A new professional indemnity insurer has entered the financial adviser market with claims it can halt the trend of escalating premiums.
In recent months, advisers have reported increases in PI insurance premiums of between 40 and 50 per cent.
Hoyl Underwriting Management says it will offer discounted premiums to firms which can prove they have better compliance models and better-qualified staff, such as those with chartered status. HUM, part of adviser business Hoyl Group, will offer cover underwritten by Elite Insurance exclusively to financial advisers and mortgage brokers. Elite currently provides PI cover to solicitors only.
The firm plans to monitor firms’ business activity on a monthly rather than annual basis. HUM director Paul Barnes says: “This will allow us to offer cheaper premiums because we can monitor firms’ business activity far more closely.
“We want to get under the skin of firms and be able to step in straight away if they move into new business areas to ensure we are comfortable with what they are doing. This will end the retrospective approach of PI insurance, which has led to increasing restrictions and costs.”
Barnes believes between 20 and 25 per cent of the adviser market would be suitable for the offering and the insurer aims initially to take on around 25 firms a month. He says the policy is “continuous” and premiums will change on a monthly basis only under exceptional circumstances. HUM will review premiums annually.
The policy can be cancelled at 60 days’ notice by HUM or 30 days’ notice by the firm.
Yellowtail Financial Planning managing director Dennis Hall says: “While it is welcome to see a new insurer entering the market, you do have to work harder for the cover and I would be concerned that premiums could go up on a monthly basis.”