IUA supports ICAEW’s professional indemnity insurance reforms for UK accountants

The International Underwriting Association (IUA) welcomes the professional indemnity insurance reforms for accountants in the UK proposed by The Institute of Chartered Accountants in England and Wales (ICAEW) Regulatory Board, the organisation recently announced.

These reforms include plans to increase minimum limits of cover to £2 million and give smaller firms more flexibility in the minimum limits of cover that they can purchase.

The IUA also stated that it backs proposals to link cover to the fee income of a firm rather than the number of partners it has.

Last year, the ICAEW issued a consultation regarding its regulation proposals on professional indemnity insurance and the IUA submitted views from its member companies.

The consultation revealed that respondents strongly disagreed with suggestions that ICAEW firms should have non-cancellable run-off cover of six years.

This would mean insurers could still be forced to cover risks regardless of whether or not a company paid their policy premium.

Additionally, the IUA criticised proposals for insurers to pay claims without guarantees that they will receive any policy excess payments due.

It noted that both of these plans would have had a significant impact on the availability and affordability of insurance for many accountants, especially smaller firms.

According to the announcement, a revised set of proposals has been published by the ICAEW highlighting the IUA’s consultation response.

Under the new plans, both an extension of non-cancellable run-off cover and insurers meeting unpaid excess have been withdrawn, the IUA explained.

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 September 1, 2024.

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