4.1 Firms must take out and maintain professional indemnity insurance

(1) Subject to Rule 4.1(2), an Authorised Firm must take out and maintain professional indemnity insurance cover that is appropriate to the nature, scale, complexity and risk profile of its business and activities in accordance with this Chapter 4.

(2) An Authorised Firm need not take out or maintain professional indemnity insurance if the AFSA gives written approval for some other form of financial protection, such as a guarantee provided by another Authorised Firm, that the AFSA considers to provide at least the same financial strength and legal certainty as professional indemnity insurance otherwise required under this Chapter 4.

4.2 Who is suitable to provide professional indemnity insurance?

(1) Before an Authorised Firm takes out or renews a professional indemnity insurance policy with an insurer, the Insurance Intermediary must be satisfied, on reasonable grounds after conducting an appropriate assessment, that the insurer is a suitable Person to provide the insurance policy to the Insurance Intermediary and that the insurer is financially sound and capable to meet any liabilities related to claims.

(2) If, at any time after the Authorised Firm has taken out or renewed a professional indemnity insurance policy with an insurer, the AFSA considers that the insurer is, or is likely to become, unsuitable to provide the insurance policy, the AFSA may, by written notice given to the Authorised Firm, require the Authorised Firm to cancel the insurance policy and take out equivalent professional indemnity insurance with another insurer in accordance with this Rule.

(3) If the Authorised Firm is given a notice under Rule 4.2(2), the Authorised Firm must comply with the notice within:

1. (a) the time stated in the notice; or
2. (b) if the AFSA allows additional time to comply with the notice, the additional time.

4.3 Requirements for professional indemnity insurance policies

(1) A professional indemnity insurance policy taken out or renewed by an Authorised Firm for this part must make provision for:

1. (a) an appropriate level of cover in relation to claims for which the Insura Authorised Firm may be liable as a result of its conduct or the conduct of its Employees and agents, taking into account the aggregate limit of indemnity, the limit of indemnity for individual claims, the excess that applies in relation to any individual claim under the policy, and the extent to which the benefit of the policy is shared with any other entity;
2. (b) appropriate cover in relation to legal defence costs;
3. (c) continuous cover for claims arising from work carried out from when the Authorised Firm was Authorised to conduct Insurance Intermediation or Insurance Management in or from the AIFC; and
4. (d) awards made against the Authorised Firm under any applicable consumer protection or ombudsman scheme.

(2) The Authorised Firm must not take out professional indemnity insurance that makes provision for the payment of fines imposed by the AFSA.