Boutique financial planning firms tend to be subjected to fewer professional indemnity insurance claims than the wider market, and can benefit from lower premiums, according to an insurance broker.
Insurance House account director Abraham Tavares says his firm only services principal-owned and run financial planning firms.“The reason for that is we believe they have a little bit more control of their staff and their procedures and training and development,” he told ifa. As a result, claims lodged against boutique firms tend to be “quite limited” compared with the rest of the market, said Mr Tavares.Insurance House recently secured an improved PI deal for the 81-member Boutique Financial Planning Principals Group (BFP) directly with the specialist insurance market Lloyd’s, he said.“Initially the BFP portfolio was with Dual, but the arrangement with Dual went sour when they started to increase premiums quite significantly,” said Mr Tavares.Insurance House was able to secure an alternative arrangement directly with Lloyd’s, “purely based on the BFP’s premium-to-loss ratio”, he said.“It’s something that we probably wouldn’t be able to secure with a portfolio that was heading south,” said Mr Tavares.“We’ve been looking after boutiques for the last seven to eight years, and in terms of premiums/claims ratio, they have been travelling pretty well.”
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