IRDA issues guidelines for professional indemnity policy for insurance intermediaries
The guidelines issued by the Insurance Regulatory and Development Authority (IRDA) will come into effect from July 1, 2021.
According to the guideline, professionals and professional entities can be prosecuted by their clients for errors or negligence in the course of their professional duties.
A professional indemnity policy is a liability insurance product that protects professional advisory individuals and professional entities from claims of negligence by their clients for errors and omissions. It covers financial loss caused to clients as a result of breach of professional functions.
As per the guidelines, every general insurer should endeavor to offer standard professional indemnity to insurers, corporate agents, web aggregators (distributing information on insurance products of various insurance companies) and insurance marketing companies.
As per the guideline, “Insurers shall fix the premium on the basis of risk…”.
Insurance intermediaries engaged in lobbying and distribution of insurance products are required to obtain professional indemnity insurance policies.
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