The FSA's stance on the rise of professional indemnity insurance far underestimates the market reali...
The FSA's stance on the rise of professional indemnity insurance far underestimates the market reality, according to research conducted by O'Halloran & Co, an intermediary firm based in Lincoln.
David Kenmir, director of investment firms division at the FSA said in late October a review found that premiums have increased on average by 50% this year but this is not out of line with increases in other comparable insurance markets.
However, Paul Croft, an adviser at O'Halloran & Co, said costs of the insurance for intermediaries has increased by between 340%-360% over the past five years.
Kenmir said that over a five year period IFAs' premiums have, as a percentage of turnover, increased from 1.4% to 3.5% and other professionals still pay higher premiums for their PII.
Croft said if Kenmir examined his research figures carefully, he would find that from 1997 to pre 11 September 2001, PI insurance premiums remained fairly constant, and in a number of instances reduced as a percentage of turnover. Immediately, following the 11 September 2001 attacks, premiums rocketed.
Philip Evans & Associates, an IFA in South Wales, said the FSA's figures on professional indemnity cover as a proportion of turnover, have no bearing on reality.
Evans said his PI cover increased to 2.3% of turnover in 1997, 2.4% in 1998, followed by 3.1% in 1999, 3.6% in 2000 and then jumped to 7.4% in 2001.
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