Advocis Protective Association E&O Plan
IMPORTANT: YOUR E&O RENEWAL NOTICE!
Our records indicate that your professional liability insurance coverage is due for renewal in April, 2014.
2014-15 APA E&O Program Renewal
Advocis, your industry's professional association, through the Advocis Protective Association (“APA”) and its broker, Willis Canada Inc., is proud to continue to offer you the tailored Errors & Omissions (“E&O”) protection that financial advisors need: great coverage, competitively priced!
Advocis Broker Services Inc. Assumes Program Administration Functions as of January 20, 2014
As per our previous notice to all APA E&O program members, Advocis has formed a new insurance brokerage, Advocis Broker Services Inc. (“ABS”). ABS will assume all program management functions, replacing Willis Canada in their capacity as APA Program program administrator. ABS will also take over administration of the related Corporate E&O coverage offerings.
As indicated in the announcement letter, you can still renew your coverage in the current APA website until close of business (5 pm EST), Friday, January 17, 2014. The website will then be closed for enrollment until start of business on Monday, January 20, 2014, at which time APA members will be able to access the new APA website and to enroll.
Renewing on-line?
To view your quality coverage options and prices, click here: www.apa-ins.ca. Effective January 20, 2014, you can also access the APA E&O Program at www.realEandO.ca
Renewing off-line (by mail, fax or e-mail)?
Please complete the application attached herewith (if our records indicate that you renew off-line) and return it to our office (see contact information at the bottom of this notice).
Coverage C & D Certificate Holders Will Be Able to Renew On-Line Effective January 20, 2014
On-line enrollment will be available for Coverage C & D certificate holders on or after January 20, 2014 at the new APA website! At present, C & D certificate holders can only apply for new coverage or renew by paper application.
2014 Pricing
In order to continue offering a competitive E&O coverage option to protect your practice, it has become necessary to increase rates to offset the claims paid under the APA Agent’s E&O program. When faced with allegations of negligence by a client, you can feel assured of the comprehensive protection offered under the APA E&O Program - it is a critical part of your risk management strategy. Since the principle of insurance is that the losses of the few are shared by the many, these increased claims costs must be offset with relatively minor rate increases.
2014-15 rates for Certificate holders carrying policy limits of $1, $2 or $3 million per Claim have been increased by 5%. Rates of Certificate holders carrying policy limits of $4 & $5 million have been increased by 10%.
All of the existing rating discounts apply to those agents who qualify (please see below for full details).
A case for carrying higher limits
Rate increases for Certificate holders carrying $4 & $5 million insurance limits are higher because claimants under the program have been successful in winning judgments well in excess of the minimum $1,000,000 limit being carried by many advisors. Legal costs are escalating and so are judgment awards and indemnity payments. For this reason, we strongly suggest that advisors look at the higher limit levels when considering their renewal options. For many life licensed advisors, the automatic choice has been to carry the minimum levels mandated by life licensed regulators. Your decision as to what insurance limits to carry should be based on a number of factors: for example, the size of your client portfolio, how long you have been in business, whether you have high net worth clients, etc.
Helpful hints when renewing your E&O coverage…
1. Don’t Let Your Coverage Lapse!
Important: Your coverage is not renewed automatically! The APA E&O Plan master policy wording, as is typical with financial advisors’ E&O policies, is “Claims Made”. This means that claims must be made and reported within the policy term for coverage to respond. Incidents which give rise to a claim made after the expiry of the policy term, or claims reported after a policy has expired are not covered (refer to master policy for terms and conditions). This is why it is important to renew your policy without lapse of coverage.
2. Please read the application questions carefully before completing. For Coverage A, B or C applicants, please read the questions under Step 1B, regarding third party firms and Personal Corporations. For on-line applicants, please note that whatever you type in these text boxes will appear in your certificate of insurance - please type only company names, and nothing else.
3. Corporate Partner & Corporate Sponsor Discount Promotion!
Advocis has teamed up with select business partners to offer a variety of products and services. As part of this program, contracted and employed agents of these select firms can take advantage of a 10% premium discount under the APA E & O Plan. The discount is applied as part of the on-line process once the applicants enters the name of the affiliated firm, along with the Promotion Code provided by the firm to its associated agents.
4. Sales Tax Changes
BC and PEI Residents
Both the BC and PEI provincial governments ratified changes in sales tax applicable to goods and services for residents of these provinces effective April 1, 2013.
In BC, the 12% Harmonized Sales Tax (HST) has been replaced by 5% Goods and Services Tax (GST) for British Columbia residents. The new tax means lower total taxes on certain goods and services which previously attracted HST. While insurance premiums are not affected by this tax, certain fees associated with insurance premiums are. Previously, 12% HST was applied to the APA Fee charged for insurance placed under the APAE & O Plan. For coverage placed in effect on April 1, 2013 or later, 5% GST applies.
In PEI, the 5% GST has been replaced by 14% HST for PEI residents. The new tax means higher total taxes on certain goods and services which previously attracted HST. Previously, 5% GST was applied to the APA Fee charged for insurance placed under the APAE & O Plan. For coverage placed in effect on April 1, 2013 or later, 14% GST applies.
Manitoba Residents
The Manitoba government has announced that most commercial insurance policies, including Errors & Omissions insurance policies, are subject to an increase in the provincial Retail Sales Tax effective July 1, 2013. Effective July 1, 2013, the tax rate increased from 7% to 8% and applies to coverage placed in effect on or after July 1, 2013.
The tax is applicable to premiums (the program Insurer’s portion of the member’s insurance cost) and the Willis Broker Fee. HST or GST, depending on province of residence, will continue to apply to the APA Sponsorship Fee.
Zero deductible on Life and Mutual Fund claims continues for 2014-15!
Another reason why the APA Agent’s E&O plan is without parallel! Many competing advisors’ E&O programs feature either $1,000 or $5,000 deductibles.
For many reasons, the APA E&O Plan is the Canadian financial advisor’s choice:
· Price:
o Receive a 5% premium discount for attendance at an Advocis “Protect Your Practice” loss prevention seminar
o Advisors first licensed in the past two years receive a 15% New Advisor Discount (for advisors licensed in 2012 or later - contact Willis for details, certain conditions apply) – helping reduce the costs of running a new practice!
o Advisors contracted with Corporate Partners/Corporate Sponsors receive a 10% premium discount
· Coverage:
o Zero deductible for Coverage A and D certificate holders (Life and Mutual Fund claims)! You’ve already paid for your E&O insurance – why pay again when you make a claim?
o Limits as high as $5 million each Claim for advisors who want to bullet-proof their growing practice, and see their insurance coverage as more than regulatory compliance
o Coverage D applicants (Licensed Assistants) can purchase $2 million each Claim for a nominal additional charge above the $1 million limit option
o Aggregate insurance limits for program participants licensed only in non-regulated provinces (for Life insurance) have been increased from $1 million Aggregate (per policy period) to $2 million at no additional charge
o Vicarious liability coverage is automatically extended to cover third party firms with whom insured advisors do business and are affiliated through an employee-employer or agent-agency relationship (included as a “firm” under the APA E&O master policy). This extends to insured advisors’ incorporated firms through which covered financial services are provided (note: this is not the same as having your “Personal Corporation” added as an Insured under your certificate of insurance, nor as comprehensive as carrying separate Corporate E&O coverage – see below for more details)
· Leverage: participation in a pool of several thousand advisors, one of the largest of its kind, means the best possible pricing and coverage based on the program’s favourable loss experience
· Strength: coverage by Liberty Mutual, an “A” (Excellent) rated insurer (A.M. Best & Co.) means claims will paid even when times are tough
· Advice: you can call ClaimsPro, our Claims management provider, for professional advice should you have concerns about a potential claim being brought against you – their highly skilled legal professionals can guide you and suggest the next steps to mitigate a situation with an unhappy client
Support: membership in a non-profit association (APA) that exists solely to facilitate protection for financial advisors. The APA E&O Plan was designed and implemented by advisors, for advisors! You can read about the APA at the APSA website: www.apa-ins.ca
Renew on-line and Save!
By renewing on-line, you can:
· Save $50
· Pay by credit card (and enjoy the loyalty benefits of your card!)
· Have your renewal processed in minutes
· Receive your insurance certificate, the master policy wording and your payment receipt right away
To renew on-line, log on to www.apa-ins.ca and renew your quality coverage!
To renew off-line:
Applicants renewing off-line can either submit the attached application or visit the APA website to download the applicable application form.
For technical matters specific to your renewal application and coverage, please refer to the contact information below.
Do you have suggestions on how to improve then APA E&O Plan? Please contact the Advocis member services team at 416-444-5251 or 1-800-563-5822.
More Important Information about Your E&O Insurance
You Still Need Coverage if You Are Retiring or Planning to Cease Practice
If you are planning to retire, have already retired, or have otherwise ceased your practice (and are, or will no longer be, licensed for your business activities), don’t just let your policy lapse!
You may qualify for an Extended Reporting Period (“ERP”), to cover the possibility of future claims based on errors or omissions alleged to have occurred prior to cessation of your practice. You can select an ERP extension from one year to six years in length (the limit of coverage must be the same as that carried under your current policy) – premiums vary according to the ERP period you select (an automatic ERP is mandated within the policy at no extra charge for advisors licensed as follows: Quebec and Manitoba, 5 years; Alberta, 1 year – this extended coverage only applies for life licensed activities governed by the regulator in the applicable province).
If you are planning on ceasing practice or have already done so…
Your exposure to claims does not end when you cease practice. But your E& O insurance does if you cancel or non-renew! You can extend the period of time during which claims may be made and covered following cessation of practice. Find out about “Extended Reporting Period” (ERP) options at the APA website. You can download an Extended Reporting Period application in the site. For paper applications, you can call to be mailed, faxed or e-mailed an application.
Don’t wait! You only have up to sixty (60) days past expiry of your certificate of insurance to apply for one of the ERP options.
Adapt Your E&O Insurance Strategy as Your Business Grows
Has your business grown in the past five years? Has your E&O coverage kept up? The APA E&O Plan offers coverage up to $5,000,000 each Claim – make sure you continue to adequately protect your business by purchasing the right amount of E&O insurance.
Exempt Products Coverage
Advisors registered as an Exempt Market Dealing Representative for sales of Exempt Products by a provincial securities commission can add coverage as described below.
Covered products: Include Linked Notes, Principal Protected Notes, Structured Notes, Labour Sponsored Funds, Flow Through Shares, Hedge Funds and any products exempt from the prospectus requirement as determined in the Securities Act in each applicable province.
(a) Exempt Products Coverage under Coverage A (Life/Mutual Funds)
Eligibility: Life, Accident Sickness and or Mutual Fund licensed advisors who are also Exempt Market Dealing Representatives wishing to include coverage for Exempt Products coverage.
Available liability limits: Advisors carrying Coverage A who contract with APA Plan Approved Exempt Market Dealers * can purchase limits of insurance for Exempt Products for either $1,000,000 each Claim/$2,000,000 per Policy Period, $2,000,000 each Claim/$2,000,000 per Policy Period or $3,000,000 each Claim/$3,000,000 per Policy Period (limits selected cannot exceed the limits of insurance you carry for Coverage A). Coverage is part of, and not in addition to your coverage limits purchased for Coverage A.
Advisors carrying Coverage A who contract with APA Plan Non-Approved Exempt Market Dealers * can purchase limits of insurance for Exempt Products for either $250,000 each Claim/$500,000 per Policy Period or $500,000 each Claim/$1,000,000 per Policy Period. Coverage is part of, and not in addition to your coverage limits purchased for Coverage A.
Deductible: $5,000 each Claim.
Pricing: Listed in the application form and as described in the APA website.
(b) Exempt Products Coverage under Coverage B (Securities)
Eligibility: IIROC registrants who are also Exempt Market Dealing Representatives wishing to include coverage for sales of Exempt Products coverage.