Biba is set to raise PI cover limits for members because it fears FSA levels are too low.

Biba regulatory working party chairman Chris Arter said that PI levels would be part of Biba's next review of its membership requirements.

He said that the FSA's PI requirements had gone down "quite dramatically" and said that members' PI "would be on the agenda at next year's annual meeting in June or July".

The move comes at a time of continued criticism from brokers who argue that the FSA's new PI requirements are too low. They fear that they will bear the cost of other brokers' failures through higher Financial Services Compensation Scheme (FSCS) levies.

Under the FSA's original proposals in CP174, brokers had to hold PI cover of £700,000 per claim and three times annual income in the aggregate.

But in its near final rules, this was watered down to £700,000 per claim and higher of £1m or 10% of annual income in the aggregate, subject to an upper limit of £30m.

The Broker Network chief executive Grant Ellis said: "Under the current rules, a broker with a turnover of £60m and earnings of £9m would be required to hold £1m PI cover in the aggregate.

This is too small. It will not cover the larger risks placed by brokers and the FSCS will bear the burden."

Ellis backed Biba's plans to review the PI limits of its members. "There is scope for trade associations to lay down higher standards," he said.

But Marrs Insurance managing director Mark Coffer warned that higher PI requirements would put increased pressure on smaller brokers.

"The PI market is getting more pricey and more difficult. It could hit brokers very hard.

"Coupled with the burden of capital requirements, it could force some to sell up."

The FSA said that it would not be raising the limits, despite the protest of brokers.

Last week Ellis met representatives of the FSA to lobby for a return to the higher aggregate limit.

But a spokeswoman for the FSA said that the amount of PI cover held by firms would be "looked at when authorising and supervising firms".

IIB director general Andrew Paddick said that the IIB would not raise the PI requirements for its members.