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Additional cash requirement for firms with PI exclusions

Firms with business lines excluded under their professional indemnity insurance will have to hold a minimum level of additional capital resources.

The regulator estimates 2 per cent of firms will need to hold additional capital resources to cover their PI exclusions under the proposals. It says this will require total additional capital of £1.6m during benign periods, with firms having to hold additional capital resources of at least £67,000. But it says when PI is harder to obtain, these requirements will impose higher costs. It says additional costs to advisers at 5 per cent PI exclusion rate would be around £4m and at 20 per cent £15.9m, working out at £168,000 and £668,000 each.

PYV managing director Neil Pointon says firms, already forced to hold at least an additional £10,000 in capital, may struggle to also cover any PI exclusions they may have.
He says: “The question is whether IFAs are liquid enough to cover the extra needed. The FSA clearly believes they are but I am not sure.”


Why prevention is better than cure

Quoting the famous adage, prevention is better than cure; there are many proactive benefits that can improve wellness in the workplace, decrease stress, increase staff morale and reduce absenteeism, as well as attracting and retaining employees of a higher standard. With a recent study showing that employees in Britain are working below peak productivity, preventative benefits can ensure you address potential health issues or causes of stress at their source and ensure productivity in the workplace remains at an optimum level. With this in mind, how are you using preventative benefits to help keep your workforce happy and healthy?


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