IFAs are warning that professional indemnity insurers are increasingly excluding different business types from basic PI cover, putting more of the risk of pension work on to the adviser.
Some IFAs' basic PI premiums have increased by up to 300 per cent but what they are getting for that basic cover is diminishing, with insurers slapping huge excesses on Serps, opt-outs and non-joiner business.
One IFA has seen excesses for these sorts of pension business soar from either the lower of 3 per cent of turnover or £1,000 per claim to £5,000 per claim.
The rises come as some industry figures are predicting even bigger inc-reases in PI premiums if Ron Pick-ering's proposals are adopted as IFAs will have to take on more risk in interpreting lighter touch regulation.
Roberts Clark director Jo Roberts says: “PI insurers are trying to look ahead to see where the next scandals are going to be. This year, insurers are including income drawdown, Serps advice and mortgage endowment business. With these increased excesses, we are basically getting to a situation of self-insurance. IFAs wanting to give advice in these areas are doing so at their own peril.”
Capital Asset Management director Alan Smith says: “The whole issue of PI is causing problems for all IFAs. Our premiums went up 300 per cent as well as the number of excesses growing.”