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Advisers miss PI discounts

By Vishal Teckchandani
 — 1 minute read
Aon says insurers are being more cautious of financial planners due to the risks they take.
Advisers are being excluded of premium discounts available from the professional indemnity (PI) sector, according to a quarterly report from risk management company Aon.

Underwriters put downward pressure on insurance rates through competition while being more alert of advisers and the risks they take, according to the report. 

The impact from the September sub-prime meltdown has been unproven in the insurance sector so far, but huge losses may surface from capital markets, Aon market services head Lambros Lambrou said.

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"There is potential for class actions to develop from substantial losses sustained in the capital markets which could have knock on effects in terms of large claims in the professional classes," he said.

Aon said for now PI markets are maintaining the belief that there will be a sustained low claims environment, and large amounts of capacity will ensure that PI rates will continue to fall for the time being. 

QBE has stopped offering new PI policies to planners following the collapse of Westpoint, Fincorp and Australian Capital Reserve.

ASIC will make PI compulsory for financial services licensees from 2008 following the Westpoint collapse, which left some planners exposed and consumers unprotected. Prudentially regulated institutions such as banks will be exempt.

Advisers miss PI discounts
Aon says insurers are being more cautious of financial planners due to the risks they take.
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