The Insurance Council of Australia (ICA) has asked the NSW Government to clarify proposed changes to regulations on property, stock and business agents’ professional indemnity (PI) insurance.

The planned amendment to the Property, Stock and Business Agents Act is designed to require licensees to hold PI insurance – but ICA says agents usually do hold PI cover and their professional associations often make it a requirement.

ICA suggests clarifications to align the amendment with PI cover offered by insurers.

Its submission to NSW Fair Trading also says PI insurers want clarification that civil liability cover is not required in the policy, because some PI policies cover legal liability for breach of professional duty rather than civil liability, although they respond to areas highlighted in the proposed regulations.

ICA notes the draft regulation does not give guidance on the extent of cover required for breach of contract.

It says cover for fraud and dishonesty under a PI policy will not cover the party committing the fraudulent or dishonest act, meaning there is unlikely to be any cover where the insured is a sole trader or single principal firm.

ICA has asked for clarification on whether the policy is expected to provide fidelity cover.

“Most insurers are unlikely to offer the proposed limits for fidelity cover on smaller firms or firms with unacceptable risk management in respect of fraud,” it says.

The regulation says the policy must provide cover of at least $1 million for any one claim or at least $3 million aggregate for all claims.

The council says it does not support the need for two reinstatements of the limit.

“We believe practitioners’ businesses would be better protected with a higher per-claim limit but with an aggregate of twice the per-claim limit,” it says. “It also reflects how most PI policies are currently written.”

It says all PI policies contain a range of exclusions and confusion will be avoided if the regulation clearly states that the application of an insurer’s usual exclusions and limitations would not affect a policy’s acceptability.