Tenet offers run-off PI cover to ex-ARs
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Tenet has set up a scheme that allows former appointed representatives to obtain run-off professional indemnity insurance with the same level of cover offered to practising advisers.
Using its Guernsey-based subsidiary company Paragon Insurance, Tenet has created a product that covers retiring advisers for any complaints made in the future.
The rates are based on the revenue that advisers earned during their time with Tenet and how long they have been out of business.
Few PI insurers offer run-off cover to advisers and it is increasingly expensive to obtain.
Tenet says practicing ARs are covered by the company’s block policy scheme but the cover ceases when advisers retire or leave their business, leaving them exposed to retrospective claims with no long stop.
Distribution and development director Keith Richards says the ability to provide run-off cover to former advisers is important to the network.
He says: “Offering advisers comprehensive run-off cover has been a Tenet priority for a number of years. Historically, sourcing satisfactory cover has been notoriously hard and often prohibitively expensive. We aim to change all that. Using Paragon’s underwriting flexibility, we have bridged the gap and further extended our range of services to advisers.”
Churchouse Financial Planning director Keith Churchouse says run-off cover will become particularly important as more advisers leave the industry in advance of the RDR deadline.
He says: “It is a good idea, subject to the terms being competitive. Obviously, we have got RDR coming up, which is going to contract the number of advisers in the market.
“Some are going to move to other organisations but clearly some are going to leave the industry altogether and having some form of run-off cover will be valuable to them.”
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Readers' comments (7)
Greg Heath | 16 Sep 2010 10:36 am
This is a welcome move by Tenet as for too long this has been a problem.
Lets hope its not too expensive it strangles the concept.
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Julian Stevens | 16 Sep 2010 10:48 am
Well done Tenet. Given the problems experienced by many small firms as a result of their network having folded for one reason or another, it's reassuring to be with what must be one of the best and strongest to have survived the difficulties of the past ten years.
The next step has to be a concerted campaign for repeal of the FSA's malicious denial of the protection of British Law in the form of the 15 year longstop. Otherwise, we'll be paying PI premiums until our dying day. (though at least this'll be the lesser of two evils). If AIFA, the worth of which an increasing proportion of its membership are starting to question, can't accomplish this then maybe Regulatory Legal can instead.
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Warning from former Network member | 16 Sep 2010 11:13 am
Tenet members enjoy a right of subrogation clause in their PI allowing their PI insurer to seek redress from members for any claims paid out to the Network! In short you do not have PI, your network does! Read your policy ladies and gents! Tenet also asks for personal guarantees from members making it impossible to obtain protection via a Ltd Co. When Tenet go through your accounts and bank statement on your compliance reviews it is all about protecting Tenet and nothing about protecting you!
In the event of a PI claim remember also that the PI s of paid to Tenet and not members who will find they are removed from the claim process. The FOS will not deal or even talk with members.
Win or lose Tenet are protected, win or lose the member is stuffed! Networks afford no protections and are high risk. Don't take my word bu also don't take yoru Netwrks word either - do your own research!
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Anonymous | 16 Sep 2010 1:55 pm
It will be interesting to see how quickly they can get this implemented - my resignation is going in tomorrow !
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Evan Owen | 16 Sep 2010 3:54 pm
How on earth can a network offer run-off cover when the network itself is obligated to maintain insurance for all the acts or omissions for which it is responsible? And that mean all the acts or omissions of the ARs, they need to appoint a lawyer.
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and you thought you were safe with a network! | 21 Sep 2010 6:13 pm
To Network members
Read your PI policy and then go ask what the right of subrogation means when levied against a third party. Then go aks who the third party is? ..... its you!
You pay the premiums, the networks gets the protection and the PI insurer asks you for the claim payment back and you thought you were safe with a network. Start asking questions but beware because like so mant before you it will strate you on the road to resignation.
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Anonymous | 4 May 2011 10:08 am
Well done Tenet! athough I'm not linked to Tenet in any way, the peace of mind offered with this is huge for retiring advisers. It's nice to see a network that is't just take!take! take!
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