One adviser, who does not want to be named, has been sent a bill for double the amount of his annual premium. He has not been insured with the mutual for a number of years.
Gauntlet managing director Roger Gaunt confirms the action but refuses to give any more details. He says: “There has been an additional call, yes. Policyholders are fully aware of the conditions of their contract. There has been a shortfall but this is a sensitive issue and it is appropriate not to comment.”
Informed Choice joint managing director Martin Bamford says many IFAs who opted for PI cover from a mutual when the market hardened in 2004 may now be facing cash calls.
He says: “When the market hardened, a cheaper option was to get cover from a mutual but the risk was they could come back to you in the future for more money.
“Gauntlet obviously seriously underestimated the cost of the cover it provided. Advisers would have been aware when they took out the contract that it could come back and demand more money and this may not be the last time it happens.”