One of the most interesting developments to occur recently on the E&O scene is the evolution of policies for firms. Both the Independent Financial Brokers of Canada and Advocis are striving to provide affordable E&O policies for firms.
The IFB recently unveiled a corporate plan. “It’s still at the stage at which people are just finding out about it and putting in applications,” says John Whaley, the IFB’s executive director. “But it’s going well so far.”
There is no guarantee the IFB corporate plan will “solve everybody’s problem with obtaining coverage,” Whaley says. “But it’s cheaper than what’s on the market.” The insurer backing the IFB corporate plan is Trisura Guarantee Insurance Co. (For more information about this plan, contact the IFB at 1-888-654-3333.)
Advocis, on the other hand, is “exploring” a corporate program, says Randy McGlynn, chairman of the board of the Advocis Protective Association and CEO of the Ontario Teachers Insurance Plan: “We hope to launch it in the new year.” Advocis is also looking at ways to provide a corporate program for MGAs.
E&O policies for corporate entities, particularly small advisor-owned shops, are seen as prohibitively expensive. As a result, many MGAs and mutual fund dealers go without. Instead, they require that their advisors have E&O, with a “vicarious liability” provision that covers the defence costs of the firm, should it get dragged into a lawsuit due to a mistake made by the advisor.
One example of a company that requires its advisors to have coverage is Partners in Planning Financial Group Ltd., which consists of two companies based in Regina — PIP Financial Services Ltd., a mutual fund dealer; and PIP Insurance Services Ltd., an MGA.
Partners in Planning has a group plan, but does not mandate that its insurance or mutual fund advisors buy into it, says Terry Ford, PIP Financial’s national compliance officer. Instead, he says, the parent company asks for proof of coverage every year to determine that it is covered.
“There’s no regulatory requirement for mutual fund dealers to have E&O,” says Ford. “But, like most dealers, we’ve made it a requirement that our advisors have E&O.”
Additionally, Saskatchewan is one of the provinces that requires insurance advisors to have E&O coverage.
— STEWART LEWIS
E&O insurance for firms on its way
- By: Stewart Lewis
- January 4, 2007 January 4, 2007
- 12:00