Miller anticipated potential exposures for a SIPP Administrator client, taking pre-emptive action and providing timely guidance that led to the risk being mitigated before any issues arose that could’ve ultimately led to their insolvency.
Miller’s SIPP administrator client was unaware of the potential professional indemnity exposure they faced as a result of underperforming and/or illiquid investments and dealings with un-regulated introducers.
Miller's claims team alerted the client to the fact that a number of their notifications and complaints were linked to specific pension investments. We were aware of similar investment issues that were impacting other financial services firms, and advised our client on the potential implications of not addressing the issue.
We understand the importance of:
- first awareness – notifying insurers of issues as soon as they arise;
- block notifications – notifying the insurer immediately so that future complaints will fall under that notification);
- aggregation – having one claim and excess rather than individual cases); and
- specific exclusions that are included in wordings once the market is aware of a trend.
We therefore advised our client to maintain a distressed assets register and to monitor the number and frequency of complaints connected to any of these distressed investments.
During each policy period that followed, this information was used to make block notifications to insurers, for whom this wasn’t an existing business process, however, we persuaded them to accept the investment as a single claim, attracting one policy excess regardless of the number of complainants.
A few years after our original intervention, an exclusion for all business emanating from non-regulated introducers came into force.
Being one step ahead, we had already notified insurers of our client’s investments. Two of these investments have given rise to hundreds of complaints and successful claims to date but one excess had already been applied in each instance.
As a result of Miller’s proactive approach, our client had adequate cover in place despite the exclusions. Other SIPP administrators facing similar claims had to deal with one excess per claimant. The two problematic investments had an estimated potential loss in the region of £30m and £13m respectively, so without the cover this company would undoubtedly have become insolvent.