This article outlines the ASIC, Industry and Connective requirements in regards to Professional Indemnity Insurance.
Professional Indemnity Renewal Process
Being granted an Australian Credit Licence has many responsibilities, in particular the requirement to maintain current Professional Indemnity Insurance. There may be financial penalties, loss of accreditation, refusal by the insurer if there is a claim made against you in that period if you let your PI Insurance Policy lapse. As part of our compliance monitoring, Connective has a reminder notification that will be emailed to you 30 and 10 days leading up to the expiry date of your PI Insurance Policy. Once you have renewed your insurance, please send through your new PI Policy to email@example.com and we can update our compliance records. We appreciate your assistance in renewing your policy well in advance of the expiry date.
Why is Professional Indemnity Insurance required?
You must have adequate arrangements in place for compensating consumers. The primary way to comply with this obligation is to have Professional Indemnity insurance (PI insurance).
Under ASIC RG210.1 Under s48(1) of the National Consumer Credit Protection Act 2009 (National Credit Act), a credit licensee must have in place adequate arrangements for compensating consumers for loss or damage suffered because of breaches of to the National Credit Act by the licensee or its representatives. If a licensee is subject to the requirement to hold PI insurance, then it must hold a policy that provides at least $2 million in cover per claim and meets the other requirements we have set in relation to the scope of the cover.
Credit licensees must meet the compensation requirements in order to undertake credit activities and therefore must hold PI insurance cover that is adequate - having regard to:
(a) the Credit Licensee’s membership of an approved EDR scheme, taking into account the maximum liability that has, realistically, some potential to arise in connection with:
(i) any particular claim against the licensee; and
(ii) all claims in respect of which the licensee could be found to have liability; and
(iii) relevant considerations relating to the regulated credit business carried on by the credit licensee, including:
- the volume of the licensee’s business;
- the number and kind of clients;
- the kind or kinds of credit activities; and
- the number of representatives of the licensee.
This is not an exhaustive list of the factors that credit licensees need to take into account in assessing what PI insurance cover is adequate in their circumstances.
The following factors are particularly relevant in determining whether a PI insurance policy for a credit licensee is adequate:
(a) the amount of the cover;
(b) the scope of the cover; and(c) whether the terms and conditions of the cover undermine the overall effect (e.g. by excluding cover for key aspects of the credit licensee’s business).
Insurance House offer
- Great Cover – Great Premium.
- The latest release of the enhanced Mortgage Broker professional indemnity policy.
- New coverage features such as Cyber and Privacy infringement plus Civil compensatory orders.
- Access an Unlimited Retroactive cover which meets all the RG210 guidelines.
What is the level of cover?
- The Connective policy has a shared aggregate across all the participating policy holders’ of $20 million any one claim and $60 million in the aggregate
- Your professional indemnity cover operates to $2million any one claim and $6 million in the aggregate
- Financial, physical or material loss caused to another party as a result of a mistake or professional negligence.
- Legal costs associated with an alleged breach of contract, professional duty and errors or omissions in the conduct of your business.
In addition, our Professional Indemnity insurance solution from IHA includes some features that other insurers may overlook, like:
- Cyber crime and privacy infringement.
- Civil compensatory orders (eg. – under NCCP Regulations).
- Optional Public Liability cover up to $20m, for a small additional fee.
- Automatic 7 year run-off coverage when you cease to practice.
- Employment practices cover.
- Retroactive cover to protect your past activities.
- ASIC approved External Dispute Resolution schemes.
When can I take out cover?
- Immediately or on expiry of your current policy.
- Common renewal date of 29th October.
- Pro-rated premium if you want to take up now and cancel your existing policy.
Who are the Insurers?
- All APRA approved with S&P ratings of A- or better.
How to Join
To apply for this PI insurance, please go to https://connective.insurancehouseplus.com.au/ for a quote. Once you have received the quote, you will need to Proceed to Application to accept and finalise the application.
If you have any queries please email: firstname.lastname@example.org
For more information, please call 1300 444 142 and ask for Brent Cooper.