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PYV predicts PI rate increase looming

PYV is predicting the professional indemnity insurance market is about to hit the bottom of the cycle.

Chief executive Neil Pointon says the recent influx of longer term policy terms being offered often signals an imminent hardening of the market, as things cannot bottom out much more for advisers.

Pointon says a longer-term policy could be useful to advisers if the market was looking like hardening.

He says Aifa has warned that capacity might be used up by foreign IFAs as a result of Mifid, which Pointon says suggests November 1 might be a turning point.

But he also suggests that because many insurers’ reinsurance deals fall due on January 1 every year this is when we could see the market start to bite.

He says the turbulent stock market and loss of confidence in the housing market could lead to underwriters’ appetites for writing PI for IFAs and mortgage intermediaries could disappear overnight.

Pointon says: “Usually PI is offered as a 12-month contract but the current very soft market conditions have allowed insurers to review this position with many offering 18-month periods and some offering two-year deals.?
“Clients should seriously consider taking advantage of these offers as it could be a way of locking in highly competitive terms. Historically, the offer of longer-term policies has heralded the hard market around the corner.”

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