2.1 The material changes in the PIA are as set out below:
Amendment Summary Relevant provisions / status
1. Reduction of the minimum limit of liability for one claim
It is proposed that the minimum amount of cover for any one claim (and claims required to be aggregated as one claim) be set at £500,000 unless the claim relates to any insurance mediation activity in which case the limit relating to such activities is increased to the amount required to comply with the requirements of the Insurance Mediation Directive applicable at outset, extension or renewal of the policy. This is currently€1,120,200.
MTC 2.1
2. Delegated authority arrangements
In respect to the delegation of underwriting authority to agents, Participating Insurers will need to:
(a) have appropriate systems and controls in place to
Amendments to the PIA as follows: Clause 3.4
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monitor and oversee these activities;
(b) provide, on request, copies of any delegated authority agreements to the SRA;
(c) notify the SRA of the name and contact details of any intermediary it has appointed; and
(d) notify the SRA of the termination of any such arrangements.
The above provisions will apply equally to any person to whom the intermediary sub-delegates underwriting authority.
Further, Participating Insurers will be required to formally acknowledge that they are bound by the acts or omissions of the agents that act on its behalf, and shall not dispute cover or refuse to pay claim by reason of those acts or omissions.
Clause 3.5
Clause 3.6
3. Variations to multi-year policies
All policies will be required to be updated to reflect any
amendments made to the Minimum Terms and Conditions, the SRA Indemnity Insurance Rules and the Glossary. Such amendment to occur on the next inception, renewal replacement or extension of a policy or 18 months after the date of the last required amendment or commencement of the policy. This requirement will not apply where the date on which amendment would have been required falls within the
Extended Indemnity Period or the Cessation Period.
This change is reflected both in the terms of the PIA between the Law Society and each Participating Insurer, and in the Minimum Terms and Conditions.
Amendments as follows: Clauses 5.1 and 5.2
Certificates of insurance contained in Schedule 3 (Part A and Part B)
MTC, clause 4.11 MTC, clause 4.12
4. Premium income disclosure requirement
Participating Insurers will be required to provide a best
estimate declaration of premium income by the end of January of the indemnity period governed by the PIA. The existing
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requirement to provide a final declaration in December following the end of the indemnity period is retained.
Clause 6.14
Declaration form at Schedule 2
5. Reporting requirements and penalties for non- compliance
Participating Insurers will be required to appoint a director or officer as a designated Reporting Officer responsible for reporting issues, and with whom the SRA can liaise directly. Other secondary compliance requirements have been included in order to ensure compliance with reporting requirements. If Participating Insurers fail to comply with its reporting requirements, it must pay the Law Society’s costs and expenses in accessing the Records of the Insurer for the purposes of obtaining the relevant information. Payment is to be made within 30 days of receipt of an invoice.
Amendments to the PIA as follows: Clauses 6.17 – 16.18 Clause 6.19
6. Insured Firms Reports and Run-off Reports
The SRA and Firms will be able to rely on the contents of the Insured Firms Reports and Run-off Reports as confirmation of cover being provided by the Insurer. The relevant clauses are expressed to be enforceable by the firms under the Contracts (Rights of Third Parties) Act 1999.
Participating Insurers should be mindful of the importance of ensuring that the contents of the Insured Firms Reports and Run-off Reports are complete and accurate.
Amendments to the PIA as follows:
Clause 6.11 (Insured Firms Reports) 6.13 (Run-off Reports)
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7. Cessation / run-off cover The relevant clauses in the Minimum Terms and Conditions have been expanded to clarify that run-off cover is to be provided on a cessation (whether during the policy period, the extended indemnity period or the cessation period) and from the expiration of the cessation period. The cover does not extend to acts or omission of the insured firm that arise after the expiration of the cessation period.
Amendments as follows: Definition of “cessation” MTC 5.4
MTC 5.5
8. International sanctions A sanctions exclusion will be included in the Minimum Terms and Conditions. The exclusion will operate so that there is deemed to be no cover, and the Participating Insurer will not be liable to pay out a claim, if the Participating Insurer is prohibited from paying out such a claim or providing such insurance by reason of: (i) economic sanction, or (ii) trade sanction law, of the UN, EU, Australia or USA.
Amendment as follows: MTC 6.11
9. Execution of documents by Lloyd’s syndicates
The execution provisions will be amended so that they properly reflect entry into the agreement by managing agents of Lloyd’s Syndicates as being for and behalf of members of the Syndicate for the relevant year of account.
Execution pages and details of insurer.
10. Impact of the Equality Act 2010
References in the PIA to the laws listed below have been removed due to the incorporation of these laws into the Equality Act 2010:
the Sex Discrimination Act 1975; the Race Relations Act 1976;
the Sex Discrimination Act 1986; and
Amendments to the PIA as follows: Clause 6.4
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the Disability Discrimination Act 1995. 11. Consequential
amendments to the Financial Services and Markets Act 2000
Financial Services Act 2012 Definition of ‘authorised insurer’ in the PIA and the Glossary