IFB reduces E&O rates

(June 10, 2005) Independent Financial Brokers of Canada is reducing its errors and omissions insurance rates and introducing higher coverage limits.

IFB’s rates now start at $750 per year for $1 million in coverage, a $50 decline. IFB has also secured additional coverage for members who require limits of up to $2 million, with those rates starting at $1,125.

“That IFB has been successful in reducing rates for 2005-06 is a major victory, and is welcome news for brokers and advisors who have seen their cost of doing business climb steadily in recent years,” IFB said in a statement. “This reduction in premium makes the IFB plan the most affordable on the market, with the broadest and most inclusive wording.”

Other features of the IFB’s new plan include: no limits on mutual fund sales, reduced coverage for licensed assistants of mutual fund reps (starting at $200) and up to five years “extended reporting” coverage for those leaving the industry.

Executive director John Whaley says the IFB plan, underwritten by AIG, has a very favourable claims history, which, along with making E&O a priority, has helped the association keep costs in line.

“When premiums started to rise rapidly a few years back, we saw the impact this was having on our members and their businesses,” Whaley says. “IFB made it a priority to bring stability and affordability back to this market and we see this year’s victory as an important step in that direction.”

IFB’s move comes amid increased competition in the E&O business. Earlier this year, Advocis created the Advocis Protective Association, a professional liability insurance plan for advisors. The APA offers two types of coverage, for life and mutual funds, and for securities, with prices starting at $795 and coverage limits topping out at $5 million.

And for the first time, APA is offering its E&O plan to non-members of Advocis, with average coverage rates about $50 higher than for members.

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