Equity release could be the next area that claims management companies turn their attention to as it is seen as an “easy target”, according to one PI insurer.
Speaking at FTAdviser’s Financial Advice Forum, Jonathan Newell, chief executive of insurance provider BareRock, said claims management companies have never tackled the defined benefit transfer market as it was seen as “too difficult”, but equity release claims could be next in their sight.
Newell said: “The other area that's perhaps at risk, and arguably the low hanging fruit for claims management companies is perhaps equity release. I think this could be an easy target.”
He said the weak spot here is potentially how passive advisers can be in getting the beneficiaries to attend the advice process.
“It's kind of asked for, but they don't really insist upon it,” he explained.
“Bearing in mind that those beneficiaries of the estate are going to be the future complainant, I think it would be a real smart move to be a bit sharper on that and encourage people to attend the advice process.”
Retirement advice
There was also the question of whether retirement and pensions advice could be next on the list of claims filtering through to PI insurers, especially after the Financial Conduct Authority launched its thematic review into this area.
Marjolaine Quirke, director of client delivery at Tenet Compliance Services who also appeared on the FTAdviser panel, highlighted that the FCA had sent advisers a long, detailed questionnaire on this area of advice.
“I think from that questionnaire when the regulator said they were going to be data led, they weren't joking,” she said.
“The same approach probably makes sense in the PII market, because if you look at a firm, there's quite a lot of information that can help to paint a picture. Consumer duty is raising the bar, but also making us look at our own practices - how much information are we tracking? How do we evidence that the outcomes are the outcomes that we are all trying to achieve?”
New PII service
Last week, FTAdviser revealed BareRock has launched a digital platform offering professional indemnity insurance to regulated financial advice firms.
BareRock's service seeks to fix the ‘broken’ PII system, in that it will reward advice firms that can evidence a risk-mitigation approach with fairer and more stable PII premiums.
BareRock was founded by Jonathan Newell, who has 30 years’ experience in PII, along with intermediary compliance expert John Netting and James Adley, previously an underwriter at Lloyd’s of London.
Discussing the reward-based system, Newell told the crowd at the forum that behavioural change was at the core of what the business was trying to achieve.
“The legacy market rates firms based on industry averages and product count. What we're looking to do is look at a firm's culture and conduct and how client centric that they are and use that as our base point,” he explained.
