While premiums for professional indemnity (PI) insurance for financial planners may have dropped in the past 12 months, the recent developments in the Westpoint collapse may push PI premiums back up again.

With as many as 100 financial planners facing lawsuits, the possibility of real claims from up to 4000 investors could cause a spike in PI premiums.

QBE Australia says it “could be a reality” that the Westpoint project will impact PI premiums, which fell by as much as 20% late last year.

While QBE seems optimistic that PI premiums will rise, underwriting agency Dexta Corporation believes premiums will continue to fall until June and plateau in the new financial year.

But it is still too early to find out what will happen to planners’ PI premiums, according to the Financial Planners Association (FPA).

An FPA spokesman says there hasn’t been any indication either way towards the outcome of premiums but it would all depend on what information came to light later on.

Meanwhile, Westpoint investors caught out by the company are facing an array of choices of what step to take to pursue claims for their losses.

Investors will have the option of pursuing a class action against planners through Slater & Gordon, making claims through the Financial Industry Complaints Service. The Association of Independently Owned Financial Planners is also seeking recompense on behalf of clients.

Westpoint liquidators are also investigating claims against directors on behalf of companies they represented. Any surplus funds recovered will be distributed to Westpoint creditors.