UK regulator, the Financial Services Authority, recently stated that despite the new Financial Ombudsman limit being raised from £100,000 to £150,000 , indemnity insurance premiums will not be likely to increase.
Earlier this month the FSA raised the awards limit from the Financial Ombudsman Service. The regulator said it consulted with professional liability insurance providers in order to investigate what kind of impact the increase will have on the price of a premium.
The FSA released a statement in conjunction with the new limit increase in which they said that only a very small number of cases actually exceed the current limit in regards to redress. The regulatory authority instead stated that their view remains that the total impact on business liability insurance firms has a high likelihood of being insignificant at best.
In its consultation with advisers, the FSA discovered that several of these advisers had concerns regarding the impact on premiums. Many such advisers also said that they would like to review further pieces of evidence.
In related news, individual financial advisor network Tenet has come out in condemnation of the increase to the Financial Ombudsman compensation limit. Tenet has been critical of the new limit, stating that the impact on firms will be huge because any decisions made by the regulatory body cannot be challenged in any way.