The CEO of the AIOFP, Peter Johnston, reports on PI changes

The departure of AIG from the Australian PI market post September 2022 will have widespread detrimental effects on pricing and cover availability across the industry.

AIG were particularly active in the larger Dealer group space, considering these groups are perceived to be high risk by the few remaining underwriters in our market, the future looks bleak for them – and that’s just not price but cover availability as well.

The worst-case scenario if no other underwriter steps into the market are large practices may have to hand back their AFSL to ASIC if they do not have the resources to self – insure.

Advisers getting unfairly blamed for product failure and legally binding unorthodox rulings from AFCA are the two key negative culprits causing underwriting losses.

To protect and insulate our members from the expected long – term price rises and supply issues, the AIOFP Board instructed our PI Advisers GSA/STEADFAST to construct a PI Mutual for members after the 2021 Hobart Conference. The Mutual will also be offering terms to large practices.

The details around this Mutual will be announced at the Darwin Conference, if your cover is up for renewal soon, I suggest you contact Ryan Neary at GSA [Steadfast] on RyanN@gsaib.com.au for transitional arrangements.

Below is a summary of the briefing paper Ryan presented to members post the Hobart conference last April 2021 on the terms and conditions of the ‘AIOFP MUTUAL’ [managed by GSA/STEADFAST]….our timing appears to be excellent.

‘GSA Insurance Brokers/STEADFAST in partnership with AIOFP, would like to conduct a feasibility study into setting up a PI Insurance Discretionary Mutual Fund for members. A Mutual will not only allow stability in premiums for members, but also will provide certainty of coverage in a market where it is becoming harder to obtain professional indemnity cover.

The following request is not a guarantee of cover, even with a Mutual in place there will be a requirement for an underwriting process to ensure all members of the Mutual have adequate risk controls in place to minimize the chance of a claim and ensure the sustainability of the Mutual.

However, for those members who provide their data, you will be considered for Foundation Membership should the feasibility study successfully advocate for the setup of a Mutual.’

APRIL 2021 post the AIOFP Hobart conference.

We are pleased to announce this process has worked and members will enjoy the security of their own professionally managed cover.

But also, please remember only ‘low risk culture’ practices will be offered terms to keep the long-term pricing and conditions favourable for participating members. We will be producing a guideline on what constitutes a low-risk practice operating environment shortly to encourage participation and protection for all concerned.

Steadfast Group Ltd, established in 1996, is the largest general insurance broking network and largest underwriting agency group in Australasia. The network provides services to broker businesses across the nation, New Zealand, Asia and London. GSA is majority owned by Steadfast.