Rising cost of its Professional Indemnity Insurance was a sign of trouble
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In an opinion piece on moneymarketing.com, the view is expressed very clearly that nobody should have been surprised by the fate of Honister Capital – i.e. its decision to go into administration. As the article points out, the warning signs were there in the rising cost of the firm’s professional indemnity insurance.
Last year, Honister reported that it had made a £3m provision against an earlier review of a business pension switch – a provision that represented three times their profit for that financial year. And there were other professional indemnity insurance claims arising from business written by advisers who had been absorbed into the expanding network with insufficient vetting.
Little wonder then that professional indemnity insurance providers began by hardening up on their rates – to which Honister’s Chief Executive made specific reference at the time – before deciding to refuse cover altogether.