Financial Services
Professional Indemnity Insurance for Insurance Brokers & FSPs
As an authorised Financial Services Provider, you carry regulatory and professional liability for the advice you give clients. Professional Indemnity insurance is a FAIS requirement for most FSP categories and protects your practice against claims of negligent advice.
Why it matters
Why insurance brokers & fsps need Professional Indemnity
- FAIS requires most FSPs to hold adequate PI cover as a licence condition.
- Advice-related claims can arise across short-term, long-term, investment and employee benefits business.
- Fidelity exposure often needs to sit alongside PI cover where you handle client funds.
What does Insurance Broker PI cover?
- ✓Claims arising from alleged negligent financial advice or intermediary services.
- ✓Regulatory defence costs in responding to FAIS-related complaints, subject to policy terms.
- ✓Liability arising from representatives acting under your licence.
Common exclusions
- –Deliberate or fraudulent acts.
- –Fidelity/theft exposure, which requires separate Fidelity Guarantee cover.
Real scenarios
Common Insurance Broker PI claims
Inappropriate advice claims
Claims that a product or investment recommendation was unsuitable for the client's needs.
Non-disclosure claims
Claims linked to alleged failure to disclose material policy terms or risks.
Ombud complaints
Complaints escalated to the FAIS Ombud or short-term insurance Ombud.
How much PI cover does an insurance broker need?
Limits are typically informed by FSP category, book size and the value of investment or risk advice provided.
What affects the premium?
- FSP category and licence scope
- Number of representatives
- Annual revenue
- Product lines advised on
- Whether client funds or assets are handled
- Claims history
What information insurers require
- • FSP number and category
- • Number of representatives
- • Annual revenue
- • Product lines (short-term, long-term, investments, medical aid, employee benefits)
- • Whether Fidelity cover is required
- • Claims history
Retroactive cover
Retroactive date should reflect your FSP licence start date or when advice services began.
Run-off cover
Run-off cover is essential if your FSP licence is deregistered or the practice is sold or closed.
FAQ
Frequently asked questions
Yes, FAIS requires most licensed FSPs to hold adequate Professional Indemnity cover appropriate to their licence category.
Get your Insurance Broker PI quote
One simple online application, tailored to how insurance brokers & fsps actually work.
Related professions
Related covers
- Fidelity Guarantee →
Required where representatives handle client funds or assets.
- Cyber Liability →
Protects client personal and financial data held by the FSP.
- Directors & Officers Liability →
For directors of the FSP entity.