PROFESSIONAL INDEMNITY INSURANCE LEVELS ARE CHANGING – EFFECTIVE ON 12 JUNE 2020
On 22 November 2019, the Commission Delegated Regulation (EU) 2019/1935 amending the IDD with regard to regulatory technical standards (“RTS”) adapting the base euro amounts for professional indemnity insurance (“PII”) and for financial capacity of insurance and reinsurance intermediaries was published in the Official Journal of the European Union.
Context of the delegated act
According to Article 10(4) of Directive (EU) 2016/97, insurance and reinsurance intermediaries must hold professional indemnity insurance covering the whole territory of the Union or some other comparable guarantee against liability arising from professional negligence, for at least EUR 1 250 000 applying to each claim and in aggregate EUR 1 850 000 per year for all claims.
Consultations prior to the adoption of the act
The European Insurance and Occupational Pensions Authority (EIOPA) carried out a public consultation on the draft regulatory technical standards, and has published a final report on the public consultation explaining how its outcome has been taken into account in the development of the final draft regulatory technical standards submitted to the Commission.
EIOPA is required to regularly review the base amounts for professional indemnity insurance and financial capacity of insurance and reinsurance intermediaries to take into account the changes to the European index of consumer prices as published by Eurostat. Over the period 1 January 2013 through 31 December 2017, the European index of consumer prices produced for the Union by Eurostat has increased by 4,03%. As a result, the base amounts mentioned below should be adapted by that percentage increase.
All insurance will be required to have in place the new limits by 12 June 2020. The new levels are as follows:-
- Current PII requirements: €1,250,000 per claim and €1,850,000 in aggregate;
- New PII requirements: €1,300,380 per claim and €1,924,560 in aggregate.
The Commission Delegated Regulation (EU) 2019/1935 entered into force on 12 December 2019 and will apply from 12 June 2020 and can be accessed here: https://eur-lex.europa.eu/