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IFAs slam PI insurer on endowment probe

IFA bodies have slammed the decision by Britain&#39s biggest professional indemnity insurer to ask questions about endowment sales on PI renewal forms.


The move, spearheaded by the PI insurer St Paul, is seen as a slap in the face for IFAs already struggling to secure PI insurance as a result of the pension review phase 2 and impending FSA investigation into FSAVCs.


IFAs face premium hikes of up to four times current levels and there are fears many could find themselves further impeded in obtaining cover following the questions.


PI brokers believe St Paul is likely to use the information, which includes the question &#34Have you ever been involved in arranging endowments?&#34, when calculating excesses.


IFAs are also asked to state if they always advised and documented the fact that endowments do not guarantee to repay the loan.


Aifa, Pass and the LIA have lined up to criticise the question&#39s inclusion, claiming they are &#34unjustified and ambiguous&#34.


The criticisms centre on the fact the questions do not specify endowment type and include sales up to 11 years ago when records were not as detailed as they are today.


Aifa director of technical services Fay Goddard says: &#34IFAs are struggling to complete these forms because they need cover. They shouldn&#39t have to be completing these questions. By asking them the insurers are implying the regulators are going to impose a review.&#34


Pass Review manager Derek Warner says: &#34Asking such detailed questions seems unreasonable at this stage, the review into FSAVC&#39s hasn&#39t even started yet and it is difficult to know what will happen with endowments.&#34


Rival PI insurer Magian director and chief underwriter Glyn Morris says: &#34I can&#39t believe in the aftermath of the pensions review the Regulator is going to introduce a review of endowments. It defies logic.&#34


But St Paul senior underwriter professions Jim Gaskin says: &#34In our view these questions are relevant underwriting information and we feel there could be an issue. We also need an understanding of how much business has been done in this area.&#34


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