Tenet has frozen net professional indemnity insurance rates for a third consecutive year to protect its members against the rising costs of remaining open for business.
For the period from 1st October 2016 to 30th September 2017, members of the network will be able to spread the cost of professional indemnity insurance (PII) over 45 weeks.
According to Caroline Bradley, group finance director for Tenet, this will help advisers with their cashflow and mitigate the effects of a contracting market for PI cover.
A lower excess will continue to apply to all non-investment business, the sales of risk targeted funds, chartered advisers and for members who use Tenet’s paraplanning service.
PII should cover the cost of defence against claims that advisers or the company they represent have presented inadequate advice, designs or services that have resulted in a client losing money.
Ms Bradley added, due to the PII market hardening and the new government increase to the standard rate of insurance premium tax (IPT) from 1 October, it is becoming harder for advisers to find cover.
She said: “Many insurers have been introducing blanket bans on pension transfer business or increasing excesses.
“However, Tenet has not undertaken any such steps and our excesses remain the same as the previous three years.”
|IPT hike - what it means|
In his March 2016 Budget, the former chancellor of the Exchequer, George Osborne, announced 0.5 per cent hike in IPT.
The standard rate of IPT rose from 9.5 per cent up to 10 per cent, which market commentators said at the time could raise £700m from the insurance sector over the next five years.
Twenty years ago, the standard rate of IPT was just 2.5 per cent but there have been further rises in the intervening period.
Tenet gets its primary PII through Paragon Insurance Company.
Back in 2012, several months after the introduction of the Retail Distribution Review, Tenet warned against an industry-wide “rocketing” of PII premiums.
At the time, it offered advisers with a Statement of Professional Standing a 50 per cent reduction in their PII excess on claims relating to advice.