Professional Indemnity Insurance and other Management Liability Insurances

We are proud to present to you our Financial Advice NZ 2021/2022 Liability Programme which has been designed for financial advisers.

We started our initial conversations with insurers at the end of 2020 to ensure we could provide to you a membership benefit which we believe reflects the elements of being a professional financial adviser. A key component of this is a Liability Programme which includes Professional Indemnity Insurance. We know the value of Professional Indemnity Insurance to you as it provides you and your clients important protections if something goes wrong.

Professional Indemnity Insurance is a hardening market and the process to finalise this programme has been robust. These have been uncertain times due to the changing regulatory environment and the risk appetite of insurers.

The development of this programme has been a journey and we understand and appreciate the concerns you have in relation to obtaining Professional Indemnity Insurance.

It is important that we have an effective, sustainable, and comprehensive Liability Programme for financial advisers, that is why we are pleased to be able to offer a programme which meets the needs of FAPs in both Class 1 (sole advisers) and Class 2 (more than 2 financial advisers in a FAP).

We believe our programme is competitive in the current market and offers benefits which recognise you belong to Financial Advice NZ as your professional body. In addition to this, we have negotiated some outstanding extensions to the programme which you will directly benefit from.

In addition to the Professional Indemnity Insurance, we also have developed a suite of Management Liability Insurances for you to consider.

Below is a summary from Marsh our adviser, who have assisted in the development of this programme, which provides a brief outline of the programme which is being offered to members and a timeline.

 

 

Financial Advice NZ Liability Programme

This summary is to provide to you an outline of the features of the Financial Advice NZ 2021/2022 Liability programme, a timeline of the information we will be providing to you and when we expect to be opening the proposal process.

The features of the programme are different depending on your FAP’s licence class and size.

Class Professional Indemnity Insurance FAP Cover
Class 1 Sole Adviser Licensed FAP The Sole Adviser Policy for your FAP covers all advice provided by your FAP.
If you were any existing member of the Liability Programme at 30 June 2021 and had applied for FAP cover in the interim programme, you will receive complimentary cover for your past advice.
Class 2 Licensed FAP with between 2 and 12 advisers This Policy for your FAP covers the financial advisers engaged by your FAP as well as any Authorised Bodies under your licence.
Class 2 Licensed FAP with 12+ advisers Terms available for licensed FAPs with greater than 12 financial advisers are available on application (FAPs with more than 12 advisers are referred to NZI for individual underwriting).

 

Other aspects of the programme include:
•   Continuation of monthly payment options for annualised premiums under $5,000 (+gst.) All Class 1 licence holders can pay monthly for a further 12 months regardless of annual premium. Note: There are no additional interest charged by a premium funder on the monthly premiums for this benefit.
•   Options to increase excesses to reduce premiums.
•   You choose your limit of indemnity from $1,000,000 to $5,000,000, but with an option to provide an excess layer for higher limits.
•   The premium is determined by the advice stream you provide, with a minimum premium payable.
•   Depending on your advice stream(s) mix, you may be eligible for included Fire & General protection.

Premium Range for PI
•   For a single adviser (Class 1) the FAP minimum annual premiums range from $1,700 to $3,600 depending on your advice stream(s).
•   For multi adviser (Class 2) the FAP minimum annual premiums range from $2,250 to $4,300 depending on your advice stream(s).

Additional options
•   Access to run-off cover for past advice
•   You can also add on other insurance protections such as Management Liability with the following policies included:

o   Public Liability
o   Employers Liability
o   Statutory Liability
o   Directors and Officers Liability
o   Legal prosecution defence insurance
o   Employment disputes
o   Cyber liability

•   The above is also available to non FAP entities such as Authorised Bodies who require their own Management Liability coverage for their own entities.

Next Steps
If you are a current member of The Financial Advice NZ Liability Programme, you would have received more detailed information about the programme wording. You will receive an email with an online proposal form for your FAP to complete on approximately the 14 June 2021.

If you are not a current member but would like to join the programme please contact Marijke von Molendorff on Marijke.vonMolendorff@marsh.com or Aissa Signal on Aissa.signal@marsh.com to obtain further information.