As a proportion of revenue, smaller insurance intermediary firms are still paying out far more for professional indemnity insurance than the largest firms, the Financial Conduct Authority’s latest data bulletin shows.
Firms with revenue of up to £100,000 paid an average premium of £2135. That means firms with a mean average revenue of £42,214 would spend the equivalent of 5.1% of their total revenue on PI.
In contrast, insurance firms with over £10m in revenue typically paid around £492,680 for their cover. Based on average revenue within that category of £5.9m, the premium is just 0.8% of revenue.
Talking about the difference in premiums paid, Melanie Hampton, MD of smaller broker Alexander Miller, said: "We deal in insurance and it has to be about risk. You have to assess the risk. I don’t think the market is trying to screw small brokers. I’m not sure that’s the way it works. I think that they are just assessing the risk the way that it is."
In the middle of the field, insurance firms with £101,000 up to £500,000 in revenue paid £5673 towards PI premiums on average. Based on average revenue within that category of £252,000, that works out as 2.2% as a proportion of revenue.
Firms with revenue of £501,000 to £10m saw higher premiums as a percentage of revenue than the bracket below, with on average £80,735 – the equivalent of 3.7% of revenue – going on PI cover.
In total, firms paid £221.4m in PI premiums in 2017.
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