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Firms applying for IFA captive PI role

The FSA has received formal applications from companies looking to become authorised as a captive professional indemnity insurer for IFAs.

As revealed in Money Marketing in February, there have been talks between the FSA, Aifa and the ABI about setting up a captive insurer selling PI insurance to IFAs on a commercial basis.

Aifa director general Paul Smee says he is encouraged by the progress but would not give details on the parties involved.

FSA director of investment firms David Kenmir says the FSA would look favourably upon any application but it would have to meet its regulatory requirements to be granted authorisation.

He would not be drawn on how long it could take for any insurer to come to the market.

He said an IFA firm does not have to be the size of the Falcon Group to apply for a PI waiver and he has received 20 applications from smaller IFAs looking for waivers. Falcon, which has an annual turnover of £10m, announced a month ago it had won a year-long PI waiver.

Of the nearly 2,000 IFA firms looking to renew their cover between September 1 and last week, 69 per cent – 1,380 – were successful, according to Kenmir.

Kenmir says: “A few firms are formally talking to us. Some have actually lodged applications to provide PI for IFAs. It is in everybody&#39s interest for these firms to come into the market as it would mean more people writing business. People think they have to be the size of the Falcon Group to get a waiver but they don&#39t.”

Aifa director general Paul Smee says: “We are aware of the initiatives going on. We are determined to facilitate discussions between the interested parties to make sure the best solution comes together for the marketplace.”

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