The broker urged brokers to re-examine their own PI cover as it responded to the FCA thematic review into insurance intermediaries’ professional indemnity.
Specialist professional indemnity (PI) broker Griffiths & Armour has urged fellow brokers to examine their PI coverage closely.
Carl Evans, partner and managing director, at the professional risks division, warned that in some cases: “The products are not really fit for purpose.”
The comments follow on from the FCA’s thematic review into insurance intermediaries PI.
That review raised concerns around:
- Exclusions surrounding the suitability of the insurer
- Exclusions around the use of non-rated insurers
- Exclusions around insolvencies
- Unsuitable cover – either cover excluded or at inadequate levels
Evans speculated that there is a “lack of awareness and lack of time” on the part of brokers which leaves them unable to look at their own cover in more depth.
“They spend the most time worrying about their clients and do not pay enough attention to their own needs,” he stated.
He argued that limits for this type of PI coverage are often too low and advised that developments such as the re-calculated Ogden Rate and the Enterprise Act mean that higher limits will be required in future.
Evans commented: “On Ogden the size of the PI awards are going to increase and there will be claims escalation … claims against brokers will be higher so they need to have higher limits of PI insurance.”
Currently the minimum benchmark limits, according to Evans, for PI claims for brokers is £1m. “It is a really low benchmark and some brokers only buy the minimum cover.”
He advised that claims can run into “a lot more than £1m” and added: “We have been trying to push that message for the last five years. There is not a lot of good guidance for the broker community.”
Quality of capacity is also a concern. “Premiums are cheap, claims are going up, and it isn’t an attractive space for mainstream writers,” he stated.
Explaining that Griffiths & Armour only uses A-rated providers for its own PI offering he said he wanted to get the message out to brokers at the Biba event next week that it is not just about price but also about quality.
“It’s the same advice brokers would give to their own customers,” he added.
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