§ PILLAR GUIDE
Insurance Brokers Professional Indemnity Insurance — UK Guide 2026
A directly-authorised regional commercial broker places a £4 million each-and-every PI policy for a mid-sized professional services client at renewal in March 2024. The client's risk profile changed materially during the policy year — a new partner brought a substantial book of overseas-instructing clients into the firm, and the firm took on an interim assignment for a large public-sector body. Neither change was notified to the insurer by the broker. In November 2024 a complaint arises from the overseas-instructing book, and the insurer voids the policy on grounds of non-disclosure under the Insurance Act 2015. The client sues the broker for the resulting loss. The claim is for £2.8 million plus defence costs.
That claim does not, by itself, end a brokerage. What turns it from a difficult letter into an existential event is whether the brokerage's own PI policy responds to a clean Insurance Act fair-presentation breach allegation, at a limit that absorbs both defence and settlement, and with no late-notification or AR-oversight argument standing in the way of cover. Insurance Act 2015 has — on Mills & Reeve's analysis — materially increased broker E&O exposure rather than reduced it, because the duty is reciprocal and broker negligence in eliciting facts is now a clearer cause of action.
This guide is for principals, compliance officers and directors at FCA-authorised insurance brokers, MGAs and appointed representatives. It runs longer than most online explainers because the detail genuinely matters — MIPRU 3.2 is more prescriptive than the SRA Minimum Terms or the ARB Code, and the interaction between MIPRU 3 cover and MIPRU 4 capital is one of the more frequently misunderstood parts of the UK regulated-broker framework.
What Professional Indemnity Insurance covers for brokers
At its core, broker PI pays the legal costs of defending a civil claim made against your firm by a client (or, post-Insurance Act, increasingly by a subrogating insurer) who says they have suffered financial loss as a result of regulated insurance distribution activity you provided, and pays any damages, settlement or Ombudsman award up to the policy limit.
A modern broker PI wording responds to claims arising from placement of cover, mid-term adjustments, claims handling, renewals, advice on cover requirements, fair presentation to insurers under the Insurance Act 2015, Appointed Representative oversight failures, delegated authority and MGA activity, fee disputes that become coverage disputes, and the broader category of "advice on insurance suitability" that sits at the heart of intermediary work.
What broker PI does not cover includes: FCA fines and penalties (excluded as a matter of public policy under English insurance law); dishonesty, fraud or deliberate criminal conduct by principals (though most policies will continue to defend "innocent" partners where one broker is alleged to have acted dishonestly); the underlying loss the client would have suffered anyway; and pure cyber events, which sit on a standalone cyber policy.
MIPRU 3.2 — the prescribed minimum cover
The FCA Handbook chapter MIPRU 3.2 sets the minimum PI for any UK-authorised insurance intermediary. Unlike many other sectors, the minimum is prescribed by the regulator and is not contract-driven.
The key rules.
MIPRU 3.2.7R sets the minimum limit of indemnity at EUR 1,300,380 for a single claim and EUR 1,924,560 in the aggregate. These figures were uplifted by the FCA in 2021 (instrument FCA 2021/30) to track the IDD's inflation-linked review. The previous figures (EUR 1,250,000 single / EUR 1,850,000 aggregate) are no longer the binding minimum.
The aggregate limit is the higher of the EUR figure or 10% of annual income up to a maximum of GBP 30 million (MIPRU 3.2.7R(2)). For mid-sized brokers the income-based test bites well above the EUR floor.
Limits must be stated in euros under MIPRU 3.2.8R. UK firms holding sterling-denominated cover must satisfy themselves the EUR equivalent is met at inception and renewal — exchange rate movement through the policy year can technically take a sterling policy below the EUR floor.
Basis of cover. Each-and-every claim for the per-claim figure, aggregate for the annual ceiling. Cover must be from an authorised insurer (MIPRU 3.2.6R), must provide cover for legal defence costs (MIPRU 3.2.9R), and must include cover for Financial Ombudsman Service awards.
Excess caps are set by MIPRU 3.2.10R to 3.2.12R: GBP 2,500 or 1.5% of annual income for non-client-money firms, GBP 5,000 or 3% of annual income for client-money firms — whichever is greater. Excesses above these caps trigger additional capital requirements under MIPRU 3.2.14R.
MIPRU 4 — the interlocking capital regime
MIPRU 3 (PII) and MIPRU 4 (capital) are designed to interlock. MIPRU 4.2.20R sets the capital resources requirement at the higher of GBP 5,000 (non-client-money) or GBP 10,000 (client-money), or 2.5% (non-client-money) / 5% (client-money) of annual income.
The FCA's stated rationale at MIPRU 4.1.6G is that capital provides protection for "situations not covered by a firm's professional indemnity insurance and the funds for the firm's PII excess". The two regimes together set the financial resilience floor: PII responds to claims; capital funds the excess and the residual risk.
A broker with £5 million of annual income (a mid-sized firm) holds capital at the higher of £5,000 or £125,000 (2.5%) for non-client-money work, or £250,000 (5%) for client-money work. Most brokers hold materially more, but the rule sets the floor.
Common claim patterns against brokers
UK broker E&O claims arise from a recurring set of fact patterns:
Wrong cover placed. The broker arranged cover that did not respond to the client's actual exposure. Examples include cyber excluded where the client had clear exposure, D&O written on Side-A-only where Side-B was needed, business interruption written without appropriate indemnity period, professional indemnity written with aggregate where each-and-every was contractually required.
Missed renewal or gap in cover. The broker assumed an insurer would auto-renew, the renewal was overlooked in the broker's diary, or the renewal was placed late and a claim notification fell into the gap. Defence on these claims is structurally weak; the broker's diary management is the principal protection.
Inadequate disclosure to insurer — Insurance Act 2015. Post-Insurance Act 2015 the broker's duty to make reasonable enquiries of the client and to present material circumstances "in a manner reasonably clear and accessible to a prudent insurer" has driven a wave of subrogated claims where insurers void cover for non-disclosure and the client sues the broker for the resulting loss.
Appointed Representative oversight failures. The FCA's revised AR regime under PS22/11 took effect on 8 December 2022, with first annual self-assessments due by 8 December 2023. In May 2023 the FCA imposed restrictions on ten principal firms for failing AR oversight expectations — four of those were insurance brokers. The dedicated AR supervisory team has driven termination of more than 1,300 principal-AR relationships. Underwriters now ask detailed AR questions at renewal.
Mid-term adjustment errors. A change in the client's risk profile during the policy year that the broker fails to communicate to the insurer, with the consequence that the policy does not respond when a claim arises.
The Appointed Representative regime post-PS22/11
The principal firm obligations under PS22/11 are extensive:
- Notify the FCA 30 days before appointment of a new AR
- Undertake annual reviews of each AR's business, senior management, financial position and regulatory history
- Complete an annual self-assessment of the AR oversight framework
- Submit complaints and revenue data on a per-AR basis
The PI consequence is direct. PII renewal forms now routinely cover:
- The number of ARs the firm is principal for
- The standard AR appointment terms
- The annual review process
- Any AR-related complaints or claims
- Whether the firm has been subject to FCA AR enforcement
Some PII policies now contain explicit AR-related sub-limits or, in extreme cases, exclusions for AR-generated business. A firm acting as principal for material AR populations should expect a more rigorous renewal conversation in 2026 than in any prior cycle.
Consumer Duty implications for brokers
PRIN 2A applies to brokers as distributors. PRIN 2A.3.16R places primary product-governance responsibility on manufacturers but PRIN 2A.3.17R to 2A.3.20R require distributors to ensure distribution strategy is consistent with the manufacturer-defined target market and to feed back data on outcomes.
Brokers must evidence good outcomes across the four Consumer Duty outcomes — products and services, price and value, consumer understanding, consumer support — and operate a Fair Value Assessment annually. The FCA has signalled a 2026 supervisory focus on distribution chains, with a consultation in H1 2026 on amendments to clarify Duty application across the chain. Weak AR governance has been identified as a specific risk vector.
The PII consequence is indirect but real. Insurers ask at renewal about the firm's Consumer Duty implementation, the Fair Value Assessment process, the management information on consumer outcomes, and the vulnerable customer policy.
Run-off cover for brokers
PII for brokers is written on a claims-made basis. MIPRU 3.2 minima continue to apply during run-off. The FCA's standard expectation, consistent with Lockton's published guidance, is six years of run-off cover mirroring the Limitation Act 1980 primary period.
Run-off is typically renewed annually with reducing premium but cannot lapse without consequence. Lapse exposes former directors to personal claims and breaches the firm's Part 4A permission wind-down conditions.
A broker firm planning cessation, sale, retirement of the principal or merger should engage with a broker at least nine months before cessation. The run-off market for brokers is narrower than the live-trading market and waiting until the final renewal materially reduces choice.
The broker PII market in 2026
Howden's 1.1.26 market report describes the wider professional indemnity and financial lines market as re-balancing. Reinsurance rate reductions are flowing through to primary, supply exceeds demand in most lines, and pricing is back to 2021-2022 levels with tighter attachments.
Active UK broker PII capacity in 2026 includes Liberty Specialty Markets, Travelers Europe, AXIS Specialty, Markel, Beazley and CFC. Specialist schemes for the broker class include Howden's own broker PI scheme, Griffiths & Armour's broker book and Manchester Underwriting Management's small-broker product.
Premiums for clean brokers with under £5 million of income are softening 10 to 20 per cent year-on-year. Firms with AR books, MGA delegated authority or PI-and-D&O cross-class exposure are seeing flatter or rising rates, reflecting the more concentrated underwriting view of those exposures.
How Apex helps
Apex Insurance Brokers Limited is an independent FCA-authorised insurance broker based in Bristol (firm reference number 724952). We have been arranging professional indemnity insurance for UK regulated firms since 2009, including for other FCA-authorised brokers.
Our work with fellow brokers follows the structure of this guide. At the renewal conversation we read the firm's MIPRU 3.2 cover position, the MIPRU 4 capital interaction, the AR oversight framework, the MGA delegated authority position, the Consumer Duty implementation, and the recent claims history. We then approach a considered shortlist of UK insurers and Lloyd's syndicates carrying genuine appetite for broker PII risk.
We understand the broker-on-broker conversation. We arrange cover for fellow regulated firms with the same care and the same FCA-compliant approach we apply to any other regulated client. We are not tied to any one insurer, we are not a network, and we do not run our own underwriting.
Trading address. 53 Queen Charlotte Street, Bristol, BS1 4HQ.
Telephone. 0117 325 0027.
Email. info@apexinsurancebrokers.co.uk.
Quote portal (commercial). proposal.apexinsurancebrokers.co.uk
Frequently asked questions
What is the minimum PII for an FCA-authorised insurance broker?
Under MIPRU 3.2.7R the minimum is EUR 1,300,380 each-and-every claim and EUR 1,924,560 in the aggregate, with the aggregate floor uplifted to 10% of annual income up to GBP 30 million for larger firms. The figures were uplifted by FCA 2021/30 in 2021.
Why is the cover in euros and not sterling?
The minima are the UK expression of IDD Article 10(4) and are inflation-uplifted by EIOPA-style review. The euro denomination survived Brexit because the IDD figures are linked to that review process. Sterling policies must satisfy themselves the EUR equivalent is met at inception and renewal.
How does MIPRU 4 capital interact with MIPRU 3 PII?
The two are designed to interlock. PII responds to claims up to the policy limit; capital funds the excess and provides protection for situations not covered by PII. The FCA's stated rationale at MIPRU 4.1.6G makes the interaction explicit. A firm reducing capital or changing income mix should review the PI excess and aggregate position at the same time.
What does Insurance Act 2015 do to broker PI exposure?
It has materially increased it. The duty of fair presentation runs to the client, and the broker's duty to make reasonable enquiries and to present material circumstances "in a manner reasonably clear and accessible to a prudent insurer" has driven a wave of subrogated claims. Mills & Reeve's analysis is that broker negligence in eliciting facts is now a clearer cause of action than before the Act.
How has the AR regime affected broker PI underwriting?
Materially. Post-PS22/11 the FCA has driven termination of more than 1,300 principal-AR relationships, restricted ten principal firms (four insurance brokers) in May 2023, and tightened ongoing supervision. Underwriters now ask detailed AR questions at renewal — number of ARs, oversight framework, complaints data. Some policies sub-limit or exclude AR-generated business.
How long should I buy run-off?
Six years is the FCA's standard expectation, mirroring the Limitation Act 1980. The cover cannot lapse without exposing former directors personally and breaching Part 4A permission wind-down conditions.
How does Consumer Duty affect my PI renewal?
Insurers now ask Consumer Duty questions at renewal — implementation framework, Fair Value Assessments, vulnerable customer policy, distribution chain governance. Weak AR oversight is a specific risk vector the FCA has flagged for 2026.
How do I notify a circumstance to my insurer?
Claims-made policies require notification as soon as practicable after the firm becomes aware. Late notification is the single most common reason a claim fails to be covered. The broker's compliance officer and the firm's professional indemnity broker should have agreed protocols for handling notifications.
Related guides
- Insurance brokers sector page — speak to a broker
- IFAs PI — IPRU-INV 13.1 and the FOS ceiling
- Solicitors PI — SRA Minimum Terms
- Accountants PI — ICAEW, ACCA, AAT minima
Author: Apex Insurance Brokers Limited. Authorised and regulated by the Financial Conduct Authority, firm reference number 724952. This guide is general information about Professional Indemnity Insurance for UK insurance brokers and is not advice tailored to any individual firm's circumstances. For advice on your own renewal please speak to a broker — see our contact page. Last reviewed: June 2026.