threesixty Urges IFA Review of PII Cover
threesixty, the IFA services provider, is urging IFAs to review their professional indemnity insurance (PII) policies because there are still significant disparities in the price and quality of cover available through service providers, despite a softening in premiums over the last 12 months.
While threesixty clients enjoy competitive premiums, typically ranging from 1-1.5% of turnover, many IFA firms are still paying 3% or more of their turnover for PII. Furthermore, some support providers are claiming a significant chunk of these premiums for themselves.
threesixty worked with insurance broker NCG to secure a preferential PII rate for its members in 2003 and 2004, when rates were tight. The market has been in a soft cycle for the last 12 months, prompting better quality insurers to reduce rates and add special features, such as rolling renewal and extended policy terms that enable IFAs to fix costs for periods of up to 18 months and simplify the renewal process. But these cheaper rates and improved features have not been passed on to IFAs by some IFA service providers.
David Brattesani, Partner at threesixty, commented: “Our own IFA clients benefit from the modifications we have in place through a preferred facility arranged via NCG, but other IFAs we speak to still seem to be languishing in outmoded and relatively expensive PII arrangements. IFA support services providers should be adding to the value of their clients’ businesses, not detracting from it. This behaviour is simply not acceptable. We would urge IFAs generally to use the current soft market as an opportunity to seek genuine value from their PII with a proven insurer and in particular, to assess the real value of any support provider who appears to be profiting from their cover.”
threesixty believes IFAs arranging their PII via a support provider should ask for disclosure of commissions or marketing allowances.
Jamie Newall, joint managing director of NCG, commented: “Our insurers value our work with threesixty and we have always maintained that we provide the best value PII product available, providing broad policy coverage with competitive premiums. But other support providers appear to be sacrificing quality cover and attractive premiums in order to generate a commission for themselves at the expense of their IFA clients. IFAs should always ask their support provider if they are receiving any commissions or kickbacks from their broker or insurance carrier.”