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PI is sky high in 200% increase

IFAs face their biggest rise in professional indemnity cover since the height of the pension review, with premiums set to rocket by up to 200 per cent this year over insurers&#39 fears of endowment misselling.

London PI broker Dickson Manchester managing director Charles Manchester blames the increases on fewer insurers providing cover, the endowment review and September 11. He says many advisers used to pay 1.5 cent of their turnover for cover but could now be paying upwards of 3 per cent.

Manchester says this is part of a wider trend which has seen PI premiums increase by at least 50 per cent across all professions. IFAs are being hit harder, he says, because they are seen as being unprofitable in underwriting terms.

Aifa says the PI market is over-reacting if it believes endowments will ever reach the scale of pension misselling and the number of ombudsman cases involving IFAs is quite small.

Director of policy Fay Goddard says: “In the last year, there has been anywhere up to 100 to 200 per cent rises, primarily to do with endowments. There is a fear among underwriters that the regulator, while not on the scale of pension misselling, will take a lot of action over endowments.”

Manchester says: “Historically, IFAs have been an appalling write. Insurers believe they have a poor track record in terms of professionalism.”

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