Sofa chairman and Informed Choice director Nick Bamford has seen his professional indemnity insurance premium increase by more than 14 times in three years for cover he believes is effectively useless.
Bamford says his premium has risen by 27 per cent to £40,000 for the year from February from £28,875 last year – a massive increase from £2,750 three years ago.
Splits are excluded from the cover and Bamford says his excess remains at £15,000 for the non-compliant cover which he says only benefits him because it permits him to carry on working.
Informed Choice has seven RIs and there have been no claims against the firm in nine years of trading. Bamford's case shows how IFA PI premiums are still rising steeply even if the rate of rise is not as extreme as last year.
Last year, the FSA said firms with a turnover of less than £10m would need non-compliant cover to be eligible to continue trading. It then considers a firm's financial position, the nature of its cover, its PI claims' record and its past business mix before agreeing non-compliant cover as valid.
Bamford says: “The bad news is I am paying £40,000 for non-compliant cover with a per-case excess that is so high it means I will never make a claim. The good news is that we have got cover and are allowed to carry on writing business.”
Hornbuckle Mitchell Group director Viv Belcher says: “The excesses have gone so high that we are all now effectively self-insuring as we are never going to claim on this insurance. It feels like we are paying huge professional indemnity premiums just so we can be in business.”