The Personal Finance Society has renewed its warnings of exponential premium growth in the professional indemnity market amid claims of "massive delays" in advisers receiving quotes and a "barrage" of questions needing to be answered.
According to the professional body brokers are blaming the shrinking number of professional indemnity insurers as the reason remaining providers in the market are struggling to process applications.
At the end of last year Keith Richards, chief executive of the PFS, said he only knew of two insurers then writing new cover for advisers who advise on defined benefit transfers.
The Financial Conduct Authority’s supervisory work in the DB sector this year, combined with its decision to increase the compensation limit of the Financial Ombudsman Services in April, has widely been blamed for shrinking the PII market.
Advisers have been faced with a growing number of policy exclusions and warnings of premium increases of 500 per cent.
In an update today (February 17) the PFS said it was continuing to receive evidence of growing premiums, including one advice firm which saw its costs jump from £3,700 in 2009 to £45,000 in 2019.
Another adviser told the professional body their professional indemnity cover cost £22,736 in 2017 rising to a 'best case scenario' of £112,000 in 2018, even before the compensation limit at the ombudsman was officially changed.
Mr Richards said: "Financial advisers who have never had a single complaint made against them are being frozen out of the defined benefit pension transfer market because of PI premium hikes and restrictions on cover.
"Problems with PI cover are causing financial advisers to exit the defined benefit pension transfer market and limiting the public’s ability to access the financial advice they need to exercise pension freedoms."
One Surrey-based adviser, who saw a 47 per cent hike in his premium, apparently told the PFS: "The FCA are quick to make changes, slow to undo the damage those changes inflict on an already beleaguered sector."
Last month the PFS warned problems with obtaining affordable professional indemnity cover had forced more than 30 advice firms out of the defined benefit transfer market in just three months.
It comes as the professional body doubles down on its efforts to tackle rising regulatory costs in the industry, with the society launching a letter template last week with which advisers have been encouraged to lobby MPs about the hardening professional indemnity market and the increases to the Financial Services Compensation Scheme levy.
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