Following widespread concerns that sourcing systems will not be able to provide accurate KFIs by 31 October some commentators believe that PI insurers will be quick to pick up on these fears and will not hesitate in increasing the brokers’ cover.
Bill Warren, network director at the Complete Network, commented: “It’s quite possible that the more this issue concerning sourcing system KFIs gets highlighted the more jumpy the PI insurers will get. We can only hope that this doesn’t set them off on another track to pushing up the PI costs before any claims are even made.”
Mike Fitzgerald, sales director at Brentchase Financial Services, said: “If the PI insurers think the broker has any exposure to being un-compliant, they will move quickly to react to this. They would no doubt increase brokers’ PI costs when they are due to renew their cover.”
Fitzgerald added that the indemnity insurers, along with lenders and sourcing systems providers, should be called in by the FSA to discuss the worries surrounding sourcing systems’ KFIs.
Fay Goddard, policy officer and expert on PI insurance at the Association of Independent Financial Advisers (AIFA), said: “For PI insurers there is an issue here and it will have a knock-on effect. But it has to seen in context.
naccurate KFIs may result in negligence claims with the broker being in breach of the FSA rules on compliance.”
John Ellis, head of public affairs at the association for financial services professionals, the LIA, commented: “In my experience hikes in PI cover often have very little to do with reality and are instead based on over cautious underwriters at the PI firms. If you give them even half a chance to increase premiums, they will.”
