Insurance brokers spend their working lives arranging cover for other people. The rulebook governing their own professional indemnity is easy to overlook — until a claim, a renewal or an FCA check turns it into the most important document on the desk. This entry sets out what MIPRU 3 requires of an FCA-authorised intermediary, how the numbers translate into a sensible sterling programme, and how the appointed representative reforms in PS22/11 have changed the way a principal's PI must respond. Readers wanting a general introduction should start at the insurance brokers' PI pillar.
MIPRU is the Prudential Sourcebook for Mortgage and Home Finance Firms and Insurance Intermediaries. It is one of the shorter FCA Handbook chapters and one of the few that applies specifically to firms whose business is intermediation rather than underwriting. Chapter 3 sets out the professional indemnity insurance requirements those firms must meet as a condition of their Part 4A permission.
The purpose is narrow: customers of an intermediary should have some capital standing behind the firm if it makes a mistake — a placement error, a claims handling failure, a piece of poor advice. The FCA does not police the wording line by line but expects the firm to hold cover meeting the chapter's minima at all times and to produce evidence on request. MIPRU 3 sits alongside MIPRU 4 (capital resources) and MIPRU 2 (systems and controls) as the prudential floor beneath the intermediary sector.
MIPRU 3.2.7R is the operative rule. It reflects the minimum PI limits set at European level under the Insurance Distribution Directive, carried across into the FCA Handbook and retained on exit. The limits are expressed in Euros because they derive from a Directive; they are periodically indexed by EIOPA and the FCA updates the Handbook figures accordingly.
At the time of writing, MIPRU 3.2.7R requires an insurance intermediary to hold cover of at least EUR 1,300,380 per claim and EUR 1,924,560 in the aggregate, or 10 per cent of annual income capped at £30 million, whichever is higher.
Two caveats. The EUR amounts are indexed on an EIOPA cycle and the Handbook version at the date of any renewal is the source of truth — brokers should read the current MIPRU 3.2.7R text before instructing an underwriter. The 10 per cent limb is calculated on the MIPRU 3 definition of annual income (commission, fees and other regulated-activity income); the £30 million ceiling only bites on the largest intermediaries.
The rule is a floor, not a ceiling. Nothing in MIPRU prevents a broker from buying more, and several reasons often push firms above the minimum — high-value placements, multiple ARs, a long historic tail, or exchange-rate movement.
Most UK broker PI policies are written in sterling. MIPRU 3 is written in Euros. That mismatch matters at two moments.
At placement, a broker taking out cover at exactly the sterling equivalent of the Euro minimum on 1 October will find, at 31 December, that the pound has moved and the sterling limit no longer converts to the required Euro floor. The FCA expects the firm to manage that risk — either by pricing in a headroom cushion or by monitoring the exchange rate and topping up if cover drifts below the statutory limit. Well-drafted policies address the mismatch by referencing the MIPRU floor explicitly, or by including a "regulatory minimum" endorsement that keeps the sterling equivalent above the Euro figure. Consumer Duty adds an overlay: PRIN 2A does not amend MIPRU 3, but a firm whose sterling limit falls below the Euro minimum, however briefly, is not delivering the outcome the rulebook was written to secure.
MIPRU says how much cover a broker must hold. It does not say what that cover has to respond to — that is a matter of wording negotiated between the intermediary and its PI insurer. Broker PI is typically scoped to include errors in placement (wrong wording chosen, exclusions missed, limit set too low, cover not incepted in time), errors in claims handling (wrong insurer notified, notification delayed past a policy time-bar, poorly presented notification giving avoidance grounds), errors in advice (wrong cover recommended, foreseeable risk missed, demands-and-needs statement misrepresenting the client's position) and errors in ancillary services (fee arrangement disputes, TOBA drafting problems, delegated authority arrangements gone wrong).
Wording variation matters. A broker with a delegated authority, a scheme or an AR network has an activity mix that many off-the-shelf wordings will not cover cleanly. Reading the definitions of professional services alongside the exclusions is the only way to know what the policy actually responds to.
PS22/11, "Improvements to the Appointed Representatives regime", published in August 2022 with rules commencing on 8 December 2022, reshaped how principal firms must supervise their ARs. It responded to years of concern about principals treating ARs as a fee stream rather than a supervised network. The reforms bit hardest on general insurance and mortgage intermediation, where the AR model is common.
Three consequences flow through to PI. First, principals must gather and report far more data on their ARs — revenue, complaints, notifications, business volumes, changes in senior management. A firm that could once run a network on light-touch oversight now generates a documented supervision trail that will be scrutinised by underwriters at renewal.
Second, principals bear direct responsibility for the outcomes their ARs deliver to customers. Consumer Duty applies to the principal in respect of the AR's regulated activity. If an AR misadvises a retail client, the customer's route of recourse is against the principal, and the principal's PI must respond.
Third, wordings have shifted. Some broker PI insurers now include AR activity within the definition of professional services without additional endorsement; others impose sub-limits for AR-linked claims, exclude particular categories, or require notification of any new AR appointment. The AR extension is one of the most important sections of a modern broker PI policy and one of the least standardised. Firms weighing structures should also look at the directly-authorised versus AR comparison.
Insurance brokers spend a great deal of time explaining the duty of fair presentation to commercial clients. The same duty applies to the broker as a commercial buyer of its own PI.
Section 3 of the Insurance Act 2015 requires the insured, before entering a non-consumer contract, to make a fair presentation of the risk — every material circumstance the insured knows or ought to know, or enough to put a prudent insurer on notice to make further enquiries. For a broker that includes every AR relationship, historic claims, notifications and circumstances, the firm's complaints and DISP returns, FCA correspondence including supervisory letters and s166 appointments, and the firm's financial position particularly on shareholder or permission-scope changes.
Under-disclosure is not a paperwork slip. Section 8 of the Act allows an insurer to avoid a policy from inception for a deliberate or reckless breach, and to apply proportionate remedies for a non-deliberate breach — higher premium, exclusions applied retrospectively, or a proportionate reduction in claim payment. A broker who discovers at claim time that its own PI has been avoided for non-disclosure has both a claim and a MIPRU 3 breach.
The Financial Ombudsman Service can consider complaints against FCA-authorised firms, including insurance intermediaries, from eligible complainants. That definition covers most retail clients, most micro-enterprises, and some small businesses and charities up to defined thresholds.
The compensation limit is periodically reviewed by the FCA. At the time of writing the FOS award limit for complaints referred during 2026 is £430,000 for acts or omissions on or after 1 April 2019, with a lower limit for older acts. Firms should check the current published figure at the FOS website before assuming any specific number.
Two features matter for PI structuring. The FOS applies fair-and-reasonable standards rather than strict legal duty — a firm can win in court and still lose at the ombudsman. And complaints can be lodged years after the underlying advice: the six-year long-stop applies to some acts but not all, and a retail client only needs to be within three years of when they knew or ought to have known they had grounds. Broker PI must respond to FOS awards up to the policy limit long after the retainer ended.
MIPRU 3 requires cover during authorisation. The FCA expects continuous cover on cancellation of Part 4A permission as well — the tail of complaints and claims does not stop when the firm hands back its authorisation.
The market convention for insurance intermediaries is six years of run-off cover following the last regulated activity. That figure lines up with the standard limitation period for contract and negligence claims in England and Wales and with the FCA's expectations for firms exiting the sector. Longer periods — ten years or unlimited — are appropriate where the firm has advised on long-tail matters or expects Consumer Duty-driven complaints beyond the six-year window.
Run-off is only meaningful if the wording preserves cover on the same basis as the expiring policy. Retroactive date preservation, aggregation and AR extension all need to survive into it. A broker retiring without checking the run-off wording line by line can find, years later, that a substantial claim is uninsured. Fuller detail is in the run-off insurance guide.
Broker PI is a specialist market. A handful of underwriters write the class at scale — some at Lloyd's, some in the London company market, and a smaller number of specialist MGAs. Wording differences are meaningful and are widening as underwriters respond to PS22/11, Consumer Duty and the run of cyber-related notifications.
The primary layer typically sits up to £2 million or £5 million with excess layers stacked above for larger intermediaries. The excess-layer market has thinned recently and pricing has been volatile as reinsurance treaty terms moved. Firms placing above £10 million total limit should expect a broker-of-brokers process; the insurer-exit playbook gives context on how quickly capacity can move.
Retroactive date preservation. A drift between renewals leaves a gap through which historic acts fall. Every renewal should preserve or improve the retroactive date — detail in the retroactive date reference.
AR extension wording and sub-limits. Not standard across the market. Some wordings cover ARs on the same terms as the principal; others carry a sub-limit, a higher excess or an exclusion for particular products. A broker adding an AR mid-term without notifying the PI insurer risks a coverage argument at claim.
Consumer Duty carve-outs. A small but growing number of wordings restrict Consumer Duty-driven complaints on the basis that the Duty extends regulated activity beyond what the underwriter originally rated. Flag them in any wording review — background in the Consumer Duty explainer.
Dishonesty of employees or directors. Standard broker PI covers innocent partners for the dishonesty of another, but wordings vary on whether the dishonest individual is covered up to the point of dishonesty. Sole-director firms need to read this carefully.
Aggregation of related claims. A pattern of similar placement errors across a scheme, delegated authority arrangement or AR network can be aggregated into a single claim drawing on one limit rather than multiple — see aggregation clauses across regulators.
Notification triggers. Broker PI is written claims-made. The circumstances-notification wording is the single point at which coverage most often unravels.
Apex Insurance Brokers Limited is FCA-authorised (FRN 724952) and places professional indemnity insurance for other FCA-authorised firms, including insurance intermediaries buying their own PI. The firm is director-led by Matthew Bartlett, who holds SMF3, SMF16 and SMF17, and advises on the MIPRU 3 mechanics, the PS22/11 AR extension considerations, and wording variations between primary and excess-layer broker PI insurers. Placements are handled on a named-adviser basis with wording review as part of the placement, not an optional extra. Firms can start at the insurance brokers' PI pillar or contact the firm directly.
MIPRU 3 is the FCA Handbook chapter setting out the professional indemnity insurance requirements for insurance intermediaries within the Prudential Sourcebook for Mortgage and Home Finance Firms and Insurance Intermediaries. It requires FCA-authorised intermediaries to hold PI cover at defined minimum limits throughout their authorisation and to be able to evidence that cover to the regulator on request.
MIPRU 3.2.7R requires cover of at least EUR 1,300,380 per claim and EUR 1,924,560 in the aggregate (or 10 per cent of annual income capped at £30 million, whichever is higher). The Euro figures are periodically indexed and the Handbook text at the date of any renewal is the source of truth — firms should check the current MIPRU 3.2.7R version before instructing an underwriter.
It depends on the wording. Broker PI typically includes an AR extension bringing the principal's cover across to acts and omissions of its ARs, but the extension is not standardised. Sub-limits, exclusions for particular product categories, notification requirements on new appointments and separate excesses are all common. The AR extension is one of the sections most worth reading in detail during a wording review.
PS22/11 raised the FCA's expectations of principal firms — more AR data collection, active supervision of the AR's regulated activity, direct principal responsibility for customer outcomes under the Consumer Duty. Underwriters now ask harder questions at renewal about the AR supervision framework, and the principal's PI must respond to a wider range of AR-linked claims than pre-2022 wording assumed.
PRIN 2A applies to FCA-authorised firms and shapes the outcomes the regulator expects. PI is one of the arrangements that supports those outcomes — a firm whose PI would not respond to a foreseeable claim is not delivering the Duty's price-and-value or consumer-support outcomes. Read the wording for any Consumer Duty carve-outs and challenge them at renewal.
The market convention is six years of run-off cover after the last regulated activity, aligning with the standard limitation period for negligence claims in England and Wales and with the FCA's expectations for firms exiting the sector. Longer run-off is appropriate where the firm has advised on long-tail matters, where Consumer Duty complaints are foreseeable, or where a substantial AR network was operated. Wording preservation across the transition matters as much as the length of the tail.
Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority. Firm reference number 724952.