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PYV criticises FSA over capital cover

Professional indemnity insurance broker PYV says there is no science in the way the FSA assesses capital cover for firms that are granted waivers in lieu of compliant cover.

Managing director Ian Boscoe says the amounts set by the regulator for capital cover in lieu of PI when waivers are given bear no relation to the actual level of claims the company might face.

Boscoe says the waiver procedure is leaving firms exposed to compensation claims that could put them out of business.

He says it nonsensical that the FSA plans to replace the Insurance Mediation Directive with a more flexible approach that would allow firms to reserve capital against liabilities based on potential risks in their book of business.

Boscoe says: “There is no sense of reality in the way the FSA calculates how much capital is required when it is giving out waivers.

“When the FSA asks a firm to stump up more capital, it doesn&#39t scientifically quantify how much is required so it does not bear any correlation to the exposure to risk.”

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