Business Insurance Specialists Pty Ltd is a specialist provider of Professional Indemnity Insurance for Financial Service firms. As a licensed general insurance brokerage, we have access to both Australian and overseas including London markets, and are able to negotiate competitive terms on your behalf.
The Financial Planning industry is undergoing massive change and upheaval, with the divestment of the planning arms from the major banks. With this exit, we notice that a substantial number of boutique firms are commencing operations. With our understanding of the market, we can obtain the required coverage for your business.
Due to Financial Planning firms being ASIC Licensees, your insurance requirements are determined by the Corporations Act. The minimum requirements are a limit of $2,000,000 excluding legal costs, meaning that legal costs are in addition to the limit. This is detailed in ASIC Regulatory Guide 126 within the Corporations Act
Depending on the turnover of your business, this limit may need to be increased as per ASIC Guidelines. Separate to this, we are aware that Financial Planners may need more coverage than the statutory required minimum. Due to the potential size of claims that may occur due to negligent advice and resultant financial loss, this should be considered.
The number of insurers and their capacity to offer terms has shrinked markedly in recent years. With recent enquiries and banking commissions mandating required actions that impose increased responsibilities on planners, the cost of insurance, has increased. Major factors that insurers use in determining cost is the risk profile of the business and type of advice being provided, experience and competency of management and staff, risk controls in place and turnover.
Our insurers meet ASIC guidelines with policy benefits including RG 126 Compliant wording, Civil Liability Insurance clause. Activities such as providing tax (financial) advice services are covered, and loss of documents and official investigations hearings cover is insured also.
Professional Indemnity coverage is ‘claims made’ meaning you must report to the insurer immediately any advice from a client whereby they believe you provided wrongful advice whether by error or omission. If the writ or advice is provided after the next renewal date, you have no insurance coverage.
We suggest that you budget for run-off coverage on the basis that you may need to maintain insurance if you sold your business, and your purchaser is requiring the risk and liabilities to remain with you as seller. Sellers of Financial Planning business are often not aware of this requirement until they are signing the business sale documentation.
We suggest that a planner review their potential run-off costs at policy inception, and periodically as these costs are potential exit costs in operating the business.
Business Insurance Specialists Pty Ltd has committed to providing market leading Financial Planner Professional Indemnity insurance and assisting planners in obtaining appropriate and competitive cover.
For a no obligation review, please contact our team today.