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PIA will allow PI excesses to be raised

The PIA is increasing the excesses permitted on IFAs&#39 professional indemnity insurance policies.

The move follows reports of PI insurers sending IFAs renewal quotes which busted the regulator&#39s previous cap.

Under the new PIA rules, excesses have been hiked to either £5,000 or 3 per cent of relevant income from £1,000 or 1 per cent of relevant income.

The increases had been widely anticipated by experts following lobbying from PI insurers, including London-based St Paul Re, as reported in Money Marketing last week.

Insurers wanted the regulator to raise the permitted level from the 1 per cent cap they had maintained for 10 years, pointing to increasing liabilities resulting from the pension review plus fears over the endowment crisis.

The PIA says the new limit is in line with terms currently available from PI insurers and will enable IFAs to obtain compliant cover, which is an important element of consumer protection.

Sofa spokesman Robert Reid says: “It still may not be high enough to ensure all renewal quotes on excesses are compliant as, under the new rules, IFAs will need to have turnovers of £300,000.”

Aifa director general Paul Smee says: “In some ways, this is inevitable, but PI providers should not overreact and realise the endowment issue is not an IFA problem.”

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