PI plea to cut premiums for better qualified firms
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Professional indemnity insurers are beginning to offer regulatory dividends to firms with higher qualifications and top-quality advice processes, although the FSA is unlikely to follow suit, says Aegon’s Peter Williams.
Speaking at the Unbiased. co.uk/Opinium/Money Marketing round table Williams advocated the use of regulatory dividends to help encourage advisers to increase qualifications. But he says the regulator has told him it is unlikely to offer such dividends as it would be hard to segment advisers and ensure its calculations are robust.
But Williams says PI insurers are starting to offer discounts of between 10 per cent and 20 per cent for advisers with higher qualifications.
He said: “Interestingly, what we are picking up is that PI insurers are actually taking it to that stage and if you are chartered and have the right processes in place, this will have an impact on the quality of your business and your PI rates are going to go down. The figures I have heard are between a 10 per cent and a 20 per cent reduction.”
Williams advocates a “score-card” approach from the FSA, with firms that are meeting all the correct disciplines in terms of processes, qualifications and claims paying a lower premium and those with a worse score paying more.
Evolve Financial Planning director Jason Witcombe says when the retail distribution review was first being discussed, there was talk about a regulatory dividend but nothing has materialised. He believes that this would be a sensible approach to take.
He says: “This should be the carrot at the end of the process. If you do get to chartered or certified financial planner status, you get lighter regulation and you might get a lower FSA fee.
“Maybe the carrot would be better than the stick approach, of if you do not get your accreditation then you are out.”
Video coverage of the panellists speaking after the round table can be seen here.
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Readers' comments (2)
Julian Stevens | 20 May 2010 9:55 am
If hard statistical data exists to prove that the business transacted by firms with higher qualified advisers generates less complaints, particularly upheld ones, than that transacted by firms with only basically qualified advisers, then this is fair enough. Where is the data?
As for regulatory dividends from the FSA ~ you must be joking. Since when did the FSA ever discount anything for anyone? All the FSA wants is more staff, more power and more money. THAT data is hard and proven.
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Anonymous | 20 May 2010 10:07 am
Good comment above Julian. Having been insured for over 30 years my premium is very low compared to others.. Why ??? not because of qualifications, rather our experience and the claims record of the company.
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