QBE Insurance has told underwriters it has ceased quoting on new business for professional indemnity (PI) insurance to financial planners as a result of the collapse of Australian Capital Reserve (ACR) last Friday.
The company announced its decision in communications issued to underwriters earlier this week, but it is not yet clear whether financial planning groups have been made aware of its position.
It informed underwriters that “following the placement of ACR into administration this week QBE will cease to provide new business quotes for Professional Liability covers involving financial planners”.
Underwriters were also informed that QBE would continue to offer renewals to financial planners with existing PI policies.
QBE failed to respond to calls by Money Management to confirm either whether it has ceased selling new PI insurance to planners, or whether it would offer renewals.
However, Money Management has evidence of electronic communication in which senior managers of the insurer confirm both these decisions are in place.
In addition, an interview with a senior insurance executive, who wished to remain anonymous, has confirmed his company’s receipt of a formal communication from QBE informing them of its decisions.
A number of issues are unclear, including whether the cessation is temporary or permanent, and whether or not it applies also to finance brokers or solely to financial planners.
It is also unclear whether the cessation was motivated solely by the collapse of ACR, and if so how many planners insured by QBE were involved, or also by the recent collapses of Westpoint and Fincorp.
ACR and its parent company EPG are now in the hands of respective administrators, PricewaterhouseCoopers and McGrath Nicol, following the collapse of the property investment scheme last week.
The group owes $220 million to banks and other financiers and $330 million to 7,000 individuals who invested in the scheme over its seven years of operation.
