"Professional indemnity insurance is becoming an increasingly worrying issue across all disciplines"
The PI market has seen a large contraction in the number of insurers operating within it and increasing premiums in recent years.
The Beaufort Group recently warned that a "fragmented and barely functioning" PI market is the biggest threat to adviser businesses in 2020.
Its chairman, Simon Goldthorpe, said there was now clear fallout from the move by insurers to step back from this market.
Goldthorpe said: “As a result, we now have a situation where firms that are already insured are struggling to change insurer, and the best an adviser business can often do is hope that its existing insurer will renew.
“There are now so few insurers left it may not even really be considered a market. Those that have remained can just cherry-pick what business they want to do, and the industry is not far off the situation where there are no insurers left to cover IFAs at all.”
“IFA firms used to be able to insure themselves for around 1-1.5% of their turnover. But now, that figure looks more like 2.5-3%. This could happen to good quality firms that have a fairly low-risk profile.
“Where that leaves the rest of them is either facing higher premiums or having policies with so many restrictions that they are basically self-insured.”
FIBA announced its own block PI scheme for members, in partnership with The PI Desk, in early 2019.
Adam Tyler, executive chairman of FIBA, said: “We always planned our PI product as a major plank of our offering to members and prospective members. As it has turned out, the changing landscape and the overall trend of increasing premiums in recent years, has seen adviser firms approach us, which would not normally have been seen as the most natural candidates for FIBA membership.
“Our main focus is on specialist finance in the commercial arena and we are keen to assist those who are already involved in the sector or thinking of expanding their business activities into the commercial arena. Our PI scheme is therefore an increasingly important benefit for members and those who want to join us, as well as providing the necessary protection for them and their customers.
"Professional indemnity insurance is becoming an increasingly worrying issue across all disciplines, but more commercial broking firms are finding that having access to the umbrella of the FIBA block policy is a welcome bonus as well as a great relief.”
