With the Banking Royal Commission resulting in a hardening of the insurance market, the Fold Legal has recommended that organisations that looking to get professional indemnity (PI) cover act quickly to ensure they’re not left uninsured.
Some Australian Financial Services (AFS) licensees had reported difficulty in obtaining PI cover, throwing a spanner in the works in terms of their business operations as the Australian Securities and Investments Commission (ASIC) required that licensees dealing with retail clients hold adequate PI insurance.
As a result, the Fold Legal found that some licence applicants were facing “substantive delays” in the approval process.
To mitigate the risk of suffering such delays, the Fold Legal’s head of licensing, Sónia Cruz, recommended that hopeful licensees start looking for insurance early and even engage a broker that specialised in PI insurance. Such a broker would need to be familiar with the compensation and insurance arrangements outlined in ASIC’s RG 126.
Cruz also said that PI applicants should know what they needed it to cover to meet ASIC’s requirements, as well as make it clear to the regulator when seeking a licence what services their business would provide. This would make it clear what needed insurance and what didn’t, preventing potential licensees from obtaining unnecessary cover.
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