FSCS protects general insurance policies for up to 90% of a claim if an insurer fails
The Prudential Regulation Authority (PRA) is proposing to raise the Financial Services Compensation Scheme (FSCS) limit for professional indemnity (PI) to 100% of the fund.
FSCS protects general insurance policies for up to 90% of the value of the claim, with no upper limit, where an insurer has failed. The scheme protects compulsory insurance, such as employers liability insurance, in full.
The FSCS is funded by the financial services industry.
The PRA said: “This reflects the potential for significant adverse consequences to policyholders, and the wider financial system, of cover being disrupted. The limits for all other types of insurance remain the same.”
PRA chief executive Andrew Bailey said the increase meant policyholders who might find it difficult to obtain alternative cover, or who were locked into a product, would have greater protection if their insurer failed.
Insurer Balva collapsed in June last year after the Latvian regulator, the Financial and Capital Market Commission, barred it from writing new business.
Balva sold policies that the FSCS has previously said could qualify for FSCS protection, including general liability insurance and professional indemnity insurance.