Financial Advice NZ Professional Liability Programme
This bespoke programme has been designed specifically for the protection of Financial Advice Providers (FAPs) and Financial Advisers, and delivers a dynamic, modern and relevant professional liability insurance cover for your professional needs.
Obtaining professional indemnity insurance is important for financial advisers’ protection against potential claims made by their clients for financial losses or damages resulting from the advice provided. Even if a financial adviser is highly skilled and provides excellent advice, mistakes can happen, and without indemnity insurance, they could be personally responsible for these costs, which could be financially devastating.
There are three distinct parts to the programme:
- Professional Indemnity Insurance
- Management Liability Insurance
- Cyber Risk Liability Insurance
About the programme
Katrina Shanks, CEO Financial Advice NZ speaks with Clinton Stanger from Curated Risk about the Financial Advice NZ Professional Liability programme.
Highlights of the programme are:
- It is tailored to your specific requirements as an adviser. We have recognised there are different types of advice and have structured the insurance product and premium accordingly.
- We are building long-term partnerships with two insurers who were new to the programme in 2022 – Ando and Berkshire Hathaway. Ando provides capacity for the Mortgage, Life and Health and KiwiSaver advice liability insurance. Berkshire Hathaway provides the programme for advisers who offer Investment advice.
- These insurers have experience in financial intermediaries and their underwriting capacity has significant financial strength.
- We have unlimited access to cover for members who provide Fire and General Advice.
- You can obtain base cover of up to $5 million; and apply for additional layers to $15 million if required.
- Discretionary Investment Management Services can be covered if you have such a license.
- Curated Risk will provide quality advice to ensure you understand the cover being applied for and provide the right solution for your individual needs.
Professional Indemnity Insurance
The limit of indemnity is in respect of your FAP practice and engaged Financial Advisers only. It covers the advice provided by your FAP (salaried employees, commission employees, authorised bodies, and contractors who give advice under your license). It is based on your revenue, not the number of advisers in your FAP and is not aggregated across all members in the programme – your policy is to the level you choose with the amount you consider appropriate for your programme. Other FAPs’ mistakes do not affect your cover. This cover is yours and yours alone.
The programme is in two parts depending on the advice which your FAP provides.
Part 1: Mortgage, Kiwisaver, Risk and Fire & General Advice
- The insurer for this part of the programme is Ando with Lloyd’s of London as the underwriter.
- Limits of Indemnity available $1m, $2m, $3m, $4m and $5m standard with defence costs in addition to your limit of indemnity.
- The policy extends to you having cover for PR consultants to protect your reputation as a direct result of a valid claim.
- Cover available for Fire and General insurance advice rather than limited to referral only or a percentage of your advice.
Part 2: Investment Advice
- The insurer for this part of the programme is Berkshire Hathaway Specialty Insurance.
- Limits of Indemnity available $1m, $2m, $3m, $4m and $5m with defence costs to $1m.
- Investment fluctuations write back cover can be purchased as additional cover.
For both programmes:
- Retroactive date – the new insurers are able to match your current date.
- The policies contain an Automatic Reinstatement.
- Covers all areas of financial advice which your FAP provides.
Management Liability Insurance
This cover is provided by Ando – Directors and Officers Insurance is being underwritten by Lloyd’s of London and the balance of the management liability underwritten by The Hollard Insurance Company Pty Limited.
Features of this cover are:
- Cover includes General/Public, Statutory, Employers Liability, Crime Cover, Legal Prosecution and Defence Costs, and Directors and Officers Liability.
- For sole advisers, or Class 1 full licences who require only General & Statutory Liability we have this option.
Cyber Risk Liability Insurance
This cover continues to be provided by NZI Insurance. As cyber resiliency becomes a larger focus for financial advisers this provides an accessible cover which is widely adopted across financial adviser programmes in New Zealand.
Features of this cover are:
- Limits of Indemnity available $500,000, $1m, and $2m.
- Excess options based on fee income to your FAP.
- Social Engineering Fraud is an optional extension which can be purchased.
In the new environment, this is a must-have insurance. It is essential to think about cyber risk not as an IT or technology risk, but as a true business risk. The insurance industry considers cyber risk will grow to the biggest liability insurance portfolio in a matter of years.
Cyber Risk insurance does not protect against a cyber event; however, the policy provides immediate access to breach coach services, IT consultants, and forensic data experts who can help minimise the interruption to the advice practice. There is also access to public relations consultants to assist with advice around how to manage the reputational aspects of such an event.
This is available if you are going to retire, cease to trade, or sell your advice practice and no longer provide financial advice.
Frequently Asked Questions
Katrina Shanks, CEO Financial Advice NZ asks Clinton Stanger from Curated Risk some frequently asked questions about the Financial Advice NZ Professional Liability Programme.
How to apply and the process
Curated Risk will utilise a Risk Evaluation tool to gather details of your FAP practice. The question set will be dynamic to the types of advice you offer.
On completion of the initial Risk Evaluation, Curated Risk will deliver a recommendation and programme summary for your review and consideration.
Confirming acceptance of the programme will be done through a placement link allowing surety of the cover you have.
Invoicing will come directly from Curated Risk and be able to be paid annually online, or through a Premium Financing arrangement that is bespoke to Financial Advice New Zealand members from a New Zealand-owned and operated independent premium financing company.
The 2023 renewal of the programme will begin in mid-April 2023.