TheFinancial Planning Association’s (FPA) professional indemnity (PI) taskforce has been strongly criticised internally with claims the initiative has stagnated in securing an association-wide underwriting deal for its members.
AMPAdvisers’ Association chief executive Neil Whelan, who is part of the taskforce, says after FPA negotiations in April for cover with Zurich London fell through, there have been only “one or two meetings”, and that momentum has “stagnated at the moment” as the FPA considers other insurance options.
FPA general manager for member services Rohan Burgess has confirmed the association has not been before an insurer for seven months, but says it has been working to get “the fundamentals in place” to secure a deal.
However, Burgess also says that as this work is still ongoing, the association does not intend to front an insurer with a case for PI cover until February 2004 at the earliest.
This comes at a time when Whelan says the FPA is under “enormous pressure” from its members to find a PI solution, and that it has not overcome the biggest challenge for cover which lies in the sheer number of its members.
Burgess says the FPA has commissioned a $20,000 study of principal members and is sitting down with the compliance arms of larger groups to get the information that would provide a risk model for an insurer.
The association has also recently appointed a major insurance group as a consultant on the issue, with Burgess saying this will plug a skill gap internally and contribute to gaining a deal.
Burgess says the FPA is also preparing an application for the new Professional Standards Council which will enable liability capping for the association, though this will depend on when recently agreed upon professional standards legislation is passed in New South Wales.
“We haven’t been sitting on our hands. We need to go back-to-basics and get the fundamentals right before we front another insurer,” Burgess says.
Though Whelan says the FPA is looking at introducing a mutual fund self-insurance model for PI cover instead of courting more underwriters, Burgess says although this is an option, it is not being actively pursued.
