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The Compensation (Claims Management Services) (Amendment) Regulations 2008

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Amendments to the Compensation (Claims Management Services) Regulations 2006

This section has no associated Explanatory Memorandum

3.  For regulation 21 (Directions about indemnity insurance) substitute—

Definitions for this Part

21.  In this Part—

“employee” means an individual who is employed or appointed by an authorised person in connection with that person’s business, whether under a contract of service or for services or otherwise; or whose services, under an arrangement between the authorised person and a third party, are placed at the disposal and under the control of the authorised person;

“insurance undertaking” means an undertaking, whether or not an insurer, which carries on insurance business which is the business of effecting or carrying out contracts of insurance;

“Zone A country” means—

(a)

any EEA State;

(b)

a country which is a full member of the Organisation for Economic Co-operation and Development; or

(c)

a country which is contained on a list published by the International Monetary Fund as being a country which has concluded special lending arrangements with the International Monetary Fund associated with the International Monetary Fund’s General Arrangements to Borrow;

except any country which is contained on a list published by the Regulator as being a country which has rescheduled its external sovereign debt.

Requirement to have professional indemnity insurance for persons who provide representation

21A.(1) This Part applies only to authorised persons who provide regulated claims management services within the meaning of Article 4(2)(e) of the Compensation (Regulated Claims Management Services) Order 2006(1).

(2) An authorised person who provides regulated claims management services in relation to claims prescribed by Article 4(3)(a) of the Compensation (Regulated Claims Management Services) Order 2006 must take out and maintain professional indemnity insurance, in accordance with this Part.

(3) That person must take out and maintain professional indemnity insurance from an insurance undertaking authorised to transact professional indemnity insurance in–

(a)a Zone A country;

(b)the Channel Islands, Gibraltar, Bermuda or the Isle of Man.

Minimum terms of professional indemnity insurance

21B.(1) The contract of professional indemnity insurance must—

(a)comply with the requirements in paragraphs (2) to (5);

(b)provide cover where an authorised person or an employee —

(i)represents a client in the course of providing or purporting to provide regulated claims management services; and

(ii)may be liable for their actions.

(2) The minimum level of indemnity in the contract of professional indemnity insurance must be–

(a)£250,000 for a single claim; and

(b)£500,000 for aggregated claims.

(3) Where the contract for professional indemnity insurance includes an excess, this must not be greater than £10,000 per claim.

(4) The contract for professional indemnity insurance must contain cover in respect of legal defence costs.

(5) The contract for professional indemnity insurance must provide for continuous cover for all claims —

(a)first made against the insured during the period of insurance; or

(b)made against the insured during or after the period of insurance and arising from claims first notified to the insurer during the period of insurance.

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