CIFPs strikes E&O insurance deal for members

(May 7, 2003) The Canadian Institute of Financial Planners has negotiated a deal with ACE Canada to provide errors and omissions (E&O) insurance for its members. Participants must hold the CFP designation and take an E&O training course to qualify for the plan.

Annual premiums are priced at $800, plus taxes, for coverage of up to $1 million per claim.

Getting E&O insurance has become a problem for many advisors. Insurance companies claim they can’t break even on E&O and some have chosen to leave the market entirely. Others are increasing premiums or reducing coverage.

“Many planners have had difficulty obtaining coverage,” says CIFPs managing director Keith Costello. “By restricting participation to CFP licensees and educating our underwriters about the requirements attached to the CFP, we were able to provide this service at a very attractive price.”

“We’re really insuring the cream of the crop and I think that went a long way to convincing the company that it was a good bet to insure these people,” Costello told Advisor.ca.

Jim Bullock, who worked with CIFPs as a consultant on the E&O plan, says not only are the premiums lower than similar plans, the coverage is also more comprehensive.

For instance, he says the plan covers advisors’ former assistants, regardless of their current status. Bullock says other policies exclude past assistants who had been licensed.

The policy also provides blanket coverage of “prior acts,” Bullock told Advisor.ca, even if the advisor can’t prove continuous insurance coverage. “Ninety-five percent of reps in Canada are insured for prior acts, but they won’t be able to qualify because they won’t have the necessary paperwork,” he explains. “Our policy insures all prior acts period, there’s no proof required at claim time. As far as I know, it’s the only policy in Canada that has that feature.”

Initially, CIFPs members who want the E&O coverage will have to take the training course, similar to a program Bullock has offered through the Peel Institute. Starting next year, passing the course will be a pre-application requirement.

“I have no doubt that other insurance companies will look at this and do the same thing,” Bullock added.

CIFPs members must apply individually for coverage. Details are available on the CIFPs Web site.

Filed by Doug Watt, Advisor.ca, dwatt@advisor.ca