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PII for brokers becoming more difficult due to FSCS levy and insurer exit

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  • 03/02/2021
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PII for brokers becoming more difficult due to FSCS levy and insurer exit
Mortgage brokers are being warned they may find it harder to get professional indemnity insurance (PII) and to be careful when going through the re-broking process.

 

Association of Mortgage Intermediaries (AMI) chief executive Robert Sinclair explained that insurer Beazley’s exit from the market was causing problems and the substantial Financial Services Compensation Scheme (FSCS) levy being thrust on brokers would only make things worse.

Asked about the PII situation on the latest Brightstar video debate, Sinclair noted Beazley had left the market as they were unable to make a profit reducing the field to just three or four who underwrite in the mortgage world along with a limited number of brokers.

The situation has prompted a guide from AMI to help brokers prepare and a warning from Sinclair.

“The big issue is, if you start pushing your CV around too many places you’ll get dropped off the list because actually the insurer if they see the proposal coming from more than one broker they will refuse to quote,” he said.

“So you have to be really careful about how you deal with this.”

AMI has also been discussing market capacity with the Financial Conduct Authority (FCA) as brokers and insurers were saying there was no issue in the marketplace.

However, research conducted by AMI with its members showed “there is a fundamental capacity issue in terms of the number of people writing policies in this marketplace and there is an issue with the quality of some of the brokers as well,” Sinclair continued.

“We’re highlighting that clearly to the FCA so they can take action on it.”

Brightstar Group CEO Rob Jupp agreed, noting he had found the market difficult.

“You’re right about PII – I’ve been quite appalled about the lack of availability of PII this year and also the cost of it as well.”

He noted that finding a new insurer also had an impact on runoff cover, and added: “This is the first year I’ve experienced such a difficult marketplace for PII in a decade it really is crazy.”

Sinclair has long advocated for a levy on all products to work similarly to ABTA and ATOL in the travel sector.

“We wouldn’t need PII in the same way [in that case]. All this is going to make PII harder to get,” he added.

 

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