IFB holds the line on E&O rates

(June 1, 2004) Independent Financial Brokers of Canada (IFB) says premiums for its errors and omissions insurance (E&O) program will not increase in the coming year. IFB has also been successful in substantially reducing premiums for licensed mutual fund assistants.

Rates for the mandatory coverage have been rising steadily, IFB says. “That IFB has been successful in holding the line on rates is a major victory and is welcome news for brokers and advisors who have seen their cost of doing business skyrocket in recent years,” the independent life insurance and mutual fund advisor association said in a release issued today.

Life brokers with less than 50% of earnings derived from mutual fund sales will pay an annual premium of around $830. Those with mutual fund sales between 50% and 99% of earnings pay about $950, while those dealing in mutual funds only face a $1,030 premium. The rates vary by province from a low of $789 to a high of $1,150.

IFB president David Barber says the association’s favourable claims experience and its focus on protecting the interests of members helped the IFB stabilize rates for 2004-2005.

Licensed mutual fund assistants who do not actively engage in product sales will pay a flat rate of about $200. They had to pay full price for E&O coverage last year.

“Our plan recognizes the non-selling role these licensed assistants fulfill, and offers them coverage for only $200, a savings of as much as $950 in some cases,” says IFB executive director John Whaley.

The IFB’s coverage year runs from July 1, 2004, to June 30, 2005. The plan is brokered by Willis Canada.

This is the second major E&O announcement in the past week. At the Advocis general meeting in Calgary last Thursday, the advisor association announced the creation of an independent committee charged with overseeing development of an in-house E&O program.

The Advocis Protective Association will work with insurers and brokers to create a product that meets the specific needs of advisors, said committee member Floyd Murphy. Advocis hopes to have its new E&O plan in place by next year.

Filed by Doug Watt, Advisor.ca, doug.watt@advisor.rogers.com