The insurer has reached agreement over a PI policy held by DKN subsidiary, Deakin Financial Services (DFS), that provides indemnity protection up to a maximum of $10 million.

DFS had sought the indemnity following the collapse of the Westpoint property group, in which DFS financial planners had advised clients to invest a total of $23 million. Former DFS clients have made claims totalling $16.6 million against the company, which went into voluntary administration late last year.

DFS and QBE disagreed on the extent of the liability, DFS arguing for the fullest possible indemnity under the $10 million policy. DFS' administrator Ferrier Hodgson has now agreed with the insurer on a figure of $5.5 million, subject to ratification this Friday by DFS creditors.

Disputes over PI payouts are usually derived from the policy wording, according to PI expert Andrew Cheetham, a senior associate at law firm TressCox.

"Most PI policies have prima facie exclusions for claims derived from investments not on the approved product list."

Mr Cheetham says it is "an interesting time" in the PI market in the wake of changes to the Corporations Act requiring Australian financial services licensees to have PI insurance in place, largely prompted by the Westpoint collapse.

"There's going to be a bit of movement in the market. For small financial planners it may become difficult to get coverage and you may get more schemes for financial planners going forward to achieve unity in strength.

"It should drive premiums down and make them more competitive."

He says the DKN case is "somewhat unique as the parent company is trading and performing very well."

"There have been some examples of licensees going into liquidation and creditors getting nothing. At least here DKN are trying to do something and not walk away from it."

DKN is also offering creditors $3 million in addition to the payout agreed with QBE.