Despite the difficulties many independent advisers are having with their professional indemnity insurance (PI) amid the continuing exodus of PI providers, solutions are available for those prepared to think creatively, according to dealer services group, Associated Advisory Practices (AAP).
AAP CEO, Soula Cargakis, says: “With the number and size of client claims over recent years and the constantly changing regulatory framework, insurers have become increasingly wary of taking on the risk of insuring independent advisers.
“This has led to not just the reduced number of providers, but also an increased administrative burden and uncertainty for adviser practices. Typically, insurers have increased the demands for information prior to renewal and are taking longer to provide an offer and quote, in many cases only doing so in the week prior to the renewal date.
“With ongoing regulatory changes such as the Tax Agents Services Act, expanding a policy to cover such changes can also be quite a convoluted process. In addition, when there are claims, many advisers have found that they are largely left on their own to manage the issue, without clear guidelines and assistance from the insurer.
“These are all major distractions and stress for an independent practice that they can really do without in the current market.
“However, from the insurers’ perspective their increased wariness is understandable. What they really need is some assurance of the professional standards and compliance framework that underpins your practice.”
According to Ms Cargakis, AAP has been able to work with its adviser clients and underwriters to put together a PI solution that addresses all of these issues, for both advisers and the underwriter.
She says that since the AAP PI solution was launched earlier this year, average renewal premiums have reduced by 10 to 15%, renewal quotes have been provided within 6 to 4 weeks of the renewal date, and the administrative burden at renewal and in the event of a claim has been greatly reduced.
“The key to being able to offer the AAP PI package is that although the insurer is covering each individual advice practice, they have the comfort of knowing they have a rigorous professional standards and compliance program provided by AAP supporting them.
“The renewal process has been greatly simplified with the online process focussing on any material changes and a clear claims process has been established so the adviser isn’t left to fend for themselves.
“Importantly, the product is available through an adviser’s existing insurance broker, as many adviser practices wish to maintain this relationship. We believe that this solution is already putting downward pressure on rates as we’ve found that existing insurers have reduced their rates to compete.”
