Professional indemnity policy for insurance intermediaries: IRDAI new guidelines, implementation date, policy period, premium rate and more
The Insurance Regulatory and Development Authority of India (IRDAI) has announced new guidelines on standard professional indemnity policy for insurance intermediaries, such as insurance brokers, corporate agents, web aggregators and insurance marketing firms.
The Insurance Regulatory and Development Authority of India (IRDAI) has announced new guidelines on standard professional indemnity policy for insurance intermediaries, such as insurance brokers, corporate agents, web aggregators and insurance marketing firms. The new guidelines issued by the IRDAI will come into force from July 1, 2021.
A professional indemnity policy is a liability insurance product that protects individuals giving professional advice and professional entities against negligence claims by their clients for errors and omissions. It covers financial loss suffered by the clients resulting from a breach of professional duty.
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According to the guidelines, professionals and professional entities may be sued by their clients for errors or negligence during the course of their professional duties.
Similarly, every general insurer should endeavour to offer the standard professional indemnity for insurance brokers, corporate agents, web aggregators and insurance marketing firms, it states.
Liabilities covered in the new guidelines are policies issued shall cover all damage resulting from any claim for duty of the insured, fraud and dishonesty of any employee, which the insured becomes legally liable to pay arising out of claims first made in writing against the insured during the policy period including legal costs and expenses incurred with prior consent of insurers, subject always to the limits of indemnity and other terms, conditions and exceptions of the policy. Also, the ratio of the limit of indemnity any one accident to any one year shall not exceed 1:1.
On policy period, IRDAI has mentioned in the guidelines that “An insurer shall issue an annual policy to the insurance intermediary. The insurer shall endeavour to issue long-term policy valid for the period of the certificate of registration.”
The premium rates shall be determined by the insurers depending upon various risk factors and its board-approved underwriting policy, IRDAI has added. It has also mentioned that the business turnover/ fees figure, wherever required shall be accurately assessed and declared by the proposer at the inception of the policy.
Insurance intermediaries engaged in solicitation and distribution of insurance products are required to take professional indemnity insurance policies.
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