View more on these topics

Soft sterling brings big rise in PI premiums

Professional indemnity insurance premiums will rise by 15 to 20 per cent next year or double that if the market hardens after the FSA confirmed it will raise minimum cover requirements, says PYV.

In its recent quarterly consultation paper, the FSA revealed it will increase minimum PI cover limits by 12 per cent from euro1.5m to euro1.68m for all new and renewed policies from March 1, 2009.

Managing director Neil Pointon says the rise, coupled with weakening sterling, will force insurers to pass additional costs on to advisers.

He says: “Increases due to the weak pound have been absorbed by insurers, due to the soft market conditions, but these have now reached around 30 per cent from bottom to top of the exchange rate fluctuations since the insurance mediation directive came into force. If the pound remains weak against the euro, the change due next March will mean these limits may have had to increase by over 40 per cent. In a flat market, I would have expected a premium rise of around 15-20 per cent to cover this cost.

“If the market was to harden as a result of the current economic turmoil, this figure could easily double.”

The FSA says that the IMD requires PI minimum indemnity limits to be adjusted in line with movements of the European index of consumer prices every five years.


Education is key to correcting equity release myths

I often get the impression equity release is seen as the quiet ‘back-water’ of the regulated advice industry in the UK. Apart from a handful of specialist advice firms most mainstream advisers seem to steer clear of equity release either viewing the area as too complicated or assuming there is no demand within their client bank for what they may view as a ‘distress’ purchase.


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm