While the professional indemnity market for financial advisers is “sound”, there are still some discrepancies between what advisers need and what is available to them, a review by the corporate regulator has found.
Conducting the review in response to concerns expressed by licensees about securing PI insurance and a “high level of unpaid external dispute resolution scheme determinations”, ASIC said it found that cover for advisers is “stable and generally available”.
However, ASIC conceded that gaps do exist between what it expects and some of the insurance products available.
“While the market was basically sound, the ASIC review found some PI insurance policies do not meet the requirements in RG 126,” a statement from ASIC said.
"We found that, like most areas of insurance, PI insurance is cyclical with reduced market capacity and significant premium increases in periods where insurers suffer poor profit ratios," the report continued.
"There was such a period from late 2008 until 2014, as a result of the GFC and a number of significant failures of financial products and advice licensees.”
The report added: "As we passed the seven-year anniversary of the GFC, however, market conditions improved. At the time of our inquiries, the market was stable with sufficient market capacity and flattening premiums."