PAA negotiates lower PI rates
UPDATED: The Professional Advisers Association has strengthened one of its key membership benefits by negotiating significantly lower professional indemnity insurance premiums for its members.
Tuesday, May 1st 2007, 6:26AM
The association, which has around 600 mainly risk adviser members, has secured these new rates from Lumley, and they are guaranteed for the next two years.PAA chief executive Dave McMillan says “the new rates represent a 33% reduction for members with $1 million of cover.”
The new premium for $1 million worth of cover is $660 a year.
McMillan told Good Returns that he was "absolutely rapt" with the results of the negotiations and that they were "a little bit better then we hoped for."
He says that the reduction in rates is due to three main factors including the “negotiation power that we now have with insurers.”
The PAA also has a “sound claims history. General claims insurance experience in this space is that the biggest claims come from the investment advice area, not life insurance. As the PAA is predominately life advisers their claims are lower.
The third factor is “the relatively soft nature of the market at the moment.”
“The (PAA) board are delighted with the result and in combination with our Educational Pathway and the now myriad of other benefits we provide for members we believe we are well positioned to continue to grow our membership.”
The Institute of Financial Advisers renegotiated its PI cover last year, which is also provided by Lumley, and claimed that it had similar pricing to the PAA scheme.
However, the PAA scheme was lower and is now significantly lower than the IFA's one.
McMillan says the PAA runs a parallel PI scheme for mortgage brokers and that has the same premiums as the main scheme. While the premiums are identical at the moment they could change if different claims experience develops.
Currently the PAA is planning to merge with the Life Brokers Association. McMillan says LBA members will be eligible for the new rates if they choose to switch schemes.
The LBA will vote on the merger proposals later this month.
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