Asendium offers users 20% PI reduction
Asendium has partnered with LML Insurance to offer reduced professional indemnity (PI) insurance for Asendium users.
PI costs have significantly increased in recent years with estimated figures showing a 75 per cent rise between 2019 and 2022, and various players exiting the market. Some factors affecting the price of PI insurance include turnover, management expertise, claims history, systems and controls in place, and the risk profile of a licensee’s business.
In a submission to the Quality of Advice Review last year, the former Financial Planning Association of Australia (now Financial Advice Association Australia) said PI insurance premiums cost 2 to 3 per cent of business revenue for small financial advice licensees and almost all said their premiums have increased year-on-year.
Over half said they have experienced an increase of 50 per cent or more.
The tripartite agreement between Asendium, LML and the broker will offer reduced PI premiums to any AFSL holders who use Asendium’s financial planning software, as much as 20 per cent off the insurers’ standard rates.
LML Insurance Group managing director, Bryan Leibbrandt, said: “Data suggests PI insurance costs have increased over 75 per cent between 2019 and 2022, and although it is leveling off somewhat with additional capacity coming into the market, we are still seeing pockets of increases.
“Attributing factors, such as clients’ risk profiles, fraudulent claims, poor underwriting results and a surge in claims, have seen Australians becoming increasingly litigious. We see the robust compliance system that Asendium has created as a positive for Insurers because it creates an environment of tangible transparent business processes and procedures with diligent communications and record keeping.”
Asendium chief executive, Scott Miller, added: “At Asendium, our mission is to help every eligible Australian access high-quality, affordable financial advice and to empower the financial planners in doing so. This starts with streamlining the advice production process for financial planners and providing the guard rails for AFSLs to manage their compliance responsibilities with confidence through Asendium.”
The offer will apply from this week onwards.
Last year, Money Management wrote how it is becoming harder for Australian financial advisers to obtain their PI cover as insurers withdrew and overseas insurers got worried about losses by authorised representatives.
Dual Australia, AIG, Axis and Vero had all exited the Australian PI insurance market in recent years.
Dean Pinto, partner at law firm Wotton and Kearney, said: “There is a genuine concern around insuring financial advisers and large dealer groups, the focus is on past losses by authorised representatives. There is a greater risk when insuring financial advisers.
“There are a lot of mum and dad investors in Australia, a higher number than globally, which gives insurers cause for concern that once the COVID-19 support is stopped, there will be a growing number of claims to follow.
“One bad authorised representative (AR) can cost a lot especially if the advice model is a one-size-fits-all model or a cookie cutter approach, that can be costly.”
AUTHOR
Laura Dew
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My PI cost $15000 for a sole practitioner last year. On top of the ASIC fees and all other associated subscriptions and software costs it's just not profitable or practical any more. After 21 years looking at all options now.