Professional indemnity provider Inperio has entered the IFA market with cover for defined benefit transfer advice.
When asked why they were entering a market so many other insurers had abandoned, Tim Little, underwriting director - financial lines at Inperio, told FTAdviser he has always been able to work profitably in the IFA market despite others finding it challenging.
He said: “Some of the big insurers that are writing in this space are not currently accepting new business because they are trying to manage their capacity. They don’t want to become too saturated with this class when they have other classes within PI to write.
“I had a business plan that has brought the interest of new capacity to the market and I think our approach, which is a diligent underwriting process which involves talking to every client, is one that we can make work.”
According to Mr Little, Covid-19 had not presented too much of an issue as this entry into the IFA market had “been a year in the making”.
He said: “I wrote a plan for this over 12 months ago and I was talking with Inperio about bringing this to them in February before Covid presented itself as a problem.
“Covid is going to put a lot of firms out of business anyway and so if we can help contribute to saving some good, honest IFA firms in the process of bringing new capacity to the market, I think that is a very good message.”
He added: “There is a negative narrative around IFAs and we would like to be a voice for good. We engage with our clients very closely so we know what they are all about.”
A lack of available professional indemnity insurance and rising costs has seen a significant number of firms give up their DB transfer permissions, causing concern this market could shrink.
Last year, the Personal Finance Society warned it knew of only two insurers writing new cover for advisers with DB transfer work - indeed last year one broker estimated there were only five insurers willing to cover financial advisers for any work at all.
Despite many insurers being worried about DB transfer risk, Mr Little said Inperio’s PI cover will not exclude firms who offer this type of advice.
He said: “My key thought around giving cover for DB transfers is that it is an important tool of an IFA firm and without it their clients will have to rely on a non-related entity, that itself can bring liability that they have no control over.
“If they have the expertise to give DB transfer advice then I believe firms should keep their permission and do it in-house because they can control that process far better than if they rely on a third party firm to give their client advice in that area.