Important changes to the CPA Capped Liability Insurance scheme
Published 27 July 2017
Many accountants will have already been contacted by CPA Australia to advise them that the Capped Liability Scheme will expire on 7 October 2017. After extensive dialogue between CPA Australia and the Professional Standards Council a replacement scheme has not been finalised within the necessary timeframe.
At that time, the scheme will lapse and all CPA public practitioners will lose the benefits of the scheme. Both parties continue to work through the issues for re-establishment of the scheme as soon practicable. As such, we are advising accountants to take time to review their level of professional indemnity insurance cover to identify any gaps or emerging risk exposures and make the appropriate changes.
What accountants need to consider
George Trbojevic operates an accountant’s professional indemnity insurance scheme for Gallagher. The capped liability offers an additional protection layer to CPA public practitioners, forming an integral part of their risk management framework alongside their mandatory insurance purchase.
Lapsing of the Capped Liability Scheme will force CPA members to re-consider risk management strategies. “Where we provide value is in working with existing clients who are CPA members, as well as accountancy practices who sit outside the CPA scheme, to check whether their current levels of professional indemnity (PI) insurance are sufficient to meet their needs and reflect the risk profile of their client base.”
“There is still time to take action, although we would generally advise doing this sooner rather than later to prevent any last-minute panic.”
Trbojevic provides more context. “There are two aspects to this. The first is in maintaining the mandatory PI cover that is a statutory requirement for all accountants in public practice. It is good practice to regularly review your level of cover and make the necessary adjustments to reflect your current and expected future needs.”
“The second relates to the Limited Liability Scheme, which provides capped liability cover - effectively providing a safety net between the levels provided under the mandatory cover and the level required to satisfy a particular claim.
"The loss of security of the Scheme will be of great concern to both small and larger practices. CPA Australia (as we do) recommend to all members they discuss their insurance needs with their current broker.” Trbojevic concludes.
CPA members concerned about their level of PI insurance are very welcome to get in touch for an obligation-free conversation and a review of their insurance. George can be contacted on 02 9242 2013.
Alternatively, additional details on our Professional Services capability is available, including more information on how we can help.