There has been a marked trend towards professional indemnity insurers failing to renew cover for advisers they have previously insured, according to a new report.
A report by specialist insurance broker Protean Risk stated over the past 12 months a growing number of advisers have been told their existing insurers are unable, or unwilling, to offer terms.
Protean Risk’s survey of underwriters from the 10 insurers that underwrite 90 per cent of IFA PI risk in the UK market found each of these companies had not offered renewal terms to one or more of their IFA clients in the past year.
Julian Brincat, head of IFA practice at Protean Risk, said one of the main reasons for this was concerns about defined benefit transfers.
He said: “The main reason for the majority of firms that don’t manage to get renewal tends to be a lack of preparation and failing to provide the information for underwriters.
“Underwriters are keeping a very close eye on DB transfers and how they are being conducted and a lot of firms are not prepared enough to be able to provide the relevant information to underwriters.
“They need to reassure underwriters they have the proper structures in place such as peer to peer reviews.”
Mr Brincat said despite the fact the Financial Conduct Authority has issued guidance on how to deal with “insistent clients”, PI insurers were still concerned about firms willing to help such individuals.
He said more reassurance on the approach the Financial Ombudsman Service would take to considering future complaints from insistent clients would be helpful for advisers and PI underwriters.
He said: “Like advisers, underwriters need to feel comfortable that if they are covering the advice side of the business the rules won’t change in the future.”
According to Protean’s survey defined benefit (DB) transfers are one of the main concerns for underwriters, along with tax schemes.
The report said: “This survey asked firms to provide information on the number of requests for DB to defined contribution (DC) pension transfers that they had received post-pension freedoms.
“The results show that the total number of requests had more than doubled from existing clients and more than trebled from new clients, compared with the equivalent period prior to the pension freedoms.
“This report shows that a large percentage of firms that had not previously conducted any DB transfers were now involved in this activity.
“It is this step into the unknown which is causing insurers to adopt a very cautious approach when dealing with firms who give pension transfer advice.
“Insurers fear an increase in complaints stemming from this new rise in demand, along with the potential of claims management companies pursuing advisers.”
Richard Ross, director of Norwich-based Chadwicks, said: “We have not had any problems renewing our PI cover. We renewed it for 18 months about four months ago.