A number of Financial Planners have complained that PII is increasingly difficult to obtain at affordable rates, particularly in relation to DB transfer business.
The Personal Finance Society has been lobbying the FCA to take action although so far the regulator has declined to do so.
However, in a hint that it may act, in an update to its PI policy this week the regulator said while it believed the market was operating correctly at present it would take action if the market started to fail.
In a statement the FCA said: “We will continue to monitor the impact that Coronavirus has on all firms’ operational resilience, including insurers.
“Where we see evidence that insurers’ ability to process renewals is being affected, we will consider taking action in line with our approach to supervision.”
The watchdog said it recognised that the PII market is “evolving” and some firms were worried that the Coronavirus outbreak may affect their ability to renew PII “in a timely manner, impacting their operational resilience.”
The FCA is keeping a close eye on the situation, it said, and assessing how insurers have been reviewing their approach to underwriting. It is aware that PI insurers may seek more detailed information to understand the risk of a particular firm.
It has been in discussion with the International Underwriting Association (IUA) and its staff have spoken to individual PI insurers and brokers.
Following these discussions it says it believes that PII cover remains available in the market and “the crisis is not preventing insurers from undertaking the renewals process.”
Advisory firms have been reminded by the FCA that they need to have PII policies in place to meet liabilities and protect consumers.