The FSA is to join an Aifa forum on the professional indemnity market in a
bid to dispel fears of a retrospective review.
The forum, which will meet three times a year, is part of a step-by-step
plan that Aifa has drawn up to help restore “order and stability” to the PI
market for IFAs and drive down the cost of cover.
PI premiums and excesses were driven through the roof by the pension review.
Aifa welcomes the participation of the FSA, saying regulatory issues are a
major reason why PI prices have become inflated. It is the first time that
a group of this nature will include the regulator.
The IFA Life Offices Group, Pension Advisers Support Scheme and PI
underwriters will also attend the forum which will define core broking
standards and services for IFAs and develop a code of best practice. Aifa
expects to have made headway by the autumn renewal season.
Money Marketing revealed last week that Aifa will give IFAs the option of
risk management healthchecks for a fee, which aims to identify gaps that
worry insurers. But PI insurers warn that the initiative could take years
to have an effect and may push up the cost of cover.
Aifa director general Paul Smee says: “The PI market for IFAs has had a
terrible battering. We need to restore some sanity. We must convince the
market the days of retrospective reviews are over so underwriting
confidence can be restored.”
Smee's View, p14, Perspective, p24