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Plan for second captive PI firm

Plans are being made for a second captive professional indemnity insurer for IFAs, with a scheme backed by a “major London broker” looking to set up a Gibraltar-based insurer selling PI cover into the UK.

The scheme, which could launch as early as the end of May, has the necessary start-up capital in place and is seeking authorisation as a mutual insurer in Gibraltar, where capital requirements are much lower than in the UK.

It would then become authorised in the UK and offer PI cover to compliant IFA firms. Over the next few years, it is looking to offer cover to up to 3,000 firms, including mortgage and general insurance brokers, which will come under the FSA&#39s regime in late 2004 and early 2005.

IFA compliance group Ifact will act as an introducer, matching up firms that meet the compliance standards with the insurer.

The news follows last week&#39s announcement by an unnamed group operating under the Umbrella brand that is looking to offer cover to up to 500 firms as a captive insurer.

Ifact deputy chairman John Derry Collins says: “The FSA are saying go for it, we will passport it into authorisation here and we will give it high priority. It would solve the problem of the willingly compliant IFA trying to get PI cover.”

M&P Insurance Consultants sole trader Mukesh Chhatralia says: “If the costs are too high, then it is practically self-insurance which brings us back to square one. But if it will help smaller IFAs such as myself get cover, it is going to be very welcome to the market.”

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