Vero Insurance will no longer offer professional indemnity (PI) cover to financial planners, in another blow to the beleaguered advice industry’s standing.

With financial planning scandals at Commonwealth and Macquarie banks prompting almost daily headlines, Suncorp-owned Vero has rubbed salt into the wound by announcing the financial planners segment of the professional indemnity market “is no longer within our risk appetite”. 

The insurer had already stopped offering cover to new customers, and as of last Monday it will no longer renew current policies.

“Vero’s market share has significantly declined over the past two years,” a Suncorp spokesman said.

He declined to confirm one industry estimate that Vero is relinquishing a 20% market share, telling insuranceNEWS.com.au: “We do not have the biggest share of the market… we are far from the biggest.”

The Financial Planning Association (FPA) says Vero, which has been offering PI insurance for financial planners for a decade, did not consult with the industry before announcing its withdrawal.

GM Policy and Conduct Dante De Gori says the association will not seek an explanation from Vero, but it is keen to ensure other insurers do not follow suit.

“The reality is [Vero] made a commercial decision for its own reasons,” he told insuranceNEWS.com.au. “We’re not privy to the reasons for that decision. 

“However, any time a PI provider pulls out of the marketplace that is a concern, and we are actively looking at better understanding the issues and exploring the options on what can be done to secure certainty and competition in the marketplace.”

Mr De Gori says Vero’s decision was flagged previously and is unlikely to be connected to the latest scandals involving poor advice and rogue advisers. “It’s definitely not great news and the timing is not great, but I don’t think the decision was linked to issues currently being canvassed in the media.”

He says Vero’s exit will be “an agenda item for discussion” when the FPA next meets with the Insurance Council of Australia.

Five years ago the FPA appointed JLT as insurance broker for the delivery of PI cover to association members. There are now seven insurers offering PI cover to financial planners, and Vero’s exit will either be seen as a timely warning to do likewise or an opportunity to increase market share.

One of those insurers, Axis Specialty Australia, says it will stand firm.

“I wouldn’t say [Vero leaving] was a surprise, but Vero was a reasonable player, so it’s a decision that has a pretty substantial impact on that market segment,” National Manager Financial Lines Tony Hynes told insuranceNEWS.com.au.

Mr Hynes says Axis has already reviewed its financial planning segment and it has no plans to exit.

“Our aim is to maintain our role in the market. No insurer likes to withdraw from a market.”