The new legislation coming in to effect some time in March 2021 will have a major impact on the Triple A’s PI scheme.
NZI has been working through the changes with Aon, our brokers, and the TripleA board.
On Friday 13th March, Aon and NZI attended the TripleA Board meeting to provide an update and as a result we are now in a position to advise our members what these changes will be.
- The current renewal date of 1 May will be shifted to 1 July.
- For the two months of May and June, the existing policy and premiums will remain in place. The TripleA will invoice all scheme members for this extra two months over the coming weeks.
- The biggest change. In many cases both the financial advice provider (FAP) and the individual adviser will require separate PI cover.
- This requirement will however not apply to a single adviser FAP.
- In situations where it does apply, both the FAP and the individual adviser will need to complete separate online proposals.
- The cost of an individual adviser’s base PI premium will increase from $1,730 to $2,200 pa (GST excl).
- The pricing for all other optional PI elements remains unchanged from the current year.
- For a FAP, the GST exclusive cover options are:
$1m any one claim, $3m in the aggregate $2m any one claim, $6m in the aggregate $5m any one claim, $15m in the aggregate 2 adviser firms $1,400 $1,800 $3,000 3-5 adviser firms $1,800 $2,400 $3,900 6-10 adviser firms $4,900 $6,300 $10,500 11 adviser firms $6,700 $8,700 $14,400
- The Board explored the issue of how our scheme compares and was advised that in terms of premiums, even at these new levels, it’s still “head and shoulders” above other schemes. If a FAP was seeking terms on its own, premiums if offered at all which is unlikely, would be “three times” that provided via the TripleA scheme.
- The cover levels for a FAP will be selected at renewal time only. There will not be a mechanism to change mid-year.
- Even though we recognise that these additional costs may be a burden on our members, the TripleA Board continues to recommend that members give serious consideration to cyber cover as this remains a very real risk for most small adviser firms.
- This is particularly true given that the Internet Liability element of the base PI policy has been removed by NZI for 2020/21. This was causing confusion with cyber cover.
- The PI scheme will be able to cover both financial advisers and nominated representatives. Pricing will be the same for both. If someone is listed on the FSP register as an adviser, they will be required to pay a PI premium.
- Any work undertaken by an adviser, or nominated representative, for a FAP outside of the TripleA scheme will not be covered.
We will keep members abreast of the upcoming administrative arrangements as these are confirmed by NZI and Aon.