The average professional indemnity insurance premium across all advice firms was £17,540 in 2017, according to FCA data.
The FCA’s latest data bulletin breaks down PI premiums for firms according to different revenue brackets.
The data shows that, when looking at average premiums paid as a proportion of regulated revenue, small firms
generally paid a higher percentage than larger firms.
Financial advisers with revenue under £100,000 paid an average premium of £2,412 representing 4.2 per cent of their regulated revenue.
Meanwhile, firms with revenue over £10m pay an average premium of £882,041, which is 1.2 per cent of their revenue.
For financial advice firms with revenue between £501,000 and £10m, the cost of keeping up with PI is 2.7 per cent of regulated revenue, with premiums averaging £34,680 last year.
Slightly better off are advice firms with revenue between £101,00 and £500,000, which paid out average premiums of £4,889, representing 1.9 per cent of their regulated revenue.
The FCA says: “We require certain firms to hold PI cover to make sure that they have the means to pay negligence and other claims and to help prevent insolvencies leading to excessive claims on the Financial Services Compensation Scheme.”
FCA director of market intelligence, data and analysis Jo Hill says this is the first analysis for the regulator’s data bulletins focusing on the cost of PI premiums.