Advisers face PI premium hike following collapse of Quinn

An increase in professional indemnity (PI) insurance claims and the collapse of a major insurer means IFAs are facing hikes in their premiums.

Northern Irish insurer Quinn Insurance, which provides professional indemnity insurance to a large number of IFAs, was placed in administration on April 15 and although current PI policies with the insurer are still valid, Quinn Insurance has stopped writing new business in the UK. IFAs with a Quinn Insurance policy will have to seek a new insurer when their current policy comes up for renewal, possibly increasing the cost.

Those who are insured with other companies will not escape the rise in the cost of premiums which comes with the collapse of a major PI provider as the market becomes less competitive. This is coupled with a significant rise in the number of claims made on these policies in the last 12 months which has also driven up costs.

Brian Boehmer, a specialist PI broker at Lockton International explained that while tricky to predict how much the average increase would be a hike in rates was inevitable.

‘It’s difficult to quantify an exact amount but the rates of some policies increased over the last 12 months because of the number of claims made. Then you have an insurer, which insures a number of them [IFAs], go into administration .Its going to have an impact on the IFAs,’ Boehmer said.

‘Previously, some IFAs have managed cashflow by looking for cheaper insurance, but they now have to face the fact that PI cover going forward will be more expensive and harder to get.’