With the impacts to New Zealand’s economy from the COVID-19 recession, insurance brokers Crombie Lockwood are expecting an increase in professional indemnity insurance (PI) claims against accountants.
“Many more insolvencies are likely to occur and this is one of the higher-risk areas for accountants,” says Amanda Halfacree, Crombie Lockwood’s manager of the central region for financial and professional risks.
“The recession inevitably means that things may become more challenging for accountants, and an increase in PI claims is expected.”
Picture: Amanda Halfacree, Crombie Lockwood’s manager of the central region for financial and professional risks.
“The recession inevitably means that things will become more challenging for accountants, and an increase in PI claims is expected.”
Another layer of complication will come from changes in the NZ Trusts Act, passed by the Parliament in July 2019.
These changes require accountants to be more actively involved in the trusts they manage, and holds them to a higher professional standard.
This is likely to lead to some restructuring in the accounting profession, as some firms broaden their trust practices, while others may cease offering trust services because of the higher standards.
“Trustee claims under PI may also increase because there will be a gap between what accountants are doing now, and what they are expected to do under the changes,” says Halfacree, who was recently recognised as a winner in the NZ Women in Insurance Awards.
More stability around pricing
Compared to the general market, the PI pricing that has been negotiated for existing clients tends to offer more stability. To extend this stable positioning to new Chartered Accountant clients, the PI evergreen extension can be applied and gives some certainty that premiums will not increase significantly over the first two years.
Provided there has been no major change in an accounting practice or a major increase in fee income, the evergreen extension effectively rolls the policy over with a minimum premium increase.
Access to free legal advice
Crombie Lockwood is a preferred supplier to CA ANZ and has an insurance programme designed specifically for the needs of Chartered Accountants. CA clients are also able to access 60 minutes of free legal advice as part of their policy.
PI insurance is offered along with the full suite of professional insurance services including management liability, cyber insurance and business asset cover.
With around 900 employees and more than 25 branches throughout New Zealand, Crombie Lockwood has grown into one of New Zealand’s largest insurance brokers.
Crombie Lockwood was founded in the provinces and is now owned by US brokerage Arthur J. Gallagher, giving the business access to global resources while maintaining the same strong local values it was built on.
Crombie Lockwood brokers act for the client and not the insurer, providing broad industry knowledge and a deep understanding of business risk.
With the New Zealand economy entering a volatile period, Crombie Lockwood brokers are here to provide expert advice and a suite of covers tailored to accountants’ needs in a changing business and regulatory environment.
Find out more
Talk to our CA ANZ dedicated insurance brokers to get your insurance sorted. 0800 435 568
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