A new professional insurance scheme has been unveiled by Financial Advice New Zealand, in conjunction with insurance brokerage firm Curated Risk.
Monday, June 6, 2022, 10:05 a.m.
It updates existing professional liability cover schemes to bring them in line with the licensing requirements of the Financial Services Law Amendment Act 2019 (FSLAA).
This law imposes a strict FAP licensing regime on the industry.
“Previously, financial advisers had individual coverage,” said Clinton Stanger of Curated Risk.
“Since the arrival of the FSLAA, it made more sense for the professional indemnity insurance structure to be in the name of the license holder, ie the FAP holder.”
Stanger said the new PI was a civil policy and covered cases brought against advisers by clients unhappy with the advice they had received.
“In addition to the professional insurance coverage, there is management liability coverage, which is an amalgamation of many previous liability coverages. Legal liability is one of the most important for our profession and there is also a cyber risk insurance policy.
The new system has been available to customers for about a week with a deadline in early July.
In monetary terms, Stanger said the level of coverage would be decided by the FAPs themselves.
“But usually it can be anywhere from $1-2 million or up to $5 million as a limit.
“If a FAP needs a limit greater than $5 million, we have access to insurers to provide that coverage.”
Stanger would not disclose the level of bonuses except that they were “very similar to last year”, and would vary more than before.
Financial Advice New Zealand chief executive Katrina Shanks said the new system had several benefits.
She said that in the past, the insurance plan tried to fit all advisers into a box.
“What advisors will now find is an insurance plan tailored to their needs.”
In addition, previous caps have been removed.
“It’s a modern and relevant new product.”
The program is also supported by new insurance companies: Ando and Berkshire Hathaway, replacing NZI and QBE.
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