How Professional Indemnity cover just got better
Crombie Lockwood’s Professional Indemnity insurance for CAs now includes extra benefits. Brought to you by Crombie Lockwood.
New Zealand’s chartered accountants have negotiated a constantly changing business landscape over the past 18 months. As well as dealing with the fallout from COVID-19 lockdowns and border closures, CAs have had to come to grips with changes to rules governing trusts and providing financial advice.
It’s been demanding, even exhausting. But one aspect of a CA’s work life is potentially now simpler, with Crombie Lockwood expanding the standard inclusions on its Professional Indemnity cover. These new benefits have come about due to Crombie Lockwood switching to Berkshire Hathaway Speciality Insurance for the CA ANZ insurance program.
From your insurance renewal date, the standard Professional Indemnity policy arranged through Crombie Lockwood will also cover you for outside directorships and for actions arising from referrals to other advisers (including financial planners), and for regulatory action relating to anti-money laundering compliance.
Importantly, if you sell or wind up your accountancy business, it also provides you with free run-off cover for seven years, subject to conditions. This can help provide significant savings.
“Now, that’s a big deal. Normally in the market, you’d be looking at a premium of up to four times your expiring premium in order to buy that seven years of run-off cover,” says Amanda Halfacree, Crombie Lockwood’s Deputy Head of Financial & Professional Risks. “That’s potentially a real money saver for chartered accountants.”
Why is run-off cover important?
Run-off insurance is an essential if your firm ceases trading or you sell your practice, as it covers you for any claims arising from services you have provided previously. The professional indemnity cover you had in place when you actually did the work won’t cover you unless run-off cover is taken.
“Professional indemnity is a ‘claims made’ policy, which means that a policy has to be in place at the time that a claim is made,” explains Halfacree.
“As liability claims can take several years to crystallise, we recommend that run-off insurance is held for seven years in order to provide adequate protection.
“Quite often, it’s a surprise to accountants that it can be so expensive in terms of your liability insurance to wind up your business.”
Picture: Amanda Halfacree, Crombie Lockwood’s Deputy Head of Financial & Professional Risks.
“Quite often, it’s a surprise to accountants that it can be so expensive in terms of your liability insurance to wind up your business.”
However, CAs who have held Professional Indemnity insurance through Crombie Lockwood for at least five years, and had no claims in the past five years, are eligible for seven years of run-off cover for free – potentially saving them thousands.
How CAs benefit from other changes
As Halfacree explains, other new inclusions on the Professional Indemnity policy respond to changes in specific areas of CAs’ work.
After the new financial advice regime came in earlier in 2021, it’s more likely that CAs will refer clients to financial advisers for investment advice.
“If that financial planner doesn’t do a good job, and there’s potentially a vicarious liability for that referral, the policy responds to that,” she says.
Recent changes to trust administration may also see an increase in professional indemnity claims related to trusteeships. So including broader cover for outside directorships and trusteeships increases protections for CAs providing this kind of advice or service.
“In terms of the advice accountants are actually providing to their clients, it’s more extensively covered and the benefits are broadened on the new Professional Indemnity policy,” says Halfacree.
Find out more
Talk to our CA ANZ dedicated insurance brokers to get your professional indemnity cover sorted.
Call 0800 435 568.
Email [email protected]
