Repercussions from the British Steel saga and the FCA’s ongoing review on the suitability of advice given by IFAs on DB transfers have had a major impact on the marketplace, with firm’s facing the prospect of a “significant spike” in their PI premium at renewal, along with increased excess levels and restrictions on cover, according to insurance firm QPI.
Hayley Dawson, development executive at QPI, part of the PIB Group, said: “Our message to firms is to ensure they prepare much earlier for their forthcoming PI renewal and use a specialist PI insurance broker, which has access to multiple insurers and with expertise in the IFA sector.
“It doesn’t have to be all doom and gloom provided they make the right choices early on.”
Ms Dawson outlined how the ongoing regulatory scrutiny of defined benefit (DB) pension transfers, culminating in the FCA’s current review, had resulted in a ‘hard market’ when it comes to securing PI for IFAs.
She added: “We’ve specialised in PI for IFAs for several years.
“Historically it’s always been a tough, restricted market, however, in the last 12 months three more insurers have exited, and with insurers starting to see activity from claims management companies in relation to DB transfers, the perfect storm has been created.
“PIB Group can still access six insurers facilities but appetite is limited.
“Insurers are looking very closely at those firms which have had a significant increase in DB work over the last couple of years, especially where this is disproportionate in relation to their overall turnover.”
Ms Dawson warned that smaller firms, reliant on DB transfer work, may “face closures in the current climate.”
PIB director Lee Chapman said there were steps IFAs can take to help minimise any impact:
• Understand as soon as possible what sort of information is going to be required at renewal
• Start preparing at least eight weeks prior to the renewal date
• IFAs need to be speaking to a specialist broker with experience in this area and one which has access to multiple insurers