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Guide to Getting Professional Indemnity Insurance

Published by FTAdviser | Sep 27, 2012

Financial advisers are required to take out professional indemnity insurance, which protects firms if claims are brought by a client. However, some significant financial failures, notably the collapses of Keydata and Arch Cru, have hit PII providers hard.

The market has also seen premiums rising due to retrospective action over major failures such as Arch Cru by the FSA. The issue was put into sharp relief this year as adviser network Honister blamed its insolvency on overly high PII costs.

This guide, as well as setting out the whys and wherefores, will give you ideas about how to reduce your premium and get the right cover.

Supporting material is provided by Teresa Brewer, Sales and Services Director, Aon UK, which began providing PII to financial advisors earlier this year.

  1. Q: What is professional indemnity insurance?

    PII policies provide cover for any claims payments, or indemnities and will also cover the defence costs associated with a claim.

  2. Q: What does PII protect my firm against?

    Some policies provide wider coverage that extends to any civil liability, which does not always require negligence tests.

  3. Q: What affects my PII premium?

    Each insurer calculates risks differently but they will all look at areas of a firm’s business when calculating the premium.

  4. Q: What can I do to reduce my PII premium?

    With PII premiums having risen in recent years, firms understandably are looking for ways to cut costs.

  5. Q: How do I make sure I am properly covered?

    Building or maintaining a strong relationship with your broker, who understands your precise needs and confines, is vital.

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Q1.  What is professional indemnity insurance?

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Q2.  Do all PII policies extend to civil liability?

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Q3.  Are turnovers reflected in the premiums for PII?

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Q4.  What should your research involve when deciding on a PI insurer?

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Q5.  How can an adviser reduce his PII premium?

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Q6.  Can other firms’ claims squeeze your PII premiums upwards?

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