Having worked in the industry for more than a decade, I have seen a fair amount of change occur. A current topical issue for accountants is the imposed professional indemnity limits, and how this in turn affects an accountant’s consideration of professional indemnity policy options.
With the increase in professional indemnity insurance limits imposed by Chartered Accountants Australia and New Zealand to meet the capped liability scheme requirements of $2 million (minimum) cover, the exercise of obtaining professional indemnity can become quite costly for accountants.
The imposed limits have propelled accountants into looking around the market for a more competitive premium. However it is a timely reminder to ensure that price is not the only factor to consider when purchasing a policy. The two other imperative factors to consider are that you ensure the policy will cover exposures in the event of a claim and that the policy fulfils the additional requirements stipulated by Chartered Accountants Australia and New Zealand. Shopping around for professional indemnity can be overwhelming and you may not be aware of what exactly you should be looking for. Here is a quick checklist when shopping around for professional indemnity as to what you should consider in a policy:
- Cost Exclusive Limit. Are defence costs paid in addition to or inclusive of the limit?
- Reinstatements of Limit. Does the policy provide unlimited reinstatements or is it limited to one or two reinstatements?
- Excess Stipulations. Is your policy excess cost inclusive or cost exclusive? Cost exclusive means that you do not contribute to your excess unless there is a settlement.
- Provisions for Part IV (a). Does your insurance policy provide cover for situations which are subject to anti avoidance provisions and Part IV (a) exclusions?
- Professional Standards legislation requirements. Does your policy meet the professional standards legislation in Australia?
- Limited AFS License Cover. Does your insurance policy cover you for Limited AFS License advice as an accountant?
- Auditors of Self Managed Super Funds RG243 Compliant. Does your policy automatically cover SMSF auditing as per regulatory guideline RG 243?
The abovementioned checklist includes just a few items you need to be aware of when searching for the right policy for you.
Following the launch of Accountancy Insurance’s PI Shield scheme this year, our success rate for saving clients money on their premiums for professional indemnity insurance has been outstanding whilst providing a bench mark high quality insurance offering and personalised service.
You may have heard of Accountancy Insurance’s tax audit insurance offering, Audit Shield, which provides peace of mind to more than 2000 accounting firms across Australasia. However, Accountancy Insurance has also provided professional indemnity insurance solutions to proactive accountants for more than 5 years and we look forward to providing you a comparative quote for your consideration.
To receive a quick quote, or to discuss the complete ‘PI shopping checklist’, please email [email protected] or speak to one of our professional team members on 1300 552 867.
This article was written by Karen McDonald, Associate Director – Professional Risks at Accountancy Insurance. For further information please visit their website here.
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