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Crunch to raise PI costs

Professional indemnity insurance premiums for mortgage brokers of less than £500 are likely to be a thing of the past, says PI broker PYV.

In its 2008 report into the PI market for mortgage brokers, PYV says the increased volume of claim notifications and other effects of the credit crunch are hardening the market.

Chief executive Neil Pointon says insurers are reviewing the terms on offer to mortgage brokers. He says deals of £200 a year could be found last year but market conditions mean deals below £500 may disappear.

Pointon says: “The credit crunch, while considered by some to be an almost global threat, is expected to cause a wave of claims against UK professional advisers with direct involvement in financial and property markets. The reasoning is obvious as, when prices fall, people face losses on their investments and look for someone else to blame.”

He says even if such allegations do not result in successful claims, defence and admin costs will be incurred.

Pointon also says brokers who carry out general insurance activities face higher limit of indemnity costs due to the euro’s rise against the pound, as the insurance mediation directive requires firms to carry minimum limits based on euros.

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