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ProACT calls for mutual PI fund for small firms

Birmingham-based law firm ProACT Legal Soli-citors is seeking permission from the FSA to set up a scheme allowing IFAs without professional ind-emnity cover to self-insure.

Under current rules, any firm which is part of a group with a market cap of over £50m can self-insure but ProACT wants the FSA to allow smaller firms to be able to club together to run a mutual fund.

Under the proposals, IFAs would insure their own risk collectively thr-ough an established offshore company – known as captive insurance. Initial responses from captive insurers in the British Virgin Islands and the Cayman Islands have been positive.

ProACT has already contacted 50 firms with a turnover of between £500,000 and £2m and will soon mail all directly authorised firms with details of the plan.

ProACT partner Gareth Fatchett says: “A captive insurer is an option which the FSA should seriously consider.

“A properly run operation can assist firms to selfinsure as a group, providing levels of cover which are simply unavailable at present. In order to solve the PI problem, the FSA is going to need to be creative.”

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