The emergence of Professional Indemnity (PI) policies with longer policy periods could be a sign that the PI market is reaching the bottom of the cycle, it has been suggested.

Neil Pointon, Chief Executive of PI broker PYV, proposes that a long-term policy could prove beneficial for intermediaries if the market were to harden in coming years.

He made his comments in light of the increasing number of multi-year PI policies becoming available.

Mr Pointon said: "Usually PI is offered as a 12 month contract but the current very soft market conditions have allowed insurers to review this position with many offering 18-month periods and some offering two-year deals.

"Clients should seriously consider taking advantage of these offers as it could be a way of locking in highly competitive terms. Historically, the offer of longer-term policies has heralded the hard market around the corner."

The suggestion of potentially more difficult PI market conditions ahead is supported by the Association of Independent Financial Advisers (Aifa), which has predicted such hardening could occur following the implementation of the Markets in Financial Instruments Directive (MiFID) in November of this year.

Aifa claims that it is "highly likely" that PI rates will harden in the UK once the MiFID comes into effect.

Mr Pointon cautioned that it is very important to use a specialist PI broker when arranging longer-term policies to ensure that they meet with the requirements of the FSA. Using the right broker should also enable the client to access the Lloyd's market as well as company markets to ensure they get the best deal.