New research points to hardening insurance market for advisers

06 May 2014

New figures from the Association of Professional Financial Advisers (APFA) reveal that the vast majority of advisers who have been offered renewals of their Professional Indemnity Insurance (PII) received either the same premium as last year or an increase. According to APFA, the findings further highlight the need for a long stop for advisers.

The research, carried out for APFA by NMG Consulting, reveals that this year, nearly one in three advisers (31%) have been offered an increased PII premium. Those premiums have increased by 14% on average. 44% of advisers have received the same premium as last year, and only 8% have been offered a reduced premium.

Chris Hannant, Director General at APFA, said:

“These findings offer further evidence of a hardening insurance market for advisers, driven by a compensation culture and the legacy of events like Arch Cru, Keydata and Catalyst. They also highlight further the need for a longstop for advisers. Without one, the liabilities of companies have no limit, and therefore when insurers calculate risk it is open-ended – which drives premiums up.

“The FCA has said that it plans to consider the case for a 15-year long stop on complaints to the Financial Ombudsman service for personal investment firms during the next twelve months. This is something we’ve long campaigned for and would be a huge step forward for the industry.”

ENDS

NMG’s research took place between 4-14 March 2014, with 271 financial advisers.

For further information please contact:

Tom Yazdi / Jo Nussbaum / Keith Brookbank

Linstock Communications

020 7089 2080