Insurers are denying they are artificially inflating business liability premiums to cover past losses, but they might soon have to do more than that. They have been put on notice from one of Australia’s most able professions – the accountants – who are threatening to find their own risk cover if premiums keep rising.

Like many other professions, the accountants have been feeling the heat of huge hikes in their professional indemnity premiums, and now they’ve joined the legal profession in attacking the insurers.

Insurance Council Deputy Executive Director Dallas Booth said yesterday that insurers aren’t singling out specific professions like accountants, and pointed out that many other professions, including doctors and engineers, are also experiencing big rises in professional indemnity premiums.

“Professional indemnity, like public liability, has made significant losses over a number of years, largely due to increases in claims costs,” he told Sunrise Exchange News.

On Friday the CEO of CPA Australia, Greg Larsen, told an insurance conference in Sydney that accountants are “heartily sick of being the fall guys for the insurance industry. We are businesspeople, too. It is simply not acceptable for the insurance industry, in order to recover its losses, to turn the screw on our members requiring professional indemnity insurance.”

He said insurers have adopted an attitude of “what the market will bear” and warned that if they can’t provide services at a reasonable price, “we will have to find another way to deliver that to our members, and so the industry runs the risk of becoming marginalised from our members’ business”.

It’s a big threat, but one which insurers will probably take seriously – not that they feel they can do much about it. Mr Larsen said his association is receiving up to 20 calls a day from members facing premium rises of up to 500%. He also expressed concerns over insurers applying greater policy exclusions and some members being unable to obtain cover at all.

Mr Larsen said it is “absolutely ridiculous” that some members are even experiencing difficulty in obtaining cover for providing tax advice. “We have reached the stage where enough is enough, and we will not be dictated to by the insurance industry,” he said.

The CPA has called for more major reforms including the abolition of joint and several liability of co-defendants, the capping of professional liability and the passing of uniform legislation on proportionate liability. It’s probably a little late to get involved, but the accountants have lobbying strength in several states and the insurers are unlikely to get in the way over such matters.

Mr Booth said a long-term solution would be introducing proportionate liability, but for the short-term he advised accountants to “implement better risk management, risk assessment and risk mitigation processes”.