Planner PI scheme on a knife edge
An industry scheme to provide planners with professional indemnity cover is close to being set up, but could be scuttled at the eleventh hour because of a reluctance by dealer groups to release details of previous insurance claims.
After more then two years attempting to set up the scheme, the Financial Planning Association (FPA) said last week it was nearing the end of its negotiations with an insurer.
However, FPA chief executive Kerrie Kelly warned the deal could fall through because some dealer groups were unwilling to provide the insurer, which has not been named, with a detailed claims history.
Kelly, who is this week celebrating her first anniversary as FPA chief executive, revealed a previous attempt to set up a professional indemnity scheme for planners had faltered when dealer groups refused to provide details of claims.
The FPA has been seeking a professional indemnity deal since the height of the indemnity crisis in 2002, when the after-effects of September 11, the HIH collapse and rising insurance claims combined to push premiums for planners through the roof.
At the time, then FPA chief executive Ken Breakspear made a dash to the UK in the hope of securing a deal with Zurich London, but the plan fell through.
“When we go out and ask for insurance histories, it is important that you [dealer groups] are prepared to give it,” Kelly said.
While reluctant to reveal details of the planned scheme, Kelly said the motivation behind it was to protect small and medium planning groups from high premiums. She said many larger groups, including all the bank owned dealers and independents such as Count, had chosen to self-insure for professional indemnity and were unlikely to take cover under the FPA’s scheme.
Asked about her first tumultuous 12 months as FPA chief executive, when the parlous state of the association’s finances were exposed and many staff members were dismissed or departed, Kelly said only that the experience had been “a little bit more interesting than I would have expected”.
Kelly said negotiations over the professional indemnity scheme were “close” to being finalised, but did not comment further on the timing.
“We are in discussions with an insurance group at the moment. Those discussions are quite well advanced,” she said.
AUTHOR
George Liondis
Recommended for you
As the government announces a public inquiry into the collapse of Dixon Advisory, risk adviser Richard Silberman has detailed the three areas that typically lead to an AFSL's collapse.
With a growing number of advisers now running their own business, they need to pivot their career identity to being a business owner rather than just as a financial adviser if they want to futureproof their business.
Zenith Investment Partners has launched a range of new managed account portfolios over the past quarter, including on Insignia Financial’s Expand platform.
The financial services technology firm has officially launched its digital advice and education solution for superannuation funds and other industry players.
