It would be comforting to think that the comments inthe recent Broker Talkback on PI cover reflected the poor construction of your question rather than a real complacency about PI insurance. However, I have my doubts.
PI insurance may not be my “biggest headache” in the short term but I certainly think it is one of the biggest threats to my longer-term financial well-being and I hope that the current round of increased premiums will spark an industrywide debate on this crucial matter.
I am a sole trader and a member of a network. My concerns are not about the premium levels, which are manageable, but about the poor level of protection I receive.
Policies are normally renewed each year and provide cover for the claims made in the forthcoming year. This gives the PI insurers the opportunity to increase premiums or excesses or even withhold cover completely when a problem arises, even though the advice in question may have been given many years ago.
This makes me very uneasy and means that I will have an ongoing need to maintain cover until I die at who knows what cost.
On joining the network, I had to give a personal guarantee to indemnify it against any losses they incur as a result of my advice.
This protects the network and leaves me totally exposed again until I die.
This problem is compounded by the fact that, for “run-off” cover, which comes into force when I leave the network, the excess is £7,500 per case. It would not take many cases to make a big dent in my finances and who is to say that the excess will not go even higher?
All my personal wealth is at risk and I am unable to protect by going “limited” because of the personal nature of the guarantee.
Like many IFAs, I have never had a claim against me upheld and, like a small number, I am well qualified (ASFA, CFP). I do not like bearing the burden of poor advice given by others but under the present system there seems to be no option.
I think it would be very helpful if Money Marketing could open up this debate with comments from SIB, our professional bodies, networks and insurance companies as well as IFAs and PI providers.
My own wish is that PI premiums paid in any year should cover the advice given in that year; that networks should see it as their duty to protect their members and not just themselves and that AFPC should be the minimum level of qualification for IFAs.