these regulations. 9.3 The scope of cover and other terms and conditions of the Professional Indemnity Policy is specified at Schedule X of these regulations. The insurance cover must indemnify an insurance marketing firm against: a. any error or omission or negligence on their part or on the part of their employees and directors; b. any loss of money or other property for which the Insurance Marketing Firm is legally liable in consequence of any financial or fraudulent act or omission; c. any loss of documents and costs and expenses incurred in replacing or restoring such documents; d. dishonest or fraudulent acts or omissions by Insurance Marketing Firms’ employees or former employees. 2. The indemnity cover: a. shall be on a yearly basis for the entire period of registration; b. shall not contain any terms to the effect that payments of claims depend upon the insurance marketing firm having first met the liability; c. shall indemnify in respect of all claims made during the period of the insurance regardless of the time at which the event giving rise to the claim may have occurred. Provided that an indemnity insurance cover not fully conforming to the above requirements shall be permitted by the Authority in special cases for reasons to be recorded by it in writing. 3. The un-insured excess in respect of each claim shall not exceed five percent of the capital employed by the insurance marketing firm in the business. 4. The insurance policy shall be obtained from any registered insurer in India who has agreed to: a. provide the Insurance Marketing Firm with an annual certificate containing the name and address, including the registration number of the Insurance Marketing Firm, the policy number, the limit of indemnity, the excess and the name of the insurer as evidence that the cover meets the requirements of the Authority; b. send a duplicate certificate to the Authority at the time the certificate is issued to the Insurance Marketing Firm; and c. inform the Insurance Marketing Firm immediately of any case of voidance, non-renewal or cancellation of cover mid- term. 5. Every insurance marketing firm shall— a. inform immediately the Authority should any cover be cancelled or voided or if any policy is not renewed; b. inform immediately the insurer in writing of any claim made by or against it; c. advise immediately the insurer of all circumstances or occurrences that may give rise to a claim under the policy; and d. advise the Authority as soon as an insurer has notified that it intends to decline indemnity in respect of a claim under the policy

CHAPTER III: INTERNATIONAL REGULATIONS ON PROFESSIONAL
INDEMNITY POLICY FOR INTERMEDIARIES

1. Internationally also the brokers are governed by rules, regulations and legislations and have the mandate of having a compulsory PI policy.

2. The requirements and regulations for insurance broking licences across the continents for their PI policy are given below:

Sr no	Country	Minimum Paid up Capital for the Broker	Salient features of the Brokers’ PI policy	Excess
1	Singapore	an amount of not less than $1 million	A registered insurance broker or any broker intending for registration shall have in force at all times a professional indemnity insurance policy with limit of indemnity not less than min paid up capital	deductible allowed shall be — where the applicant is in its first financial year of operation, not more than 20% of the paid-up capital in any other case, not more than 20% of the applicant’s net asset value as at the end of its preceding financial year.
2	Hongkong	must at all times maintain a paid-up capital of not less than $ 500,000	the limit of indemnity must not be less than the greater of the following— 2 times the aggregate amount of insurance brokerage income in the 12 consecutive months immediately before the commencement date of the policy period under its PI insurance policy, up to a maximum of $75,000,000; or $3,000,000 In relation to a licensed insurance broker  company which is in its first 12 months of operation as a licensed insurance broker company, the limit of indemnity must not be less than $3,000,000.The professional indemnity insurance policy must include a provision for at least one automatic reinstatement of the limit of indemnity	must not be more than 50% of the company’s net assets as at the end of its financial year immediately before the commencement date of the policy period under the policyORnot be more than 50% of the company’s paid-up share capital as at the commencement date of the policy period under the policy
3	Mauritius		At least Rs. 5 million for any act, error or omission in the conduct of his business
4	UAE (Dubai)	The paid capital may not be less than (AED 3,000,000) three million Dirhams for a company incorporated in the UAE and (AED 10,000,000) ten million Dirhams for the branch of a company incorporated in a financial free zone or the branch of a foreign company	The insured shall be the Insurance Broker and the beneficiary shall be the Chairman of the IA Board of Directors in his capacity.The insured sum under the policy may not be less than (AED 2,000,000) two million Dirhams for companies incorporated in the UAE. As for the branch of a foreign company or companies incorporated in any financial free zone, the insured sum under the policy may not be less than (AED 3,000,000) three million Dirhams, 6. Any amendment or alternation to the insurance policy may only be made under the written approval of the IA  Professional indemnity insurance policy Insurance Consultant whose application was accepted must submit to the Authority a professional indemnity insurance policy with a sum insured of (1.5) million dirhams;The (Corporate Person) Insurance Consultant must submit to the Authority a professional indemnity insurance policy with a sum insured of (3) million dirhams;	deductible amount may not exceed (AED 30,000) thirty thousand Dirhams for each accident, companies incorporated in the UAE, deductible amount may not exceed (AED 50,000) fifty thousand Dirhams for each accident, foreign company or companies incorporated in any financial free zone, deductible does not exceed (30,000) dirhams and the insurance policy shall be in the name of the Insurance Consultant the amount of the deductible does not exceed (30,000) dirhams and the insurance policy shall be in the name of the Corporate Person Insurance Consultant.
5.	United Kingdom( London	the firm is a member of a group in which there is an authorised person with net tangible assets of more than £10 million, the comparable guarantee must be from that person; A ‘comparable guarantee’ means a written agreement on terms at least equal to those in a contract of professional indemnity insurance to finance the claims that might arise as a result of a breach by the firm of its duties under the regulatory system or civil law	(1) for a single claim, €1,250,000; and (0) in aggregate, the higher of: (a) €1,850,000; and (b) an amount equivalent to 10% of annual income (this amount being subject to a maximum of £30 million).	For a firm which does not hold client money or other client assets, the excess must not be more than the higher of: (1) £2,500; and (2) 1.5% of annual income. For a firm which holds client money or other client assets, the excess must not be more than the higher of: (1) £5,000; and (2) 3% of annual income.
6	Trinidad and Tobago	Where the applicant is a body corporate, or partnership evidence that the paid up capital in cash is not less than one hundred thousand dollars;	Central Bank of Trinidad and Tobago, requires that there is in force Professional indemnity insurance of not less than five million dollars placed with an insurer approved by the Central Bank of Trinidad and Tobago.	The deductible to be applied in respect of any claim should not exceed fifteen housand dollars.

CHAPTER IV: RECOMMENDATIONS REGARDING HAVING A STANDARD

PRODUCT

1. In the insurance industry an intermediary (which can be a broker or corporate agent/agent, Web aggregator or Insurance Marketing firm) is a licensed independent entity which represents buyers (proposer/insured) for insurance and which deals with either insurance companies for obtaining the insurance coverage which the insurance buyer wants. He gives the insurance buyer “customer service” regarding insurance coverage requirements, modifications of coverage, renewals, premium negotiations etc.

2. The Intermediary arranges insurance coverage for the customer, and usually receives a brokerage/commission from the insurer. Acting as independent advisers, some brokers receive consulting fees from customers who seek the broker’s advice and services.

3. Intermediaries are providing a professional service and thus arose the need for an insurance cover for covering the financial losses that a client taking the service of an intermediary may incur due to professional service lapses on his part

4. IRDA Regulations stipulate that every intermediary has to take Professional Indemnity

policy throughout the validity of the period of the Certificate of Registration issued to them by the Authority

5. The following were observed by the Committee:

a. The coverage available for Brokers varies from insurer to insurer

b. Private insurers have no appetite for issuing such policies mainly to avoid the complications that may arise primarily due to Conflict of Interest between the Insurer and the broker when a claim is lodged.

c. There is no standard product for Corporate Agents, Web aggregators and Insurance Marketing firms

6. Further the need for the standardisation of products was also felt by IRDAI during onsite inspections and at the time of offsite monitoring, when it was quite frequently observed that the Professional Indemnity policies taken by the brokers were not in compliance with the IRDA prescribed schedule.

7. The following are the common irregularities observed in the PI policies taken by the broker

1. The risks that were to be covered as per IRDA regulations are either not covered in the policy or mentioned under exclusions.

2. Some policies cover the risks but the wordings mentioned are altered (such as not covering former employees, directors, dishonesty, fraudulent activities etc.)

3. AOY: AOA is not 1:1.

4. Retroactive date does not be given from date of issuance of Certificate of Registration for the first time.

5. The indemnity limit is not sufficient, as per the requirements mentioned in point no. 3 above

6. Different Indemnity limits are given for different Retro Active dates.

7. The policies are not renewed continuously but with some gaps in between

8. Un-insured excess is not in line with regulation

8. As a feedback from the brokers fraternity revealed that the policies do not comply in terms of point no. 1 & 2 above due to the reasons that the standard wordings of the policies offered by some of the insurers do not provide the required coverages and hence, the policies taken by them do not comply with the regulations.

9. To resolve the discrepancies that arise due to non- availability of a comprehensive product, the idea of a standard product has been mooted.

10. To begin with, the Committee carried out a detailed comparison of the PI policies issued by leading private and public sector insurers in India, on the basis of base coverage, definitions and exclusions.

Serial No.	Difficulties faced by Intermediary/Insurer	Possible Solutions that can be offered
1	Insurers do not want to get in a situation where non-coverage of a claim scenario notified in the policy of an intermediary leads to loss of business from that intermediary. This is especially the case for the large brokers, where a conflict of interest situation exists and any friction created between the insurer and the broker due to a claim scenario can cost the insurer on the business front	To address this conflict of Interest the Committee is suggesting to devise a Market Agreement Plan
2	Non-availability of professional indemnity wordings in the market which are compatible with the existing regulations. Several aspects, such as retroactive date from date when licence was granted, coverage for ISPs and FSEs etc. are not part of the standard market wordings available, creating a problem for the intermediaries to get the wordings modified to comply with regulatory requirements.	After comparing the wordings available, we have devised a standard wording for all intermediaries addressing the issues which is given in Section IV of the Market Agreement Plan
3	A challenge faced by insurers is that major reinsurance treaties exclude PI policies for top brokers (Marsh, Willis and AON).	This challenge can be resolved by providing facultative reinsurance capacity for this coverage either by General Insurance Corporation of India or with discussion with other Foreign Reinsurance Branches (FRB) operating in India, since they can create a spread on a global level and have more experience in underwriting these risks.
4	On the retroactive date issue, IRDA regulations require coverage to exist from the date of grant of license by the regulator – this kind of retroactive exposure isn’t something which every insurer would be comfortable offering, especially since there have been several cases of fraud, miss-selling and others by insurance intermediaries across the globe.	Retroactive date ought to be from the date of payment of premium, provided there is a continuous renewal If there is a break in insurance , then the revised retroactive date will be from the policy start date from which there is a continuous renewal
5	Pricing problem as previous claims history is not available always	It may be made mandatory for all intermediaries to publish records of such professional indemnity related issues which they may have faced from customers in the past 5 years. A repository holding such data will be extremely valuable for underwriters across insurers to assess this risk better
6	The capping on un-insured excess in respect of each claim, which is linked to capital employed by the intermediary is another cause of issue. Some insurers may perceive this excess amount to be quite low for the risk exposure.	It has been decided that the policy deductible will be 0.5% of Limit of Liability

12. And as a corollary, the Committee also studied some of the actual claims case studies and claim scenarios

12.1 The number of claims against the intermediaries seems to be rising. The inadequacy in the policy coverage and non – standardisation of the policy wording has led to many of claims being repudiated

12.2 Further the reasons for rise in the number of claims can be attributed to following

• • The increasing spectrum and the complexity of the insurance products
  • Business environment which is extremely competitive and provokes the intermediary to sometimes commit the impossible
  • The digital dependency is on the rise and the increasing sophistication of business transactions sometimes outgrow the knowledge base of the people involved in them
  • Statutory and regulatory changes

12.3 The detailed study made by the Committee with regard to the coverage, wordings, case studies relating to claims etc establishes the need for the standardised product in the market for the PI policy for Intermediaries.

12.4 The Committee also felt the need to have a Market Co-operation Agreement to underwrite the standard policy.

12.5 A common pricing approach would be required to have a Market Co-operation Agreement in place.

12.6 A mechanism also needs to be put in place to ensure that the Market Co­operation Agreement is administered.

CHAPTER V: RECOMMENDATIONS REGARDING STANDARD POLICY
WORDINGS FOR PROFESSIONAL INDEMNITY POLICY FOR THE
INTERMEDIARIES

Coverage	Comments
Type of form	Claims made
Insuring Clause
Professional Liability	Standard policy must define the Professional Services to avoid ambiguity and difference in coverage.
Intellectual Property	This needs to be covered in the standard policy, typically trade secrets are excluded.
Defamation	This needs to be covered in the standard policy.
Fraud/Dishonesty	This needs to be covered up to final adjudication.
Defence	This is covered under all policies, and should be the case for the standardized wordings as well.
Extensions
Court Attendance	This needs to be covered in the standard policy.
Extended Reporting Period	This needs to be covered in the standard policy.
Lost Documents	This needs to be covered in the standard policy. Recovery and Restoration is also mandatory as per regulations, this should be incorporated in the wordings as well.
Definitions
Breach of Duty	Defining ‘Breach of Duty’ is recommended, this will help avoid interpretation issues at the time of claims.
Claim	Defining ‘Claim’ is recommended, this will help avoid interpretation issues at the time of claims.
Damages	Defining ‘Damages’ is recommended, this will help avoid interpretation issues at the time of claims.
Defence Costs	This is standard, no comments offered.
Documents	This should also be defined.
Employee	This is one critical definition which needs to be worked upon – since the IRDA regulations require Insurance Marketing Firms (IMF) to cover ISPs and FSEs in their policy.
Fraud/Dishonesty	This needs to be covered, whether defined separately or not can be dealt with.
Insured	This needs to be defined – either as a single Insured or as Insured and Insured Person separately.
Loss	As per regulations, loss of money or property for which broker is legally liable needs to be covered by the policy. Hence, this should be included in this definition for the standardized policy wording.
Professional Services	Standard policy must define the Professional Services to avoid ambiguity and difference in coverage.
Third Party	This should be defined to avoid issues at the time of a claim.
Wrongful Act	This should be defined exhaustively.
Exclusions (Applicable to all insuring clauses)
Antitrust	This exclusion is not a big area of concern for Insurance Broker’s per se, can be avoided if minimum retentions and premium are standardized to pick this exposure.
Bodily Injury & Property Damage	This exclusion should remain, not an exposure typically picked up by a PI policy.
Contractual Liability/Performance Guarantees	This should remain excluded.
War & Terrorism	This should remain excluded.
Cost Assessment	This exclusion may be avoided.
Insolvency	This should remain excluded.
Infrastructure	This exclusion may be avoided.
Prior Acts Exclusion	This should remain excluded.
Prior and Pending Litigation	This should remain excluded.

1. Background

1.1. The necessity for a standard product in order to conform to the Regulatory provisions prescribed by IRDAI for each of the categories of Intermediaries has already been discussed.

1.2. Based on the coverage, exclusions and the insuring clause provisions we give below our observations which formed our baseline and the yardstick on which the Standard policy wording has been drafted

Insurer	Insurer A	Insurer B	Insurer C	Insurer D
Type of form	Claims Made Policy	Claims Made Policy	Claims Made Policy	Claims Made Policy
Insuring Clause
Professional Liability	Covered	Covered as per form	Covered, however terms are not defined.	Covered, however terms are not defined.
Intellectual Property	Covered	Offered as anextension	Excluded	Excluded.
Defamation	Covered	Offered as anextension	Libel and Slander is excluded.	Defamati on is excluded.
Fraud/Dishonest y	Covered	Offered as anextension	Covered	Excluded.
Defence	Covered	Covered as per form	Covered	Covered
Extensions
Court Attendance	Provided	Not provided	Not provided	Excluded.
Extended Reporting Period	Provided	Provided	Extensio n provided, however no duration mentione d.	Extension provided, however no duration mentione d.
Lost Documents	Provided	Provided	Covered as perform.	Excluded.
Definitions
Breach of Duty	means any actual or alleged negligent breach of duty, act, error, misstatements, misleading statements, breach of confidentiality or omission in the performance of or failure to perform Professional Services.	Not defined, however mentioned in Wrongful Act definition.	No definition s section provided in the policy.	No definition s section provided in the policy.
Claim	means any: (i) written demand or (ii) civil or administrative proceeding, that seeks Damages from Wrongful Acts.	Defined, covers any error, misstateme nt, misleading statement, act, omission, neglect or breach of duty committed, attempted, or allegedly committed or attempted before or during the Policy Period.	No definition s section provided in the policy.	No definition s section provided in the policy.
Damages	means any amount that an Insured shall be legally liable to pay to a Third Party in respect of judgments rendered against an Insured, or for settlements negotiated by the Insurer with the consent of either the Insured or the Policyholder	Not defined, however mentioned in Claim definition.	No definition s section provided in the policy.	No definition s section provided in the policy.
Defence Costs	means reasonable fees, costs and expenses incurred by or on behalf of the Insured in the investigation, defence, adjustment, settlement or appeal of any Claim. “Defence Costs” shall not mean any internal or overhead expenses of any Insured or the cost of any Insured’s time.	Covered and defined.	No definition s section provided in the policy.	No definition s section provided in the policy.
Documents Employee	means all documents of any nature whatsoever including computer records and electronic or digitized data; but does not include any currency, negotiable instruments or records thereof. any natural person who is or has been expressly engaged as an employee under a contract of employment with the Policyholder or any Subsidiary. “Employee” shall not mean any: (i) principal, partner or director; or (ii) temporary contract labour, self-employed person or labour-only sub- contractor.	Covered and defined. Covered and defined.	No definition s section provided in the policy. No definition s section provided in the policy.	No definition s section provided in the policy. No definition s section provided in the policy.
Fraud/Dishonest y	means fraudulent or dishonest conduct of an Employee: (i) not condoned, expressly or implicitly; and (ii) that results in liability to; the Policyholder or any Subsidiary.	Not defined, however covered via extension as mentioned above.	No definition s section provided in the policy.	No definition s section provided in the policy.
Insured	means: (1) the Policyholder or any Subsidiary; (2) any natural person, who is or has been a principal, partner or director of the Policyholder or any Subsidiary; (2) any	Insured and Insured Person are both defined.	No definition s section provided in the policy.	No definition s section provided in the policy.
Insurer	Insurer A	Insurer B	Insurer C	Insurer D
Type of form	Claims Made Policy	Claims Made Policy	Claims Made Policy	Claims Made Policy
Insuring Clause
Professional Liability	Covered	Covered as per form	Covered, however terms are not defined.	Covered, however terms are not defined.
Intellectual Property	Covered	Offered as anextension	Excluded	Excluded.
Defamation	Covered	Offered as anextension	Libel and Slander is excluded.	Defamati on is excluded.
Fraud/Dishonest y	Covered	Offered as anextension	Covered	Excluded.
Defence	Covered	Covered as per form	Covered	Covered
Extensions
Court Attendance	Provided	Not provided	Not provided	Excluded.
Extended Reporting Period	Provided	Provided	Extensio n provided, however no duration mentione d.	Extension provided, however no duration mentione d.
Lost Documents	Provided	Provided	Covered as perform.	Excluded.
Definitions
Breach of Duty	means any actual or alleged negligent breach of duty, act, error, misstatements, misleading statements, breach of confidentiality or omission in the performance of or failure to perform Professional Services.	Not defined, however mentioned in Wrongful Act definition.	No definition s section provided in the policy.	No definition s section provided in the policy.
Claim	means any: (i) written demand or (ii) civil or administrative proceeding, that seeks Damages from Wrongful Acts.	Defined, covers any error, misstateme nt, misleading statement, act, omission, neglect or breach of duty committed, attempted, or allegedly committed or attempted before or during the Policy Period.	No definition  section provided in the policy.	No definition s section provided in the policy.
Damages	means any amount that an Insured shall be legally liable to pay to a Third Party in respect of judgments rendered against an Insured, or for settlements negotiated by the Insurer with he consent of either the Insured or the Policyholder	Not defined, however mentioned in Claim definition.	No definition s section provided in the policy.	No definition s section provided in the policy.
Defence Costs	means reasonable fees, costs and expenses incurred by or on behalf of the Insured in the investigation, defence, adjustment, settlement or appeal of any Claim. “Defence Costs” shall not mean any internal or overhead expenses of any Insured or the cost of any Insured’s time.	Covered and defined.	No definition s section provided in the policy.	No definition s section provided in the policy.
Documents Employee	means all documents of any nature whatsoever including computer records and electronic or digitized data; but does not include any currency, negotiable instruments or records thereof. any natural person who is or has been expressly engaged as an employee under a contract of employment with the Policyholder or any Subsidiary. “Employee” shall not mean any: (i) principal, partner or director; or (ii) temporary contract labour, self-employed person or labour-only sub- contractor.	Covered and defined. Covered and defined.	No definition s section provided in the policy. No definition s section provided in the policy.	No definition s section provided in the policy. No definition s section provided in the policy.
Fraud/Dishonest y	means fraudulent or dishonest conduct of an Employee:(i) not condoned, expressly or implicitly; and(ii) that results in liability to; the Policyholder or any Subsidiary.	Not defined, however covered via extension as mentioned above.	No definition s section provided in the policy.	No definition s section provided in the policy.
Insured	means: (1) the Policyholder or any Subsidiary; (2) any natural person, who is or has been a principal, partner or director of the Policyholder or any Subsidiary; (3) any	Insured and Insured Person are both defined.	No definition s section provided in the policy.	No definition s section provided in the policy.
	Employee; (4) any temporary contract labour, self-employed persons, labour-only sub­contractors, solely under contract with, and under the direction and direct supervision of the Policyholder or any Subsidiary; and (5) any estates or legal representatives of any Insured described in (2) and (3) of this definition; but only when providing Professional Services in the foregoing capacities.
Loss	means Damages and Defence Costs. “Loss” shall not mean and this policy shall not cover any (1) taxes; (2) non- compensatory damages, including punitive, multiple, exemplary or liquidated damages; (3) fines or penalties; (4) the costs and expenses of complying with any order for, grant of or agreement to provide injunctive or other non- monetary relief; (5) compensation, benefits or overhead of, or charges or expenses by any Insured; or (6) any matters which may be deemed uninsurable under the law governing this policy or the jurisdiction in which a Claim is brought.	Covered and defined.	No definition s section provided in the policy.	No definition s section provided in the policy.
Professional Services	means the professional services of the Policyholder and any Subsidiary as specified in the Schedule	Covered and defined.	No definition s section provided in the policy.	No definition s section provided in the policy.
Third Party	means any entity or natural person; provided, however, Third Party does not mean: (i) any Insured; or (ii) any other entity or natural person having a financial interest or executive role in the operation of the Policyholder or any Subsidiary.	Not defined.	No definition s section provided in the policy.	No definition s section provided in the policy.
Wrongful Act	means any Breach of Duty, Infringement, libel, slander, or Fraud/Dishones ty	Defined.	No definition s section provided in the policy.	No definition s section provided in the policy.
Exclusions Applicable to all insuring clauses
Antitrust	Excluded as per form.	“Anti- competitive Practices” have been excluded, which is similar in meaning	No such exclusion	No such exclusion.
Bodily Injury & Property Damage	Excluded as per form.	Excluded as per form.	Excluded as per form.	Excluded as perform.
Contractual Liability/Perform ance Guarantees	Excluded as per form.	“Assumed Liability” has been excluded, which is similar in meaning.	Not excluded.	Not excluded.
War & Terrorism	Excluded as per form.	Excluded as per form.	Excluded as per form.	Excluded as per form.
Cost Assessment	Excluded as per form.	Not excluded.	Not excluded.	Not excluded.
Insolvency	Excluded as per form.	Excluded via “Bankruptcy ” exclusion.	Excluded as per form.	Not excluded.
Infrastructure	Excluded as per form.	Not excluded.	Not excluded.	Not excluded.
	Policyholder or any Subsidiary.
Wrongful Act	means any Breach of Duty, Infringement, libel, slander, or Fraud/Dishones ty	Defined.	No definition s section provided in the policy.	No definition s section provided in the policy.
Exclusions Applicable to all insuring clauses
Antitrust	Excluded as per form.	“Anti- competitive Practices” have been excluded, which is similar in meaning	No such exclusion	No such exclusion.
Bodily Injury & Property Damage	Excluded as per form.	Excluded as per form.	Excluded as per form.	Excluded as perform.
Contractual Liability/Perform ance Guarantees	Excluded as per form.	“Assumed Liability” has been excluded, which is similar in meaning.	Not excluded.	Not excluded.
War & Terrorism	Excluded as per form.	Excluded as per form.	Excluded as per form.	Excluded as per form.
Cost Assessment	Excluded as per form.	Not excluded.	Not excluded.	Not excluded.
Insolvency	Excluded as per form.	Excluded via “Bankruptcy ” exclusion.	Excluded as per form.	Not excluded.
Infrastructure	Excluded as per form.	Not excluded.	Not excluded.	Not excluded.

CHAPTER VI: THE REINSURANCE PERSPECTIVE AND RECOMMENDATIONS
REGARDING MARKET COOPERATION FOR PROFESSIONAL INDEMNITY
POLICY FOR INTERMEDIARIES

1. Reinsurance arrangements available

1.2. The majority of PI policies for Intermediaries have been underwritten by Public Sector Companies through their treaty capacities.

1.3. PSU’s can deploy upto INR 150 crores per risk which serves the capacity requirements of the market.

1.4. In comparison, Private companies have lower appetite to write PI policies for intermediaries and they shy away from offering PI policies due to Conflict of Interest issue, as detailed in section 2 of this Chapter

1.5. Most reinsurance arrangements exclude P.I policies for large brokers. Insurance Brokers like AON, Marsh, Willis, Howden and erstwhile JLT are excluded from the scope of the treaty (of PSUs)

2. Proposal for a market co-operation arrangement on professional indemnity policy for the intermediaries

2.1. Risk pooling in insurance means that there are many contributors to help spread the financial risks from expensive claims more evenly. Risk pooling is essential to the concept of insurance. The earliest known insurance policies were written some 5,000 years ago, to protect shippers against the loss of their cargo and crews at sea.

2.2. Conflict of interest is one the major deterrents for insurers to write PI policy because of the active working relationship between Insurers & the intermediaries.

2.3. Insurers & Intermediaries work extensively together both on the direct side as well as reinsurance placements. Insurers & Reinsurers are reluctant in writing PI policies for Intermediaries due to potential conflict of interest, particularly when they are trading actively with that particular intermediary.

2.4. Conflict of Interest can arise in the following situations –

Insurer A issues the PI policy for the Broker B. Broker B has business transactions with Insurer A.

Example 1

Broker B commits an error / fraud on a policy placed with Insurer A, thus causing financial loss to the Insured who in turn takes legal action against both broker as well as the Insurer.

Broker B claims under the PI policy which has been issued by Insurer A itself. In essence for the purpose of PI, insurer A and the broker B are related parties and in the event of a loss, Insurer A would end of bearing expenses for both themselves and the broker.

Example 2

Insured sued broker B for claim repudiation/ deficient service for a Policy issued by Insurer A. PI Policy to the broker as well as the Policy to the Insured was issued by Insurer A, thus complicating the situation.

Example 3

Error or fraud committed on a reinsurance placement done by Broker B for Insurer A causing financial loss to the Insurer. Insurer A has no way of making good his loss if the PI policy is also issued by them.

2.5.A possible solution to the resolution of the above conflicts of interest can be a Market Cooperation Agreement (MCA). A Pool/MCA could be formed for the purpose of writing PI policy for intermediaries, where insurers come together and deploy capacity for underwriting the risk, on an annual basis.

• This Market pool can ensure
• A diversified portfolio to Insurers,
• Centralized issuance of policy,
• Greater transparency in information,
• Fair & unbiased management of claims.
• It will address the conflict of interest issue that exists between Insurers & intermediaries.

2.6. Modalities for creation and operation of market cooperation arrangement

2.6.1 Policy Issuance

√ Insurers could nominate one Insurer who would be the Lead Insurer on all policies issued to the intermediaries. Rest of the Insurers, who put in capacity participate as co insurers on the policy.

√ Lead & coinsurance shares in each policy could be determined in the same proportion of the capacity deployed by them.

√ Rating engines could be pre-designed for agents, web aggregators, direct brokers & composite brokers.

√ There could be a small panel of insurers authorized for taking underwriting decisions where the risk, for whatever reasons does not qualify to be pre-underwritten.

2.6.2 Premium Collection & Quarterly Declarations

√ Premiums collected by the lead insurer could be remitted to other insurers as per timelines in ETASS regulations.

√ There could be a quarterly declaration of policies underwritten by the lead Insurer to other insurers.

3 Claims Processing

√ Representation from different companies on claims matters to enable fair & unbiased processing

√ Such Representatives from three different companies could be nominated on a rotational basis for settlement of claims to ensure a fair, unbiased & non­discriminatory processing.

√ If one of the Insurers on the panel are involved in the claim (i.e insurer & broker being involved in a conflict which triggers the PI policy), the insurer could recuse themselves from claims handling.

√ Decision of the nominated claims representative will be final and binding on all insurers

There needs to be a body to administer the operations of the Market Cooperation Agreement /Pool.

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