On Monday, April Canada launched its financial services coverage, for everyone from stock brokers to mortgage lenders, and brokers are being advised that this isn’t a quick turnaround policy. The coverage is for negligence or omissions in financial advice that negatively affected the investor, as well as cyber protection for sensitive banking data.
April Canada’s director of commercial lines, Kent Pitkin said understanding the nature of the claims tends to take some unravelling.
Learn more about financial services insurance here.
“With this type of client, because we’re looking both at the good side and the distressed side, we know these risks aren’t something that gets quoted very quickly, they’re not that half hour turnaround time. There’s a lot of back and forth that goes along with this thing,” Pitkin said.
“We want to help the broker out. One client that we went back and forth with was a new venture that was a different type of lending institution. We talked for about a month asking a series of different questions and walking the client through why they needed that information. We were the only ones who ended up providing a quote because the lending institution was so far out there compared to normal market risk.”
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Its entrance into financial services coverage is one April Canada saw as advantageous because there is no single specialist in the market right now, Pitkin said.
“We saw there was an opening in that space - we found a niche space within that group for the distressed side of financial institutions, with ups and downs in the economy,” Pitkin said.
“Not that we’re focused on the distressed side entirely, but we found there wasn’t one company that was really good at doing this type of insurance and we felt that it was a good opportunity.”
It also comes shortly after tellers from the ‘Big Five’ banks revealed to the media they were pressured by their bosses to sell financial instruments customers may not necessarily need. A CBC investigation found the difference between a financial “adviser” and an “advisor” can separate consultants from salespeople.
“It’s a difficult segment because there’s a lot of ambiguity in what’s considered advice and what’s considered a professional,” Pitkin said. “They’re not professionals like doctors where there’s a clear cut ‘I cut the wrong leg off or I didn’t cut the wrong leg off’.
“It’s really hard to prove that they really were negligent and that they knowingly made an error.”
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