Changes to the ICAEW minimum terms
Since 1 January 2014 the ICAEW has amended its minimum insurance terms for its members, albeit in two very specific ways.
The Lord Chancellor has approved the ICAEW’s application to be a regulator of reserved probate services and a licensing authority for Alternative Business Structures. Parliament accordingly designated the ICAEW as such in July 2014, when it also approved an order giving effect to the designation that should become law in August 2014. The ICAEW expects to be able to accept ABS applications from the beginning of September 2014.
For an accountancy firm to be licensed to conduct probate work a principal will need to be authorised after attending a training course and passing an assessment. In preparation for this (the ICAEW hopes to accept applications from around July 2014), the new minimum terms incorporate clauses in respect of probate work to require cover of at least £500,000 per claim and to cover accountants for complaints to the Legal Ombudsman (to whom clients can complain about probate work) by making the definition of “ombudsman” generic. As for this change to accountants’ business generally, when assessing risk insurers may wish to seek information from prospective insureds as to whether they will conduct probate work.
The minimum terms also incorporate an ‘insurance mediation’ clause dealing with the special levels of insurance for any firm that undertakes such work, namely a minimum of €1,120,200 for each claim and €1,680,300 per annum for all claims. This is for firms that would be licensed by the ICAEW under the Designated Professional Body arrangements or authorised by the Financial Conduct Authority. Whilst these arrangements have been in place for some time, they have now been formally incorporated into the policy wording (so that firms doing such work need not ask insurers for an extension of cover any longer).
There are also corresponding changes to the ICAEW Professional Indemnity Insurance Regulations.
For further details please contact Jonathan Hyde Senior Associate, Insurance on +44 (0)20 7280 8927.
This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.