PI 'run-off' cover a major consideration when IFAs come to sell - Professional Indemnity insurance for IFAs

07/08/2009

Written by Neil Pointon

A number of financial advisory firms are set to be "given away" due to concerns about exposure to past liability, it has been suggested.

Speaking to FTAdviser, Richard Howells, intermediary sales director of Zurich's UK life business, states that those businesses looking to sell up may find putting a value on income and clients is relatively straightforward.

However, Mr Howells claims that as there is no long-stop for liability - which could see an independent financial adviser (IFA) face legal action from clients for the rest of his or her life – getting a satisfactory price for it might be difficult.

As such, Mr Howells suggests that there could be set to be "quite a few firms to be given away" as IFAs are so concerned about the potential of being hit with claims that they are willing to sell a business for nothing and now could be the worst time to sell a business unless an IFA is in dire "need to bail out".

Last month, the IFA Defence Union pointed out that those IFAs purchasing a fellow business "would be foolish not to review or take precautions against future liabilities".

Neil Pointon, CEO of specialist PI broker PYV, commented: "This shows the need for IFAs to get their house in order before putting up the 'for sale' sign. In particular, they need to enquire about the availability of 'run-off' cover from their PI broker. As these policies are typically 'claims made' and purchased annually, they may need to factor in the cost of a number of years’ policies."

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PYV are one of the UK's leading providers of professional indemnity insurance. This news article has been produced by Adfero in collaboration with PYV and its unauthorised use is not permitted.

(c) 2009 Adfero Ltd.

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