What will happen to insurance premiums under the new regime?

Andrew Ford

Andrew Ford, head of financial and professional risks at insurance broker Crombie Lockwood, says rising standards under the FSLAA regime could reduce the risks for insurers and help keep a lid on rising premiums.

Premiums on professional indemnity insurance have risen in recent years amid increasing claims here and in Australia. Yet Ford does not believe the new licensing regime will further add to the problem for advisers.

“From an insurance premium point of view, the ones that have gone through licensing will be at a higher bar than it has been," Ford added.  "Under the new regime, a lot of advisory firms will have had to pull their socks up. In my view, the new licensing regime isn’t going to cause insurance premiums to rise for advisers. If you’ve jumped through the hoops to be deemed fit and proper, then you’re actually less of a risk going forward. It’s a positive thing for insurers and should be better for the risk base of their clients.”

Ford played down fears that the new regime would lead to major increases in premium rates.