Fraudulent PI claims driving premiums up: Vero
Professional indemnity (PI) premiums are high because insurers have difficulty identifying authorised representatives who have made fraudulent claims in the past, according to Vero head of casualty Alex Green.
Responding to the Government-commissioned Richard St John report 'Compensation arrangements for consumers of financial services', Green said the actions of a few "rogue representatives" made PI premiums more expensive for everyone.
"Our biggest concern today is fraud and misrepresentation - the misconduct that is particularly prevalent through small licensees and certain authorised groups in large licensees," Green said.
Privacy issues prevent insurers from sharing information about the dishonest claims made by some authorised representatives, he said.
"We know names of authorised representatives who have bankrupted a lot of people who have trusted them. There are no formal records or documentation around that," Green said.
"The authorised representative could turn up in six months' time at another dealer group," he added.
If there is no formal court case finding against an authorised representative who makes a "false or misleading" claim, the Australians Securities and Investments Commission (ASIC) "cannot know what really happened", and will not add the individual to a publicly available register, Green said.
Green described the Richard St John report as "measured" and "not a knee-jerk", but he said it failed to do justice to the practical problems for PI insurers.
"A significant proportion of the losses that are paid out are due to fraud and dishonesty," Green said.
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