PYV is warning that professional indemnity insurance rates are likely to rise.
Chief executive Neil Pointon says the recent influx of longer-term policy terms being offered is typically a signal that the market is set to harden.
Pointon says a longer-term policy could be useful to advisers if they want to safeguard themselves against the risks of the market turning.
He says Aifa has warned that capacity might be used up by foreign IFAs as a result of Mifid, which Pointon says suggests that November 1 might be a turning point. But he adds that as many insurers’ reinsurance deals fall due on January 1 every year, this is when we could see the market start to bite.
He says the turbulent stockmarket and loss of confidence in the housing market could lead to underwriters’ appetites for writing PI for IFAs and mortgage intermediaries disappearing overnight.
Pointon says: “Usually, PI is offered as a 12-month contract but the current very soft market conditions have allowed insurers to review this position, with many offering 18-month periods and some offering two-year deals. Clients should seriously consider taking advantage of these offers as it could be a way of locking in highly competitive terms. Historically, the offer of longer-term policies has heralded the hard market around the corner.”