What is happening in the Professional Indemnity Insurance market for Financial Advisers?

For the last two years there has been a lack of competition amongst Insurers for Financial Advisers’ Professional Indemnity Insurance (PII). This is for several reasons: the combination of a shortage of Insurance capacity (following poor results in 2017 & 2018); the effect of the increase in FOS limits for advice post April 2019; the overall concern over DB transfer activity; and, the uncertainty in the UK economy (previously expected to be a problem with a potentially bad Brexit deal for the UK causing poor economic outcomes). 

Now the threat is a global recession as trade is being significantly impacted while individual countries are in lockdown.  

Insurers are obviously facing challenges on a number of fronts and, as in any commercial market place, businesses choose where to deploy their capital and resources. This has been highlighted in PII for Financial Advisers for many years with Insurers entering and exiting this market place with remarkable frequency for over 20 years.   

How to avoid possible delays to your renewal 

Ensure all renewal documentation is clear and legible

In these difficult times Insurers are generally operating well. Underwriters, while working from home, have been able to turn work around quite quickly but what has become immediately obvious is that unclear or confusing data is causing considerable difficulties. Normally, Underwriter and Broker meetings are face-to-face and there is the opportunity to smooth out issues such as these swiftly. Whereas now the Underwriters are more reliant on the information that has been sent. 

To ensure your insurance renewal is processed as efficiently as possible please make sure that all information sent through is clear and legible. If Howden is your Broker, your account handler will obviously check this on receipt of the proposal form and marry it with the other information which allows us to make the submission to the Insurers.  

Start your renewal process as early as possible

Insurers have been keen to avoid extending policies recently but in the current environment they have toughened this stance further.   Extensions are only likely to be given in exceptional circumstances.    

In order to eliminate the need for any extensions to policies please try to send your Broker your renewal documentation in plenty of time.

Completion of the proposal form is vital 

We have received a number of questions from clients about whether the proposal form can be circumvented during these testing times. The simple answer is that the Insurers still need the information on which to base their rating criteria, perhaps more so now than ever. So yes, Brokers will still need full submissions.   

Please look out for our new update for Financial Advisers in which we will discuss Insurer expectations of working from home protocols and the repercussions of checking process oversights.