Professional Indemntiy (PI) Insurance rates to rise up to 30%

PRLog (Press Release) - Apr 20, 2009 -
Sydney, NSW, (BizCover.com.au) – Last Friday’s edition of the Australian Financial Review (AFR) suggested that Australian professionals face a rise in insurance premiums. This follows the increase in negligent claims that have resulted from the current economic climate.  It is predicted that the financial sector will be hit the hardest as insurance is getting more expensive and harder to obtain.  Professional Indemnity Insurance, for financial planners, is a requirement of the Australian Securities and Investments Commission (ASIC).

In the AFR article, Professional Risk insurance specialist MEGA Capital (parent company of BizCover) said that they expect the cost of mandatory professional indemnity for financial planners to increase by up to 30 per cent over the coming 12 months amid rising claims. When questioned about evidence of rising premiums, Mega Capital director Michael Gottlieb said: “This is not speculation. Anyone getting a renewal notice will tell you it is going up.”  

According to the AFR, ASIC will be reviewing it’s policy on what is considered “adequate” indemnity coverage and have proposed to increase the amount required as a result of recent corporate collapses.  ASIC appears hopeful that insurers may reconsider raising premiums, or at least proceed with caution.

In response to this article, Michael Gottlieb stated that prices are increasing in professions linked to investment markets and domestic housing e.g. financial services and mortgage broking. These professions should take the time to differentiate their submissions and ensure that their broker is conducting a remarket of their risk. In contrast, other professions are still enjoying substantial competition and pricing in many cases is reducing. These professionals should make every effort to get quotes from multiple insurers in an effort to keep prices down.”  To aid in this process, Mega Capital has launched the BizCover website which in a few minutes provides online quotes from multiple insurers.