PracticeAccounting FirmsIrish institute wants probe into PI costs

Irish institute wants probe into PI costs

The cost of professional indemnity cover for one Irish practice has trebled this year, even though no claim has been made against it, according to the Institute of Chartered Accountants in Ireland.

Link: Professional indemnity too risky for insurers

The firm, which is not one of the so-called ‘Big Four’, has not been named, but details of its premiums bill, which has soared from £31,000 to £96,000, have been submitted to the Irish Competition Authority.

It is currently investigating the escalating cost of motor, employers’ liability and public liability insurance, and the institute wants the probe extended to professional indemnity cover.

Such insurance is compulsory for all ICAI members, according to chief executive Brian Walsh, and most practices carry cover significantly above the minimum requirement. ‘This creates a captive market and makes practices particularly vulnerable if insurers engage in uncompetitive behaviour,’ he warned.

The institute had reason to believe, Walsh said, that the minimum professional liability premium for a sole practitioner had doubled to £127. In some cases, in recent months, ‘we are aware of increases which have ranged from 60% to 400%’.

Most of the ICAI practices were small, with over 700 having, at most, three partners. Rising professional indemnity costs posed ‘a significant threat to their viability’, he said, which was why the institute wanted the Competition Authority probe extended. If the Authority agreed to do so, ‘we can provide it with the details of practices where significant premium increases have been quoted despite an absence of claims’.

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