October 2017

Practical PI considerations for financial advisers


Professional indemnity (PI) insurance covers the cost of potential claims and disputes arising from a third party alleging a breach of professional duty. PI cover is mandatory for virtually all holders of an Australian financial services licence that deal with retail clients under the Corporations Act 2001.

ASIC in its Regulatory Guide 126 Compensation and insurance arrangements for AFS Licensees stipulates the minimum requirements for PI insurance including: the amount of cover, scope of cover, exclusions and persons covered.

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Learning objectives

After reading this article, you should be able to:

  • explain the purpose of PI insurance
  • outline the factors affecting PI premiums
  • discuss the common areas of misunderstanding in relation to PI insurance
  • raise key questions to ask insurance brokers in relation to PI insurance.

Knowledge areas and accreditation

Knowledge area: Practice Management (75 minutes/1.25 points).

FPA CPD points 1.25 Dimensions: Capability, Critical Thinking (FPA 0009488).

AFA CPD points 1.25 (AFA 01022009).

CPA Australia CPD points 1.25 (CPA 000375).

TPB CPE (75 minutes/1.25 points).

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