With rising PI claims, more levies and falling premiums, brokers are under fire from all sides
It’s a triple whammy of bad news for brokers this week. As we reveal on page 22, there’s been a spike in errors and omissions claims from cash-strapped clients looking to make a quick buck in the face of claims refusals from insurers. One expert estimates that claims have risen by as much as 20% – and where claims go, professional indemnity premiums will follow. There’s little that brokers can do to buck this trend, other than to ensure their behaviour is beyond reproach. Compliance expert Branko Bjelobaba has suggested that brokers make mistakes particularly around transparency and disclosure.
The FSA agrees, and that’s why the regulator is threatening to introduce yet another levy, this time to pay for its increased workload around client money handling. The authority may be in its death throes, but every time it thinks up a new task, it seems brokers get landed with the tab.
Given the prolonged uncertainty over the Financial Services Compensation Scheme and the wider economic constraints on brokers, the spectre of a new levy is ill-judged and ill-timed. Why is the FSA, currently on another round of ARROW visits, so keen to crack down on poor old general insurance brokers when the perpetrators of the global economic crisis remain unpunished? Could it be that they are an easier target?
Meanwhile, money’s too tight to mention. Our latest commercial premiums index from Acturis shows that average premiums are actually dropping year-on-year in the heartland of commercial combined and packages business (page 12). Taken altogether, brokers would be justified in feeling they’re the ones getting burnt this bonfire night. IT