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Proposal form guides
A plain-English guide to the questions on Apex’s professional indemnity proposal form for insurance brokers: what each section is for, why underwriters ask, and where brokers most often go wrong on their own cover.
Part of: Professional indemnity insurance at Apex
In short
An insurance broker’s PI proposal form is the firm’s own presentation of risk, and the Insurance Act 2015 duty of fair presentation applies to it just as it does to clients. Underwriters use it to establish who is insured, which classes and territories the income comes from, whether the firm holds delegated authority, how money is controlled and what has gone wrong before. The answers that most often cause trouble concern predecessor businesses, historic financial services work, binders and unreported circumstances. Answer from records, and disclose anything material that no question covers.
Brokers spend their working lives explaining fair presentation to clients. The same duty applies to your own PI. Under the Insurance Act 2015 the firm must disclose every material circumstance it knows or ought to know, clearly, whether or not a question asks about it. Underwriters also tend to hold a broker’s own presentation to a higher standard: you know what a material fact looks like. Our page on why the proposal form matters covers the general principle.
Broker PI responds mainly to claims that the firm got a client’s cover wrong: the wrong policy, a missed disclosure, a lapsed renewal, an uninsured loss. Many policies also respond to the firm’s own losses through employee dishonesty, which is why the form asks about cash and cheque controls. Our insurance brokers’ PI guide and broker E&O claim examples give the wider picture.
What to have to hand: FCA register entry and permissions; trade body memberships; current and past principals; commission and fee income by territory; last year’s split by class and activity; the largest single client income and largest sum insured placed; details of binders and underwriting agencies used; and current policy details, including the retroactive date.
Expect the full name of the proposer, including all trading styles and every company to be insured, the address, the date trading began, predecessor practices, and any change of ownership, amalgamation or takeover at any time.
Consolidation means many broking firms carry the history of books they have bought. PI is claims-made, so a complaint about a policy placed by a predecessor years ago can arrive at the current firm, depending on how the acquisition was structured. The underwriter needs to know which predecessors are to be covered and whether their run-off was dealt with at the time.
Note the words “at any time in the past”: the ownership question has no cut-off. List every change, even if it seems old enough not to matter.
Current principals, past principals for whom cover is wanted, headcount of principals, qualified staff and others, and whether cover is needed for principals’ work at previous firms.
Past principals matter because a retired or departed director can be named in a claim about work done while at the firm. Previous business activities are a separate question: cover for what a principal did at another broker is not automatic, and if it is wanted it has to be asked for. The ratio of qualified to other staff is a rough guide to technical depth and supervision.
FCA authorisation and reference number, permissions held, Lloyd’s broker status and trade body membership.
Permissions tell the underwriter what the firm is able to do, which may be more than it actually does. If you hold investment permissions you no longer use, say so rather than leaving the underwriter to assume the worst. Lloyd’s broker status points to larger and more complex placements. Trade body membership is not a substitute for controls, but accreditation can help show how the firm is run. If you are an appointed representative rather than directly authorised, the cover position is different; our page on directly authorised versus AR status explains why.
Commission and fee income by territory for last year, this year and next; the largest and average income from one client; changes in geography; last year’s split by class and activity, totalling 100%; past and expected changes of activity; run-off for financial services no longer transacted; and the largest sum insured placed.
As the form’s own help text says, the split drives underwriting more than the headline figure. Personal lines, SME commercial, large corporate, specialist classes and Lloyd’s placing carry different exposures. Take the split from the accounts or broking system, not memory. The estimates for this year and next are representations of expectation and must be made in good faith.
The largest sum insured is the severity question. A placement error on a very large risk can produce a claim far out of proportion to the commission earned, which is why the form means the overall sum insured on any class, including liability limits, not just material damage.
The financial services questions catch brokers that once did life, pensions or investment business. That work can generate complaints long after it stopped, and it is priced differently. Give the last year it was transacted, the income then, the products, peak adviser numbers and whether any defined benefit transfer advice was given. A separate questionnaire may follow.
Whether you hold any binding authority, with insurer, class, limits, territory, premium and peak aggregate; whether delegated authority income exceeds 30% of total commission and fees; whether you place with underwriting agencies and have checked their authority; associations with other businesses; and subcontracting.
Binders change the risk. When a broker accepts business on an insurer’s behalf, errors in pricing, writing risks outside the authority or ignoring referral rules create liabilities to the insurer as well as to clients. The 30% question measures how far the business as a whole depends on delegated authority. Any binder needs its own questionnaire; see our page on binding authorities and PI.
The underwriting agency question looks at the opposite position. Placing with an agency whose authority has lapsed, or does not extend to the class, can leave the client uninsured and the broker liable. Keep evidence of the checks you make. Associations with other businesses point to conflicts, and subcontractors who need indemnifying under your policy must be named.
Whether staff are told never to sign proposal forms for clients; references for staff handling money; fraud losses in six years; two signatures on cheques over £25,000; independent checks of cash and petty cash; independent reconciliation of bank statements; and daily banking.
The first question goes to the heart of broker E&O. A broker who signs a client’s proposal, or submits answers the client has not checked, is exposed when the insurer later reduces or refuses a claim because those answers were wrong. The client’s next call is to the broker. Make sure the instruction is written down, and that staff know it applies to renewal declarations and online quote journeys as well as paper forms.
The rest are classic fidelity controls: separation of duties, independent checks and prompt banking. They matter where the policy covers the firm’s own losses through dishonesty, and they are tested after a loss. If the firm never handles cash or rarely writes cheques, say so in the notes rather than answering “no”.
Expect current insurer, broker, limit, excess, premium and retroactive date; any claim against the firm or a past or present principal, successful or not; losses suffered by the firm; steps taken to prevent recurrence; circumstances after full enquiry; and any declined, cancelled or refused insurance.
The circumstances question has three parts, and the third is wide: anything that might affect consideration of the proposal. Think beyond formal complaints: a client’s claim declined for non-disclosure that the client may blame on you, a renewal that lapsed without confirmation, an insurer in difficulty with your clients’ business on its books. Include claims settled within the excess or paid by the firm to keep a client relationship. Make a documented enquiry of every principal and account handler before signing. A circumstance usually belongs with your current insurer as a notification before renewal, then on the form too.
Give the retroactive date exactly as it appears on the current schedule; a recent date means earlier placements are not covered.
Limit, excess and start date. The FCA sets minimum PI requirements for insurance intermediaries in MIPRU 3.2, including minimum limits for each claim and in the aggregate. Treat the minimum as a floor. Insurer agency agreements, client expectations, the largest sum insured you place and any binder exposure are better guides to the right figure. Check, too, whether the limit applies to each claim or in the aggregate: an aggregate limit can be used up by one bad year.
A higher voluntary excess usually lowers the premium, but the firm pays it on every claim, and a run of small errors can make a high excess expensive.
The declaration is given by a director, partner, principal or compliance officer. Read it: it confirms the answers are true after enquiry and usually commits the firm to telling insurers about material changes before cover starts. You would tell a client the same thing.
Yes. A broker's PI policy is a non-consumer contract, so the Insurance Act 2015 duty applies in full: disclose every material circumstance you know or ought to know, whether or not a question asks about it. Underwriters generally expect a broker to present its own risk at least as well as it would a client's.
Because PI is claims-made. Complaints about past life, pensions or investment advice can arrive long after the work stopped, and they are answered by the policy in force when they are made. The insurer needs to know the volume and type of that business to decide whether, and on what terms, to cover it.
Yes. Any binding authority means the firm is accepting risks on an insurer's behalf, which creates liabilities to that insurer as well as to clients. Disclose it, however small, and expect a separate questionnaire. See our page on binding authorities and PI.
The requirements are in MIPRU 3.2, which sets minimum limits for each claim and in the aggregate and has been revised over time, so check the current rule rather than relying on an old figure. Treat it as a floor: insurer agreements and the size of the risks you place usually point higher.
If it might give rise to a claim against the firm, yes. Notify it to your current insurer as a circumstance before renewal, then disclose it on the form. Waiting for the client to complain risks a late notification and a gap between policies.
No. It walks through the questions on Apex's own online proposal form for insurance brokers and explains why underwriters ask them. Insurers' forms differ in wording, order and definitions, and nothing here reproduces any insurer's form.
Start your proposal online and save it as you go, or upload a completed proposal from your current broker on the first page. Or call 0117 325 0027.
Start your proposal Request a callbackApex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority. Registered in England and Wales, company number 07014570. This page is general information, not advice on your individual circumstances. It explains the kinds of question asked and does not reproduce any insurer's form or guarantee that cover will be available or on what terms.
