Stay Ahead of Risk: Why Professional Indemnity Goes Beyond Just Insurance

John Netting at BareRock explains:

Here at BareRock we take a different approach to PI insurance. As part of how we support firms with more than just insurance coverage, we regularly issue guidance and commentary on emerging and current risks that matter to financial advice practices like yours.
We want our BareRock Briefings to be an essential resource for forward-thinking advice firms who understand that staying ahead of regulatory expectations isn’t just good practice but when and how it impacts their PI risk profiles and business resilience.

As examples here is a summary of a few of our recent briefings:

Artificial Intelligence: Opportunity and Risk in Equal Measure

Our latest briefing on AI implementation reveals how this technology can genuinely reduce administrative errors and enhance compliance monitoring when handled properly. We explored how AI-powered automation helps eliminate human error points in manual processing, while enhanced compliance monitoring ensures consistent standards across all client interactions. However, we also highlighted the hidden dangers: governance gaps, over-reliance on technology, and the critical importance of keeping humans in the decision-making loop. The key takeaway? AI is brilliant as a tool, but firms need robust governance frameworks and meaningful human oversight to harness its benefits safely.

Administrative Errors in Volatile Markets: An expensive Wake-Up Call

Market volatility has transformed routine administrative mistakes into significant financial exposures. Our claims data analysis revealed that administrative errors have risen from 6% to 17% of all claims, with an average cost of £27,000 per incident. During volatile market conditions, simple processing delays can result in substantially higher losses—we documented one case where a short delay in executing a sell instruction cost a client £18,400 during a market decline. The briefing provided practical mitigation strategies, from implementing four-eyes checks for large transactions to strengthening controls during periods of change.

Vulnerability Assessment: Beyond Compliance to Claims Defence

With the FCA’s recent review confirming significant gaps in how firms understand and respond to vulnerable customers, we addressed the reality that traditional compliance approaches often fall short when subjected to FOS scrutiny. We introduced our fifth strategic partnership with Comentis, offering a digital platform that helps identify vulnerability across all wealth brackets. The key insight? Proper vulnerability assessment isn’t just regulatory compliance, it’s crucial protection against future complaints, especially when beneficiaries retrospectively question advice given to vulnerable clients.

The Bottom Line

Many advice firms we work with have found these insights invaluable in staying ahead of regulatory expectations, which positively impacts their PI risk profiles.

“Just read the most recent BareRock Briefing, a great read and, as usual, both topical and extremely useful. Having just completed our PI renewal forms online in record time, I just had to write and thank you—what a difference BareRock has made to our PI experience over the last year. Pragmatic, sensible and just so helpful.” — Pam Stott, Fiveways Financial Planning

Stay One Step Ahead

You can read a full version of our old briefings on our website here.
We’re mindful of your time, which is why we only send briefings when there’s something substantive to share. If you’d like to receive these regulatory insights directly and stay one step ahead of risk, you can subscribe to our briefings here.