Insulating Members from rising professional indemnity (PI) premiums
The NACFB Mutual, managed by specialist provider Tower Insurance, is available exclusively to NACFB Members and seeks to provide more expansive PI cover tailored specifically to the needs of commercial finance brokers. The NACFB Mutual also delivers additional benefits such as competitive premiums based on each Member’s individual risk profile. The NACFB Mutual has been developed in direct response to a PI market plagued by increases in premiums and excesses, alongside reductions in policy coverage.
Wholly owned by its policyholders, the NACFB Mutual is governed by an elected board of directors and will only cover the professional indemnity exposure of NACFB Members. Owing to the minimum standards reviews undertaken by the Association, NACFB Members carry a lower risk profile than many non-Members and the Mutual’s pricing reflects such benchmarks of professionalism.
In a recorded address, Association Chair Paul Goodman has shared how the NACFB Mutual can support all Members with the provision of their professional indemnity cover
| Policy Feature | Standard PI Policy | NACFB Mutual |
|---|---|---|
| Policy protects against claims from lenders?* | ❌ | ✅ |
| Designed by NACFB Members for NACFB Members? | ❌ | ✅ |
| Pricing based upon sectoral risk profiling? | ❌ | ✅ |
| Pooled risk based and collective oversight? | ❌ | ✅ |
| Adaptable policy for claims outside of terms? | ❌ | ✅ |
| Exclusively for NACFB Members? | ❌ | ✅ |
* Excluding debit back claims
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Key benefits of the NACFB Mutual
- Competitive pricing – NACFB Members who have already accessed the Mutual scheme are achieving savings of up to 30% on previous policies.
- Enhanced coverage – The Mutual’s cover protects against claims from third parties, including commercial lenders – excluding lender claw back claims. Most current policies contain a lenders’ liability exclusion clause which does not protect against claims brought by lenders.
- Reduced volatility – The NACFB Mutual has been structured so that it rides out the general cycles of the insurance market. The Mutual is sector-led, sector-driven, and sector managed – enabling greater agility.
- Increased knowledge – Those taking out cover through the Mutual will share ownership of it and have a say in the Mutual’s management through the election of a board of directors.
- Longer-term resilience – The NACFB Mutual will be run much like the NACFB itself, with no shareholders demanding short-term profits.
- Product adaptability – Policy holders within the NACFB Mutual reserve the right to approach the board of directors and ask the Mutual to cover elements that fall outside of the initial terms. Such a strategic deployment of the Mutual enables the industry to isolate and address onerous claims quickly, mitigating against any wider market impact.
“21% of NACFB Members said the biggest threat to their brokerage in 2021 was the rising cost of PI. Rather than wait for premium prices to fall, we have taken matters into our own hands. For the last few months, the Association has been quietly rolling out a viable solution, one that not only provides Members with better cover at a lower premium but also provides tangible Mutual benefits to the policyholders.”
“The broader professional indemnity market has been a poorly performing sector for insurers, and it was evident to us that our Members were being unfairly categorised, when in reality, they carry a much lower PI risk. In addition, the ongoing delivery of data from our Members will enable us to maintain a fairer cover.”
NACFB Mutual is a member of the Association of Financial Mutuals
NACFB Mutual Ltd (NACFB Mutual) is an appointed representative of Tower Insurance Brokers Ltd who are authorised and regulated by the Financial Conduct Authority.