What impact are DBTs having on insurance?
For those advisors with no exposure to DBTs, there may still be an increase in premium due to the overall rise in insurer claims costs. IFAs who have undertaken pension transfers, even those with little involvement, appear to be incurring increased excesses, higher premiums and in most cases, a complete blanket exclusion on all DBT activities.
More worrying are the difficulties facing those firms promoting themselves as ‘Pension Transfer Specialists’. Very few insurers are willing to provide Professional Indemnity insurance for IFAs full stop, but those firms with a history of predominantly engaging in these pension transfers are now facing an incredibly difficult predicament. Many insurers, including existing providers, are now restricting cover to such an extent that the policy is no longer suitable for the needs of the business, regardless of premium spend, resulting in more firms having to close their doors permanently.
How best to be prepared
Use a specialist PI broker, preferably one with experience in placing cover for IFAs
A specialist broker will be able to provide best advice when negotiating a potentially difficult renewal, have access to more insurer markets and be best positioned to assist in the event of a claim or circumstance.
Look to review your insurance well in advance of the renewal date.
Should your insurer impose certain restrictions or decide not to offer renewal terms, you will require additional time to look for alternative options.
Be wary of unrated of untested markets
With the collapse of three unrated insurers in the last two years, it’s important you have confidence in the financial security of your insurer. If you are uncertain or have concerns over the insurer’s financial ratings, ask for written verification from your broker.
Don’t be put off from asking questions
If you have any concerns over endorsements or exclusions applying to your policy, make sure to ask your broker to provide a full and clear explanation. The same applies to unfamiliar terminologies. It’s imperative you have confidence in the cover provided, the strength and capacity of the insurer and the experience and knowledge of your insurance broker.
About Daniel West Cert CII – Associate Director
Daniel has been with Apex Insurance Brokers for 5 years and specialises in the placement of IFA and Financial Institution Professional Indemnity Insurance (PI).
As an independent broker, Apex can offer one of the most extensive choices of IFA insurers available, with specialist sector and product knowledge to offer their clients some of the best terms available in the market. Their extensive IFA insurance experience allows them to fully understand your business, advise how to best present your risk and what insurers are best suited to your firm.
