Regulator IRDAI has come out with guidelines on standard professional indemnity policy for insurance intermediaries, including brokers, corporate agents and web aggregators.
The guidelines issued by the Insurance Regulatory and Development Authority of India (IRDAI) will come into effect from July 1.
Professionals and professional entities may be sued by their clients for errors or negligence during the course of their professional duties, as per the guidelines.
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 breach of professional duty.
As per the guidelines, every general insurer should endeavour to offer the standard professional indemnity for insurance brokers, corporate agents, web aggregators and insurance marketing firms.
On policy period, the guidelines said: “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 certificate of registration.”
The premium rates will be determined by the insurers depending upon various risk factors and its board approved underwriting policy.
Insurance intermediaries engaged in solicitation and distribution of insurance products are required to take professional indemnity insurance policies.