PI insurance market ‘pretty positive’, with minimal Shield, First Guardian impact

The collapse of the Shield and First Guardian master funds is not having a material effect on the cost of professional indemnity insurance for financial advisers and licensees, but with increased capacity in the market driving down premiums, just one or two big claims from elsewhere could see that change quickly, according to a leading PI broker and underwriter. 

Ryan Neary, executive general manager, specialty and corporate, for insurance brokers GSA, told the 2026 Finance Industry Awards hosted by the Institute of Finance Professionals of Australia (IFPA), that the PI insurance outlook for advisers and licensees is “pretty positive at the moment”. 

“Maybe seven or eight years ago… it was a really, really hard market; you probably had five PI insurers that were considering risks such as financial planners and dealer groups,” Neary said, as part of a panel discussion moderated by Conexus Financial co-chief executive officer Aleks Vickovich.

“We’re now at just over 20 looking at risks, but albeit a lot of that capacity is still coming from London there are local providers that have been in the market for a long time that are still in the game, but once again, you look at Shield and First Guardian, and people thought that that would change the market a little bit. It really hasn’t.  

“There was a small group of advisers that were involved in Shield and First Guardian. Where it’s really impacted, and where it’s had the impact on the market, and where people are talking about is the trustees and the platforms. They’re the ones that have really been put in the spotlight over this, and from an insurance and risk perspective, they’re the ones that are really getting hauled over the coals by insurers.” 

Neary said that competition between underwriters is keeping the market stable, but with gross written premiums of only about $100 million if “you have a few big claims, there’s not a lot of premiums to sustain that”. 

“There’s not a lot of premiums to keep the market sustainable, and it can shift really quickly.  

“What is keeping the market steady at the moment is competition. There is a lot of competition out there, there is a lot of demand for quality risks, and I was speaking to Matt [Fogarty] earlier, just around the systems, the compliance, the oversight that insurers look for now, and that’s why I think that the new dealer group model and the larger businesses are the ones that insurers used to be uncomfortable with, but they are getting more comfortable with.” 

Neary said that if a couple of big claims made insurers unprofitable, “you’ll start seeing London insurers, re-insurers get a bit nervous and start to lift rates”. 

“I reckon we’re still probably about 12 to 18 months from that,” he said. 

Wotton Kearney partner Dean Pinto said Shield and First Guardian are so far not affecting PI premiums, but conversations with the Lloyds insurance market indicate that insurers are starting to “look more closely now at your APL”. 

“When I go to London and I meet the Lloyds market, yes, they have been very interested in what’s happened with First Guardian, but their takeaway is that this isn’t an issue which is impacting numerous advisers. This isn’t a Storm Financial, this isn’t a Timbercorp. So, from that point of view, they’re backing their ability to write the risks,” Pinto said. 

“I did do a few phone calls today around them just to see what their views are and what impact it’s had. OK, if you’re telling me this is not impacting what you charge as a premium, what is it doing? What are you changing? And the feedback to come back is well, they’re going to look more closely now at your APL. What’s on your APL? How have you tested what’s on those APL?  

“And the second common thing that came up from the insurers was where are you getting your clients from? And if you’re taking cold leads, that’s going to be [considered] going forward as well.” 

Neary said a greater direct impact had been felt by the trustees of platforms, and that would have indirect consequences for advisers and licensees. 

“They’re the ones that have really been put in the spotlight over this, and from an insurance and risk perspective, they’re the ones that are really getting hauled over the coals by insurers,” he said. 

“Therefore, as dealer groups and as financial advisers, you’re probably seeing that come back on you in terms of reviews they’re doing on you, pausing you on the platform, whatever it is. So, whilst you haven’t been directly affected by what’s happened, indirectly you have been affected.” 

National head of distribution for licensee Lifestyle Asset Management, Rob McCann, said that over the past quarter of a decade “there’s been something like 50 product failures”. There have also undeniably been advice issues, “and a whole stream of things”.  

“But if you look at Shield and First Guardian, the regulator has been very quick calling to account all the moving parts that occurred that allowed this scam, and it is an outright scam,” McCann said. 

“There’s been fines, there’s been [remediation] made by Netwealth and Macquarie. They paid the money back. But you know what? Who was the first entity that approved that product? It was ASIC. They approved the RE, they approved the trustees, they approved the product.  

“Along the way, there were warning signs the whole way. Now, ASIC are asking us all to do better, and I think we need to do better. But I haven’t seen anywhere yet where ASIC is better.” 

InFocus head of strategic relations, Matt Fogarty, said that as scrutiny ramps up on product, both on platforms and on licensees’ APLs, “choice and flexibility is being lost very quickly here as a result of Shield and First Guardian as these guardrails tighten”. 

“The product governance regime that’s sitting across all of this, if you’re at the coalface with it, certainly from an advice network point of view, is huge, and it’s happening every day, the questions you’re being asked, the due diligence you’re being asked about, the work that you need to do,” Fogarty said. 

“So… from an advice point of view, we’re in a great time. If you’re an adviser, an accountant, running a professional advisory business, I think times are pretty good. Yes, it’s complex, and there’s lots going on, and there’s clients stressing out… of course, that’s true, but I see [advice] more optimistically than I have in the last 10 years. So, it’s ironic that whilst that’s happening, another side of the coin here is being tightened so dramatically.” 

Neary said class actions, such as those brought against platform operators Macquarie and Netwealth, are a potentially greater threat to the PI insurance market. 

“Class action brings a risk to severity, and when you have a severity claim, they’re the ones that really scare insurers. They can wipe out your tower, wipe out your limit, and wipe out profitability of insurers for many years. 

“Securities class actions are what ruined the directors’ and officers’ liability [insurance] market. If you start getting similar class actions in the PI market from matters like this, it will drive significant losses.”