Some new legal ground has been broken in New Zealand with respect to indemnity insurance covering financial planning practices.
The case involved a couple who claim to have lost hundreds of thousands of dollars through investments made on the recommendations of a financial advisory group, including into failed financial group Bridgecorp.
The couple argued that the financial advisory group, Vestar, held indemnity insurance with QBE Insurance and that QBE should have to pay to cover Vestar’s negligence.
However, newspaper reports from New Zealand today say that the court declined to overrule exception clauses in the insurance policy relating to Vestar recommending investment in companies that subsequently failed.
The court’s decision has given rise to claims in New Zealand that the question of indemnity insurance needs to be overhauled and has asked that the Government examine the issue.
