IFAFeb 17 2017

Better technology could cut PI premiums

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Better technology could cut PI premiums

Storing customer documents remotely and using data management systems may help to cut professional indemnity insurance premiums, experts have claimed.

A company called EDM Mortgage Support Services stated that insurance firms will lower PI premiums if they can see that organisations have rigorous and suitable control systems in place with regards to data and information management.

Joe Pepper, managing director, said that too many firms still hold customer data in offices or storehouses, where it is vulnerable to fire or flood.

"If they were to have an electronic data process signed off by the insurer, that would put them in a much better place," he said. 

"If they are able to have that information exported and held in a secure data storage facility that isn't subject to fire risk, then the benefit is even greater.

"The greater ability they have to time and date stamp the information, authenticate individuals and locations and date any changes, then the lower their premiums will ultimately be."

Premiums for public indemnity insurance could be set to rise further after the financial regulator the Financial Conduct Authority announced a consultation into the Financial Services Compensation Scheme levy.

The changes could mean that some of the risks that are currently covered by the FSCS could move across to IFAs themselves, which could in turn raise PI premiums.

Paul White, from Belgravia Insurance Consultants, said that most firms should have disaster-recovery systems to ensure that documents are not lost in fire or flood, and that this is recommended as best practice at the FCA.

"I welcome anything that cuts premiums" he said.

Adam Stretton, managing director of The Right Mortgage & Protection Network, said: “Having digital records isn’t just good for PI premiums, but it also makes good business sense.

"Cutting down on the use of paper means lower costs and less space being used in the office. Keeping digital records allows for a company to have simpler disaster recovery procedures in place and mitigate the risk of loss or damage to paper files and naturally lead to lower PI premiums.”

“It is also far easier to deal with complaints if files are held digitally rather than on paper, which will also lead to lower premiums.”