Against a background of spiralling premium prices for brokers, David Kenmir, director of investment firms at the FSA, said: “We want to help advisers present their businesses in the best possible light. Experience picked up from our discussions with firms and with the professional indemnity market has shown that a good quality presentation to an insurer could make all the difference. We hope this booklet will help firms to provide comprehensive and relevant information to their insurers”.
Issues under serious media scrutiny like split capital investment trusts or mortgage endowments are also likely to provoke greater scrutiny from insurance underwriters.
But firms can help themselves by seeking guidance from insurers on which areas are of particular concern and consider how they can alleviate some of these concerns, said the FSA (see below).
Steve Jones, director of Towry Law Mortgage Services, said: “In some cases premiums have risen 300 per cent from last year to this with no change in the broker’s personal circumstances. However, the impending regulatory changes have been causing concern among underwriters that they may heighten the risk of non-compliant sales among brokers.”
Tips from the FSA
Factors that may affect underwriting on your PI insurance
• Adviser/support staff ratio.
• Self-employed staff.
• Compliance.
• Control systems/monitoring.
• Research.
• Client/advisers ratio.
• Trail (volume of past business).
• Qualifications and experience.
• Specialist support; business structure.
• Regulatory visits/disciplinary record; and claims records/complaints log.
• Compliance systems, e.g. frequency of file checking.
• Management control, e.g. show the degree of supervision of advisers.
• Training and competence, e.g. evidence of assessments of competence and qualifications.
• Client acquisition, e.g. carrying out client satisfaction surveys.
