In 2016 Andrew joined a professional group that offered, among other membership advantages, access to professional indemnity insurance. Andrew’s insurance adviser explained that group buying power resulted in lower premiums for members and Andrew’s insurance premium in 2016 was less than he paid in 2015.
In 2023 Andrew retired and asked his insurance adviser to arrange run-off professional indemnity cover. The adviser arranged run-off cover with the existing insurer. Andrew complained that the excess and premium for the run-off cover were excessive and that the adviser should have obtained quotes from other professional indemnity insurers when they first placed the insurance cover in 2016, over the years in between when rolling over insurance, and in 2023 when arranging run-off cover. Andrew claimed compensation of $10,000 for because it ‘felt right’ for the failure to arrange more suitable cover.
Andrew’s insurance adviser said that they had provided an appropriate professional service and were not liable to pay compensation.
Andrew did not accept the insurance adviser’s response and complained to FSCL.
Review
The run-off professional indemnity insurance arranged by the adviser would cover Andrew for any mistakes he made while he was working.
It seemed to us that Andrew was prompted to complain because he thought that the run-off insurance was too expensive and that the adviser should have negotiated a better deal. We explained to Andrew that the adviser had no option but to arrange run-off cover with the existing insurer. To our knowledge, no insurer will provide run-off cover if they have not previously been the professional indemnity insurer. Although Andrew considered that the insurer’s excess and premiums were too high, these factors were outside the adviser’s control.
With respect to Andrew’s complaint that the adviser failed to get competitive quotes for professional indemnity cover while he was working, it was our view that Andrew understood the service the adviser was agreeing to provide and accepted insurance on these terms.
The adviser showed us they had benchmarked the cost of the insurance provided to the professional group against what was available in the industry for the 2017/2018 year and again for the 2021/2022 year and was satisfied that the insurance available to the group members was competitively priced. Andrew had accepted the cover negotiated by the adviser at the time.
There was nothing to suggest that the cover recommended was inappropriate or that the adviser had caused Andrew any loss.
Resolution
We decided that Andrew should discontinue his complaint.
Insights for consumers
If you are concerned that the insurance proposed by your adviser is not competitive you should ask your adviser for a comparative quote.
