Research reveals increased insurance costs for one in three IFAs

Nearly one third of advisers have seen the cost of their PII insurance rise over the last year according to research from the Association of Professional Financial Advisers (APFA).

Over half (52{0a6a65c996ed4169444354e707b897cdb00dbefc1d0429e8febb9bf11027ba53}) of IFAs have received an offer of the same, or lower, premiums.More areas of advice, such as VCTs, EIS, pension transfers and drawdown are seen as ‘red flags’ by insurers says trade newspaper, Financial Adviser. Chris Hannant, Director General APFA, blames previous high-profile miss-selling cases. “These findings offer further evidence of a hardening insurance market for advisers, driven by a compensation culture and the legacy of events like Arch cru, Keydata and Catalyst,” he said.

NMG Consulting surveyed a sample of 271 advisers on behalf of APFA. 31{0a6a65c996ed4169444354e707b897cdb00dbefc1d0429e8febb9bf11027ba53} said their premiums had risen since last year, with an average premium increase of 14{0a6a65c996ed4169444354e707b897cdb00dbefc1d0429e8febb9bf11027ba53}. 44{0a6a65c996ed4169444354e707b897cdb00dbefc1d0429e8febb9bf11027ba53} of advisers paid the same premium and 8{0a6a65c996ed4169444354e707b897cdb00dbefc1d0429e8febb9bf11027ba53} were offered a reduction. Further details of the survey have been reported by APFA, Money Marketing and Financial Adviser.

The findings show how important it is for IFAs to present their business clearly to insurers says James Burgoyne, Director – Claims & Technical , Brunel Professional Risks. “We are seeing signs of a hardening insurance market for IFAs. That is why we work so closely with our clients to make sure that we fully explain their businesses to insurers. Insurers offer their most competitive premiums to well-managed businesses, where the risks are recognised and clear procedures are followed.”