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PI availability adequate – APRA
The Australian Prudential Regulation Authority (APRA) is satisfied with both the availability and pricing of professional indemnity (PI) insurance for superannuation trustees.
The regulator has issued an information paper reporting the findings of a survey conducted last year, which polled insurance brokers on the availability and level of coverage of PI insurance for Registrable Superannuation Entity (RSE) licensees.
An acceptable level of PI insurance is one requirement for RSE licensees, prescribed by the Superannuation Industry (Supervision) Act 1993. APRA also requires licensees to hold sufficient coverage for trustee and fund operations.
“Licensees are expected to be able to demonstrate that the level and terms of insurance cover are prudent and reasonable to meet their obligations and to ensure they are acting in the best interests of members,” said APRA deputy chairman Ross Jones. “In APRA’s view, the level and terms of insurance … should reflect the nature, scale and complexity of [their] operations.”
APRA found that the spike in PI premiums experienced after the collapse of HIH Insurance in 2001 has largely ended, with premiums trending downwards since then.
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Superannuation funds will have two options for charging fees for the advice provided by the new class of adviser.
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