PI insurance premiums up 30 per cent: Christina Kalantzis
Professional indemnity (PI) insurance premiums for financial planning practices are up 30 per cent from last year, according to Alexis Insurance Brokers principal Christina Kalantzis.
The average 'one-man-band' practice is currently looking at an annual premium of $7,500-$8,500, she said.
"It's the ongoing cost as well. Five years ago, the excess could have been $10,000. Now they've gone up and it's $50,000 plus," Kalantzis said.
If planners want a smaller excess - say, $20,000 - they would be faced with annual premiums in the $10,000-12,000 range, she added.
Some providers of PI insurance have 'layered' excesses when it comes to Financial Ombudsman Service (FOS) claims, Kalantzis said.
"So they'll say your first FOS claim is $20,000, your second claim is $30,000, and your fourth is $50,000," she said.
Kalantzis agreed with most of the findings in Richard St John's report into compensation for retail financial services clients, released earlier this week.
"It's quite a balanced report ... I agree that PI insurance for AFSLs [Australian Financial Services Licences] at the moment is getting tighter and the coverage is getting more limited," Kalantzis said.
Kalantzis was also eager to hear Minister for Financial Services and Superannuation Bill Shorten's response to the report in the coming months.
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