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FSA wording turns away insurers from return to market

The required wording of the FSA&#39s compliant professional indemnity

insurance policy is the biggest disincentive to encouraging insurers

to come back into the market, according to PI broker Collegiate.

Speaking at an FSA-hos-ted PI workshop for IFAs in London this week,

Collegiate managing director Tony Howe said the wording of policies

which compels IFAs to alert insurers over any cases which may result

in a future misselling claim is the biggest obstacle to insurers

re-entering the market.

He said it leaves insurers open to entire tranches of possible future

claims to pay out and is the biggest disincentive in the marketplace.

The FSA was also criticised by PI insurer Markel International, which

said that by reviewing things through the back door, the FSA is

scaring away more capacity in the market.

Markel general counsel Penny Whitwell said while it may be difficult

for the FSA to launch wide-ranging reviews similar to the pension

review, it is constantly reviewing products and inviting claims from

consumers.

Howe said: “It is an ind-ustrywide problem. The policy wording works

to keep insurers out of the market.If the FSA were to remove block

notification from its definition of what constitutes compliant cover,

that would attract more insurers back into the industry.”

Whitwell said: “This issue of drumming up claims through the back

door is totally alien compared with other industries.”

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