PI cover key as brokers navigate tough conditions

BizCover encourages mortgage brokers to match their professional indemnity cover to the risk they may face

PI cover key as brokers navigate tough conditions

This article was produced in partnership with BizCover

Arguably the most pressing concern that Australian mortgage brokerages have in the current economic climate is inflation, which sits at near 30-year highs.1

Rising interest rates and rising inflation are creating a perfect storm for mortgage brokers, in which an increasing number of mortgage holders may be facing the very real possibility of defaulting on home loans or property investments and in some cases, made based on professional advice or recommendations from their mortgage broker.

The Reserve Bank of Australia showed earlier in June that its fight with inflation is not over by hiking rates yet again2, and structural indicators suggest that they may last longer than some expect.

With inflation and interest rates marching on and two of the four big banks now predicting that the cash rate will peak at 4.6% in 20233, now more than ever both new and current mortgage holders may be looking to mortgage brokerages for professional financial recommendations true to the current economic climate.

Find out the winners for the best mortgage brokerages in Australia of 2023 here.

How professional indemnity (PI) insurance can support mortgage brokers

BizCover’s Professional Indemnity Insurance helps protect mortgage brokers from claims made by clients due to losses resulting from your actual or alleged negligence in the delivery of your professional service or advice. PI will also assist with the legal costs associated with responding to or managing claims covered by the policy.

With your clients facing possible financial hardship and with more changes to interest rates being introduced, it might be more important than ever to review your cover and stay on top of your PI cover.

The danger of letting your PI insurance slide

When mortgage brokers don’t review their business insurance in a timely manner, they can also run the risk of being underinsured. Recent studies suggest that only 43%4 of Australian small businesses believe they are fully covered from insurable business risks.

If a PI claim is made against your mortgage broker business and you are underinsured, your business could be exposed to financial risks that could have been avoided with the appropriate level of Professional Indemnity cover in place.

While it is true that PI is a mandatory requirement for mortgage brokers, it also does a lot of the heavy lifting to help mortgage brokers reduce their exposure to risk from insured events, such as:

  • being negligent in rendering its professional services;
  • providing shoddy, incomplete, or incorrect work;
  • making mistakes or oversights;
  • accidental omissions; and
  • failing to provide promised services.

To review your Professional Indemnity insurance today visit bizcover.com.au. Switching to BizCover is easy! Compare multiple quotes from selected leading Australian insurers and find out how much you can save in minutes.

  1. ABS,  Consumer Price Index, Australia, March 2023
  2. MPA Magazine, RBA decision tips official cash rate over 4%, June 2023
  3. Rate City, How high will rates go? Here's what experts think about the RBA cash rate, June 2023
  4. Vero, Discover SMEs’ top risk concerns, and are they protected?, May 2022

*This information is general only and does not take into account your objectives, financial situation or needs. It should not be relied upon as advice. As with any insurance, cover will be subject to the terms, conditions and exclusions contained in the policy wording. © 2023 BizCover Pty Limited, all rights reserved. ABN 68 127 707 975; AFSL 501769.

BizCover is Australia's largest online business insurance service for small businesses. BizCover allows small business owners to compare and get quotes for multiple products from market-leading insurers, providing a simple experience through one online platform.  Over 180,000 Australian SMEs currently protect their business through BizCover's proprietary platform across thousands of occupations. To date, BizCover has sold over one million business insurance policies using the technology in Australia, New Zealand and the US.