ICA members professional indemnity insurance
Insurance requirements for The Institute of Chartered Accountants in England & Wales (ICAEW), The Institute of Chartered Accountants of Scotland (ICAS) and The Institute of Chartered Accountants in Ireland (ICAI).
Required limit of indemnity
Firms are required to have a limit of indemnity of two and a half times the firm’s gross fee income for past financial year. There is a minimum requirement for sole practitioners of £50,000 or £100,000 for all other firms. There is currently a maximum requirement of £1,000,000, however, firms with larger turnovers or those with an increased level of exposure or firms who have clients with specific supplier requirements can purchase higher levels of cover.
Sole practitioners are required to have an excess no greater than £30,000 in the aggregate.
For Partnerships, the £30,000 aggregate excess can multiplied by the number of principals.
Corporate practices are allowed a maximum excess of £30,000 in the aggregate or the total amount accepted by the principal as a legally binding personal obligation (but not more than £30,000 for any one principal).
Main features of rules
Insurance cover must be provided via an insurer from the ‘List of participating Insurers’ published each year by the Institute. The cover must conform to the Institute ‘approved wording’ – a ‘difference in conditions’ clause must be included where cover differs.
The policy must provide Retroactive cover of at least 6 years or back to the establishment date of practice if this is more recent.
Run-off cover following cessation must be maintained for 2 years, but it is recommended that run-off is continued for at least 6 years.
An ‘Assigned risk pool’ exists for those practices unable to obtain cover.