A deal to collectively insure distribution firms’ historical advice liabilities is set to go ahead this year.
Last month Money Marketing revealed that national advice firms and networks were in talks with global insurance broker Marsh UK to investigate the possibility of brokering a deal to incorporate several firms’ liabilities under a single arrangement.
Former Tenet group director Geoffrey Clarkson, Marsh UK and law firm Reynolds Porter Chamberlain are now going ahead with the plans.
Clarkson says: “We have spoken to enough advice firms to convince us that we can create this product.
“This deal will allow firms to take liabilities off their balance sheet for claims made over a set time ago, such as five years.
“We hope to have a product ready by May or June this year.”
Clarkson says in addition to a bulk deal, the partnership has been approached by firms which would like to secure similar liabilities cover on an individual basis. He adds this may be possible, depending on firms’ claims histories.
RPC partner Robbie Constance says: “The reaction so far has been positive. The next stage is to get some more serious commitments from interested parties to provide data to allow Marsh UK to develop the product.
“We hope to make professional indemnity insurance cheaper, encourage private equity firms to invest in the advice sector and find a practical solution to the long stop problem.”
Page Russell director Tim Page says: “It sounds like this arrangement will be for large distributors only, but it could still be beneficial to smaller firms if it can help prevent another large distributor going belly up and the liabilities falling on the Financial Services Compensation Scheme.”