Regulation

MIPRU 3: a broker’s own professional indemnity insurance

In short: MIPRU 3 is the chapter of the FCA Handbook that requires an insurance intermediary to hold professional indemnity insurance on its own account, and prescribes what that cover must look like. It sets minimum limits of indemnity in euro, dictates what the policy must respond to, and caps how large an excess the firm may carry — with a tighter cap for firms that hold client money. The limits are a regulatory floor, not an assessment of what any particular broker actually needs.

Category: Regulation and compliance
Also known as: MIPRU 3, MIPRU 3.2, broker PI requirements, intermediary PI
Related concepts: FCA, professional indemnity insurance, aggregation by regulator

What MIPRU 3 is and who it applies to

MIPRU is the FCA’s Prudential sourcebook for Mortgage and Home Finance Firms, and Insurance Intermediaries. Chapter 3 deals with professional indemnity insurance. It applies to a firm with Part 4A permission for insurance distribution activity, home finance mediation activity or MCD article 3(1)(b) credit intermediation activity, subject to the exceptions the chapter sets out.

This is the broker’s own cover, not the client’s. It is the policy that responds if the intermediary gets something wrong: the cover not arranged, the material fact not passed on, the renewal missed. For a commercial buyer it is worth knowing that the requirement exists and what it does and does not guarantee.

The minimum limits of indemnity

MIPRU 3.2.7R sets the minimum limits for an insurance intermediary. For a single claim against the firm the minimum is €1,300,380. In the aggregate, the minimum is the higher of €1,924,560 or an amount equivalent to 10% of annual income, that amount being subject to a maximum of £30 million.

The figures are stated in euro in the rule itself, because they derive from the European minimum amounts that were carried into the UK Handbook, and they are indexed rather than round. Quoting them in sterling is an approximation, which is why the rule does not do it. The aggregate limit scaling with income is the more interesting half: a larger intermediary is required to carry more, up to the £30 million ceiling on the income-linked calculation.

What the policy has to cover

MIPRU 3.2.4R prescribes the shape of the contract. It must cover claims for which the firm may be liable as a result of the conduct of itself, its employees and its appointed representatives. It must carry at least the minimum limits, and an excess within the permitted level. It must include appropriate cover for legal defence costs. It must provide continuous cover in respect of claims arising from work carried on from the date the firm was given permission. And it must cover awards made against the firm by the Financial Ombudsman Service — a point brokers sometimes miss when buying a generic PI wording, because ombudsman awards are not court judgments and a policy that only responds to legal liability may not reach them.

The excess, and what changes when a firm holds client money

MIPRU caps how much risk the firm may retain. Where the firm does not hold client money or other client assets, the excess must not be more than the higher of £2,500 and 1.5% of annual income (MIPRU 3.2.11R). Where the firm does hold client money or other client assets, the excess must not be more than the higher of £5,000 and 3% of annual income (MIPRU 3.2.12R).

A firm may carry a higher excess than these levels, but if it does it must hold additional capital calculated in accordance with the tables in MIPRU 3.2.14, which scale with the firm’s income and the size of the excess. In other words the regulator will let a broker self-insure more of its own errors, but only if it has the balance sheet to stand behind the decision.

Why the minimums are a floor, not an answer

Two intermediaries can both comply with MIPRU 3 and carry wildly different real exposure. A firm placing a handful of small commercial packages and a firm handling large construction or financial-lines programmes face different worst cases entirely, and the regulatory minimum takes no account of the size of the risks passing through the book. Sensible brokers buy well above the floor, and buy on wording rather than on price: the retroactive date, the definition of professional business, and the aggregation clause all decide how far the limit actually stretches.

The same logic applies to any regulated profession that has a mandated minimum, from the SRA’s minimum terms for solicitors onwards. The number in the rulebook is the point at which the regulator stops objecting, not the point at which the firm is properly insured.

Frequently asked questions

What are the minimum PI limits for an FCA-regulated insurance broker?

MIPRU 3.2.7R requires at least 1,300,380 euro for a single claim, and in the aggregate the higher of 1,924,560 euro or an amount equivalent to 10% of annual income, subject to a maximum of 30 million pounds on the income-linked figure. The rule states the limits in euro.

Does holding client money change the requirements?

It changes the permitted excess. A firm that does not hold client money or other client assets may carry an excess of no more than the higher of 2,500 pounds and 1.5% of annual income. A firm that does hold client money or client assets may carry no more than the higher of 5,000 pounds and 3% of annual income.

Are the MIPRU minimum limits enough?

They are a compliance floor, not a risk assessment. The rule takes no account of the size or complexity of the business a particular intermediary places, so a broker handling large or technical programmes should expect to carry considerably more, and should look at the retroactive date and aggregation wording as closely as at the limit.

Related entries

This entry is part of the Apex Insurance Wiki. It is insurance information about how UK cover responds to the rules described, and is not legal or regulatory advice. Rules, limits and wordings change; the position stated is as at August 2026. Check the primary source and take your own professional advice before relying on any of it.

Buying your own broker PI?

If you are an intermediary reviewing your MIPRU cover, we can help you look past the minimum limit at the wording that decides how far it reaches.

Call 0117 325 0027 info@apexinsurancebrokers.co.uk

Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority (FRN 724952). This page is general information, not advice on a specific policy.

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