1.This Article shall apply to AIFMs that choose to cover professional liability risks through professional indemnity insurance.
2.The AIFM shall take out and maintain at all times professional indemnity insurance that:
(a)shall have an initial term of no less than one year;
(b)shall have a notice period for cancellation of at least 90 days;
(c)shall cover professional liability risks as defined in Article 12(1) and (2);
(d)is taken out from [F2a UK or non-UK] undertaking authorised to provide professional indemnity insurance, in accordance with [F3the law of the United Kingdom or of any part of the United Kingdom or the law of a third country];
(e)is provided by a third party entity.
Any agreed defined excess shall be fully covered by own funds which are in addition to the own funds to be provided in accordance with [F4rules 11.3.1(2) and 11.3.2 of the Interim Prudential sourcebook for Investment Businesses].
3.The coverage of the insurance for an individual claim shall be equal to at least 0,7 % of the value of the portfolios of AIFs managed by the AIFM calculated as set out in the second subparagraph of Article 14(2).
4.The coverage of the insurance for claims in aggregate per year shall be equal to at least 0,9 % of the value of the portfolios of AIFs managed by the AIFM calculated as set out in the second subparagraph of Article 14(2).
5.The AIFM shall review the professional indemnity insurance policy and its compliance with the requirements laid down in this Article at least once a year and in the event of any change which affects the policy’s compliance with the requirements in this Article.
Textual Amendments
F2Words in Art. 15(2)(d) substituted (31.12.2020) by The Alternative Investment Fund Managers (Amendment etc.) (EU Exit) Regulations 2019 (S.I. 2019/328), regs. 1(3), 23(14)(a)(i) (as amended by S.I. 2019/325, regs. 1(3), 58); 2020 c. 1, Sch. 5 para. 1(1)
F3Words in Art. 15(2)(d) substituted (31.12.2020) by The Alternative Investment Fund Managers (Amendment etc.) (EU Exit) Regulations 2019 (S.I. 2019/328), regs. 1(3), 23(14)(a)(ii) (as amended by S.I. 2019/325, regs. 1(3), 58); 2020 c. 1, Sch. 5 para. 1(1)
F4Words in Art. 15(2) substituted (31.12.2020) by The Alternative Investment Fund Managers (Amendment etc.) (EU Exit) Regulations 2019 (S.I. 2019/328), regs. 1(3), 23(14)(b) (as amended by S.I. 2019/325, regs. 1(3), 58); 2020 c. 1, Sch. 5 para. 1(1)
Textual Amendments
F1Words in Ch. 2 Section 3 heading omitted (31.12.2020) by virtue of The Alternative Investment Fund Managers (Amendment etc.) (EU Exit) Regulations 2019 (S.I. 2019/328), regs. 1(3), 23(11) (as amended by S.I. 2019/325, regs. 1(3), 58); 2020 c. 1, Sch. 5 para. 1(1)