A major IFA PI broker has found that although the FSA's provisions for solving the PI crisis have “greatly eased the burden”, an increasing number of IFAs are taking additional cover from a second PI provider to help cover big excesses.
Broker PYV operations director Neil Pointon says that IFAs are investing in extra protection over regu-latory requirements to cover growing excesses.
Following CP193, published last July, the FSA has eased rules, allowing some well capitalised firms to offset capital to cover exclusions in their PI cover.
However, Pointon says IFAs are trying to find the best cover possible which, with current levels of supply, is starting to include higher levels of excess layer coverage.
PI provider Magian Mut-ual director Glyn Morris says because insurers are not offering the degrees of cover they used to, irrespective of regulation requirements, some IFAs think that greater cover is needed for their businesses.
Pointon says: “Demand for an excess layer reflects restructuring of the way that supply has been arranged. Over the regulatory requirements, IFAs are seeking to invest in extra protection.”
Morris says: “Some competitors will not offer more than £1m cover and some IFAs are buying on the perception that, irrespective of regulation, greater cover is needed.”