Simon Goldthorpe: How to get in the best shape for your PII renewal

3rd July 2020

This article first appeared in Professional Adviser.


Renewing PI insurance is one of the biggest challenges financial advisers currently face, writes Simon Goldthorpe, who outlines a few ways advisers can potentially save on their yearly renewal…

Insurers have become increasingly nervous in the past few years about services such as DB transfers, thanks to high-profile mis-selling scandals.

Other factors such as the Financial Ombudsman Service increased limit for advice-related complaints compound matters and mean advisers have been grappling with higher premiums, soaring excesses and tighter restrictions.

The difficulties have been highly documented and the FCA recently announcing its latest measures to protect consumers means the process of securing cover is unlikely to ease any time soon.

But it’s not all doom and gloom. There are several things advisers can do to help strengthen their position and increase their chances of getting cover at a rate and terms that work for them.

Detail, detail, detail

The proposal form is the minimum amount of information to be provided on your firm, but also an ideal place to promote your business. Set out all the relevant information in a clear and easy-to-understand way that creates a narrative around your work – soft facts are critical.

In a separate document, provide notes, commentary, graphs and calculations around cases that you‘ve worked on. Start with the bigger cases, as these represent a higher risk to you and an insurer.

Show where your business is strong and where you’ve minimised risk, but be upfront and honest in highlighting the risks that remain.

An underwriter will consider your renewal against similar firms, so giving them a wealth of useful information will make their life easier and also build a better case for your business. It may also help you to reduce the cost of your cover.

Start early

Set aside a good amount of time to collate the above information so that it doesn’t become a last-minute burden.

If, for example, you have hundreds of files to review, work on a few each month. Identify some of your riskier cases and pull out the relevant facts as you go, rather than trying to do it all in the last few weeks before your renewal date.

For DB transfers, it might make sense to start with the cases that resulted in the largest fees, or a review of your biggest clients. Whatever your preference, starting early will put you in far better stead by the time that the renewal comes around.

Focus on ongoing service

Positive ongoing relationships, rather than one-off transactions, are much less likely to result in costly complaints. Highlight these to show why your business should be viewed as less of a risk.

Small things to suggest how you are doing things right and why your clients trust you, can go a long way. Bring in concrete examples of where you undertake regular review meetings or issue monthly newsletters and investment bulletins. Having a lot of clients who are family members also makes complaints less likely.

Finally, showing that clients have not lost out is a powerful sign of lower risk and therefore chances of a complaint, so look at bringing this to the fore.

Demonstrate quality control

If you’re concerned about your chances of securing cover it may be worth considering appointing a quality control specialist.

As an example, having all advice pre-approved to our own standards has enabled us at Beaufort Financial to demonstrate oversight of practices across the firm, something which has become integral to our ongoing cover as a result.

Having an independent expert in place to ensure all advice meets requirements will tell an underwriter than your firm takes compliance seriously and that you are doing what you can to get things right.

In this increasingly challenging market, following these steps will help you formulate a careful submission that gives you the best chance of securing competitive PI insurance for your firm.