Advisers giving defined benefit pension transfer advice can expect to pay nearly double for their professional indemnity insurance premiums at the next renewal than those who do not advise in that area.
QPI, which is part of insurance broker PIB Group, says advisers with DB exposure can expect to pay between 2 per cent and 3 per cent of their turnover for their PI premiums at the next renewal.
For advisers with no DB exposure the average rate is likely to be between 1.7 per cent and 1.8 per cent.
Last month, Money Marketing reported advisers’ experiences of insurers continuing to take a sceptical view of any DB transfer business amid a slew of negative headlines around British Steel and other well-documented DB scheme failures.
Some advisers said they can no longer get run-off cover for past business, in addition to limited options for forward-looking business.
According to QPI, in the past year three PI insurers have exited the market.
QPI development executive Hayley Dawson says: “Insurers are looking very closely at those firms that have had a significant increase in DB work over the last couple of years, especially where this is disproportionate in relation to their overall turnover.”
She adds: “We’re witnessing a substantial hike in premiums. We’ve seen doubling and, in some cases, tripling in the amount IFAs were paying the previous year. We’ve recently seen one firm whose premium rose from £16,000 to £70,000.”