Advisers are being hit by soaring professional indemnity insurance premiums and increasingly onerous data requests as the PI market hardens.
Advisers who have renewed their PI policy in recent weeks say prices have risen significantly and the process is becoming more “invasive” and time consuming.
One advice firm, who wants to remain anonymous, has seen its premium more than double, from £3,500 for a two-year policy at last renewal to £3,700 for a one-year policy.
PI broker IFA Solutions managing director Jamie Newell says premiums have increased by 40 to 50 per cent in the past year across the market as a whole, while the firm’s own rates have gone up by about 20 per cent.
He says: “A couple of insurers have pulled out of the adviser sector so it is becoming a supply and demand issue. Insurers are being really fussy about the risk profiles of businesses and smaller advice firms are becoming particularly hard to place.”
Yellowtail Financial Planning managing director Dennis Hall says: “The PI market has hardened up over the past 12 months, and insurers which were competitive a year or two ago have now significantly pushed up their rates.
“The questions asked by insurers have become increasingly invasive, requiring more in-depth data on past business and on business written longer ago. The renewal process now takes the best part of a day.”
Philip J Milton & Company managing director Philip Milton says his firm had to join support services firm Bankhall at a cost of several thousand pounds a year in order to access a competitive PI policy this year.
He says: “Our existing insurer wanted to ratchet up our premium significantly, so in the end we joined Bankhall as our insurance broker could offer a deal exclusively to Bankhall members.”
Investment Quorum chief executive Lee Robertson says his firm was also forced to switch provider when renewing last month as its existing provider had pulled out of the adviser market.
He says: “There are less insurers in the market which is pushing prices up.
“Insurers’ forms are much more detailed now. They are asking for business to be broken down by business category and case size, making the process much more time consuming.”