Tenet is offering advisers in its network arm the chance to pre-fund discounted run-off professional indemnity cover that will cover them post-retirement at a cost of around 1 per cent of turnover per year for an average of six years.
In a video interview, Mike O’Brien, group brands director of Tenet, said the network and support services firm had started offering professional indemnity insurance run-off cover to firms on a ‘lump sum’ voluntary basis last year and it has been popular.
Mr O’Brien added that it had subsequently offered TenetConnect firms the chance to earn a discount on future professional indemnity insurance run-off cover premiums, which can be pre-funded at a cost of about 1 per cent of turnover a year.
He said: “We expect that on average it will take about six years for the run-off cover to be fully funded, but if a firm chooses to leave the network in the intervening period (whether retiring, or for any other reason), then they will have the option to pay any outstanding balance in a lump sum.
“The run-off policy terms are identical to those of the main policy and the primary and upper layer insurers are the same.
“We think that this run-off cover initiative is unique in our market space. It offers advisers important peace-of-mind, particularly in the absence of any liability long-stop in our sector. And by effectively spreading the cost of the insurance over time, it makes it more practical for advisers to afford.”
Last month ex-director of Tenet Geoffrey Clarkson announced he be launching with Marsh UK, a subsidiary of US-based Marsh and Mclennan, legacy PI cover to be offered to members of UK adviser networks.
A number of firms confirmed last year they were aware of conversations on the launch of industry-wide legacy cover, with Chase de Vere citing a number of “challenges to be overcome” to make the plan work.
Patrick Connolly, head of communications for the Somerset-based firm, told FTAdviser at the time: “I think there will be a risk that either premiums will not be as low, excess will be too high and there would be exclusions.”
Discussing Tenet’s campaign for a long-stop for larger advice firms in the video, Mr O’Brien said the firm had achieved in excess of 5,000 signatures for its campaign to force a parliamentary debate on introduction from its target of 10,000.
He added that if advisers have written non-standard investment business such as unregulated collective investment schemes in the past then it is now quite difficult for them to get PI cover.
He said: “The (PI) market is hardening in terms of what it is willing to accept as a risk and the premium it is willing to charge for it.
“We have taken an approach where we are building a pool and offering our members, as they leave or retire, effectively long-stop insurance.
“It (long-stop insurance) is something they have got to pay for but it does mean that they can retire with the safety and knowledge that, apart from the excess, they are not going to get a bill that they can’t afford some way down the line.”
