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Aifa leads move to cut costs of PI insurance

Aifa and life offices aim to slash the cost of professional indemnity

insurance through an initiative designed to improve standards in the IFA

sector.

Aifa devised the initiative and the Pass review with life offices. IFAs

will be given access to Pass-review-style healthchecks which will show them

where there are gaps in their risk management. Aifa believes the cost of

cover will come down once the number of claims drops and IFAs become more

risk-aware.

PI insurers, which welcome the initiative, identify record-keeping as a

gap. Many IFAs have to turn to providers for records when they could keep

their own data.

The Aifa move could take years to make an impact. The cost of PI cover was

driven up by the pension review and trust has been lost between IFAs and

the PI providers. Last year, Money Marketing revealed IFAs faced premiums

for PI cover soaring by up to 300 per cent.

Aifa director general Paul Smee says: “We want to open up communications

between various parts of the PI market and IFAs. At the moment, they do not

understand each other.”

Insurance broker PYV managing director Ian Boscoe says: “The healthcheck

is sensible if it flushes out weaknesses which could affect the cost of

indemnity. This is obviously of great benefit to IFAs.”

l Pass is gearing up to help small IFAs cope with the increased admin

burden arising from the forthcoming FSAVC review.

IFAs will need to identify what sales need reviewing. Around 10 per cent

could be subject to recalculation.

Martyn, 34, joined IFA Promotion in 1994 after a stint as a broker sales

manager at Guinness Flight Global Asset Management. She started out

managing IFAP&#39s relationship with sponsors and became managing director in

October 1999.

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