Lobbying efforts against proposed PI changes is 'scaremongering', claims association

by Julia Corderoy20 Aug 2015
Lobbying efforts against proposed professional indemnity (PI) insurance legislation is "scaremongering", claims the FBAA.

This week, Australian Broker reported on the MFAA urging brokers to support its lobbying efforts to stop changes to professional indemnity insurance legislation, which proposes an increase of professional indemnity insurance to $20 million in the aggregate, from a current figure of $2 million per claim and up to $6 million in the aggregate.

The MFAA claims that, if passed, these changes will be a significant cost for broker businesses and could harm broker/client relationships.

However, the chief executive of the FBAA, Peter White – who says the FBAA has spoken to people “at the highest level” regarding PI insurance – has labelled talk of spiralling PI costs as “misguided” and “scaremongering”.

“Yesterday’s story in ‘Australian Broker’ simply reports proposals by an organisation that has no great influence in this field, and would only affect anyone who acts as an agent for a lender, solicitor or conveyancer on conveyancing matters for verification of identification,” he said.

“Even if the proposals carried any weight, they would apply to probably less than 1% of brokers, and then only on conveyancing activities not broking activities.”

When Australian Broker queried the FBAA as to who they have spoken to “at the highest level” regarding PI insurance, a spokesperson said it was “regulators, insurance companies and government”. 

White has also condemned the MFAA for publicly calling on FBAA members to support its lobbying efforts, without consulting the FBAA first.

“We have already dealt with this issue at a higher level and would not want to see our members wasting their time supporting lobbying efforts against an issue that will likely never eventuate and is clearly not properly understood by those coordinating the lobbying,” he said.

“The FBAA continues to liaise with key stakeholders on this issue, and have sought further clarification from them since this article appeared.”

However, the chief executive of the MFAA, Siobhan Hayden told Australian Broker that she is standing behind the lobbying efforts and will not apologise for speaking up about any changes that have the potential to harm brokers.

“We make no apologies for advocating strongly against any possible change that has the potential to impact negatively on our members and consumers,” she said.

“Unfortunately due to previous lack of sufficient detail from ARNECC the reasons behind the changes to the PI insurance, and the extent to which they will affect brokers have not been clear.

“Our liaison with ARNECC is ongoing and we will continue to fight to ensure the best results possible for our members and consumers, right up till the date new regulation comes into effect, and beyond.”
 

COMMENTS

  • by Banker 20/08/2015 10:15:16 AM

    Look back at what happened to independent property valuers 7 or 8 years ago. The hike in PI premiums (coupled with lower valuation fees) meant that it was no longer viable for many to stay as self employed contractors, they became salaried on significantly lower incomes.
    We can't ignore that there is a risk of this influencing our industry in a similar way.

  • by PJ Patterson 20/08/2015 10:23:32 AM

    It's great to see the MFAA taking up the lobbying effort. The number of times I have heard brokers ask 'What does the MFAA do for me' well, this is what they do and should continue doing for their members (of which I am proudly one).
    Whether Mr. White is correct in suggesting that this is a non issue, I am grateful that the MFAA is taking the aggressive approach and showing the industry that our professional body is on top of the issue. I'd prefer that they address it and this be a non issue than get whacked over the head with a big PI increase in a year or two and wonder what happened.

  • by Peter White CEO FBAA 20/08/2015 10:46:29 AM

    Ummm bloggers this 'maybe' $20m PI aggregate cover DOESN'T apply to finance broking activities which is what your PI Cover reflects - please read what's written.