AIOFP to self insure for PI
The Association of Independently Owned Financial Planners (AIOFP) will scrap its current professional indemnity insurance deal in favour of a new scheme that will see it largely self-insure.
The move would cut premiums for the association’s members to just 0.5 per cent of revenue, down from the more typical figure of 1 to 2 per cent, according to chief executive Peter Johnston.
Johnston warned professional indemnity premiums for planners could once again hit the dangerously high levels of 2002 and 2003 if insurers are hurt badly by Hurricane Katrina-related claims.
Under the planned new scheme, all AIOFP members would contribute 0.5 per cent of revenue to a central pool, which will be used to pay for any claims against members worth less than $500,000.
The association would seek to insure all claims above $500,000, with premiums for this cover also paid for from the central pool.
The current AIOFP scheme, where brokers Willis Australia provide a facility to secure cover for the association’s members through AIG or QBE, would make way for the new arrangement.
“With cyclone Katrina, the market is going to get tight again. We are expecting the market to get tough again so we are putting this strategy in place to combat that,” Johnston said.
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