Australian Professional Indemnity firms also facing headaches

As if the situation in the UK for solicitor firms wasn’t bad enough, Australian firms in need of professional indemnity insurance have also been feeling the pain recently.

Industry officials have called for new approaches to safety guidelines and product regulations due to the way that professional liability insurance underwriters assess the risk of a given planner.  The official who went on record with the statement, Deen Sanders, the Financial Planning Association’s deputy chief, also said that the ambiguity of certain regulatory guidelines also exacerbated the issue.

Mr Sanders, who remarked that business liability insurance underwriters were incorrectly reviewing licensees’ risks, was joined by Alexis Compliance Risk Solutions’ spokesperson, Christina Kalantzis, in stating that the Australian Securities and Investments Commission was not providing adequate safety guidelines and product regulation.  Both Mr Sanders and Ms Kalantzis said that the ASIC needs to make sure that all parties in an investment – such as manufacturers, auditors, and the research house – are all given their due care and attention.

Mr Sanders commented that underwriters are using a formula of approved product list and revenue and charging insurance premiums that reflect that instead of looking at risk.  This leads to underwriters reacting too sluggishly to market issues, added Mr Sanders, going on to say that this leads to every planner being penalised for the bad behaviour of a few bad apples when instead underwriters should be considering which licensees are more worthy of being insured.

However, Aimee Pozoglou, commercial financial lines head for Dual Australia, remarked that the reasons for the recent premium hikes were applicable to every firm within the entire financial planning sector.

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