Wealth and other financial sector advisors enjoy a broadly stable market for professional indemnity insurance, but there are also shortcomings, according to a recent report.

Financial advisors in Australia enjoy a generally stable market for professional indemnity insurance but gaps exist between the expectations of regulators and what is available. So says a report by the Australian Securities and Investments Commission, the country’s financial regulator. ASIC believes that the market for such insurance is “basically sound”, but its review has found that some policies do not come up to the minimum standards it has set out.

ASIC carried the review out in response to Australian Financial Services licensee concerns about securing PI insurance and the high number of unpaid external dispute resolution scheme determinations. Its deputy chairman added: "Advice businesses must have adequate PI insurance, and they should make sure this cover measures up with our requirements in RG 126 [regulatory guide]. ASIC will follow up with surveillance of advice licensees' PI insurance and if we find problems we will take enforcement action.”

The regulator reviewed the market between November 2014 and June this year to get a clearer idea of how much PI insurance costs and how widely available it is.

The report looks into complaints that ASIC has heard from some advice licensees over the past few years that they have been unable to secure PI insurance at a reasonable cost. It looks at whether the insurance that is available meets its guidance for adequate PI insurance, and tries to determine whether there are any significant deficiencies in the PI insurance policies that are generally available to advice licensees.