Professional indemnity (PI) underwriting agency PI Direct has established a new mutual insurer, Magian Mutual, following its acquisition of Magian Underwriting Agency.
The insurer provides PI cover for the financial intermediary sector. PI Direct’s acquisition of Magian Underwriting Agency was sanctioned on 12 May, at the same time Magian Mutual received FSA authorisation. The link-up will see ongoing cover provided for the existing Magian book of 750 IFAs, as well as new capacity introduced to the market. Magian Mutual aims to underwrite premium income of £15m in its first year, rising to £25m in its third year.
Michael Wood, chief executive of PI Direct, said: ‘We have for some time been acutely aware of the difficulties IFAs have experienced in obtaining PI cover. Our acquisition of Magian, and the creation of Magian Mutual, will enable us to address these difficulties by providing affordable, and most importantly, compliant cover for quality IFAs of all sizes.’
Paul Smee, director general of the Association of Independent Financial Advisers (AIFA), said: ‘There are some indications of new capacity coming into the market of which Magian is the first. It is key to ensure that mortgage intermediaries and IFAs are first in the queue.’ Smee welcomed any such softening of the market, but emphasised the work AIFA still had to do, to help ensure mortgage brokers and IFAs got their share of further capacity.
Glyn Morris, IFA director for PI Direct, said mortgage brokers had not always been top of the list for consideration, as he believed operating standards were not always as high in this sector as they were in the IFA sector. However, he said if mortgage brokers had robust procedures and standards in place they would be covered, and he expected more to come onto the Magian Mutual book following regulation in 2004. Morris said indications from Magian Mutual’s first six weeks’ trading indicated it was easily meeting targets.