Duty of care under the Wft · licence requirement · underinsurance
Professional indemnity insurance (BAV) for a self-employed insurance adviser
For a financial services provider this insurance is not a choice but a condition of the licence. The substantive question is whether the cover fits the products in which you actually act as an intermediary.
- Several insurers compared objectively
- 9.5 customer rating for a new policy
- AFM licence 12016589
- Personal 072 - 509 24 56, weekdays 9–17
Deze pagina in het Nederlands: Beroepsaansprakelijkheidsverzekering voor een zelfstandige verzekeringsadviseur.
The calculator and the quote form below are in Dutch. Prefer to do this in English? Email info@finassverzekert. nl or call 072 - 509 24 56 and we will take it from there.
Work out for yourself what it would cost.
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- We compare the offerings of several insurers
- An adviser checks whether the cover suits your activities
- We arrange the switch, including cancellation
A premium indication, not personal advice. Prefer to talk it through? Call 072 - 509 24 56.
In brief
Anyone acting as an intermediary in insurance or other financial products needs a licence and must, under the Dutch Financial Supervision Act, hold professional indemnity insurance or an equivalent arrangement. That requirement is set out in Article 4:75 of the Dutch Financial Supervision Act (Wft) and is worked out in the Decree on Conduct of Business Supervision of Financial Undertakings. A policy that does not meet those requirements is not only a cover problem but a regulatory one. How the product itself works is set out on the hub page on the BAV.
Claims in this profession follow from the duty of care in Article 4:23 of the Dutch Financial Supervision Act (Wft): you must obtain information about the customer's situation and advise on what suits it. What goes wrong is recognisable. Buildings insurance (opstalverzekering) not adjusted after building work, so that a fire reveals underinsurance. Business interruption cover with an indemnity period far too short for the actual time needed to rebuild. Disability insurance (AOV) with a description of occupation that is no longer correct. A change you received but did not pass on, so that the loss falls outside the cover.
A second category is the duty of disclosure when taking out a policy. Article 7:928 of the Dutch Civil Code requires the customer to disclose what matters to the insurer; Article 7:930 of the Dutch Civil Code allows the insurer to reduce or refuse payment where that has not happened. As the adviser, you are the one who should have asked about a criminal record, an earlier refusal or an earlier claims history. If it turns out you did not, the bill moves from the customer to you.
This page deals with one situation. The full overview is on Compare professional indemnity insurance (BAV).
What an advice claim in financial services is about
Four subjects that are decisive for a self-employed insurance adviser.
Your file is your cover
A customer says afterwards that he was never told about an exclusion or that he asked for wider cover. Without a customer profile, an advice report and confirmation of the choices made, you have nothing to fall back on. Also record what the customer declined: a recommended extension the customer did not want is your most important defence, provided you confirmed that refusal in writing.
Working outside your licence is not covered
If you act as an intermediary or advise in a product group for which you have no licence, for example mortgage credit or pensions alongside general insurance, you are carrying out work outside your insured capacity. Policies exclude acting contrary to statutory requirements or outside the licence. Have your policy schedule name the product groups matching your registration.
Premium collection and client money
If you collect premiums or claim payments through your own account, separate requirements apply and loss through misappropriation is not covered: Article 7:952 of the Dutch Civil Code excludes loss caused by intent. An administrative fine or order subject to a penalty from the AFM (the Dutch financial markets authority) is a sanction as well, and therefore uninsurable. Keep the flow of money out of your own account as far as possible so as not to run this risk.
Transferring a portfolio leaves a gap behind
If you sell your portfolio or stop advising, customers can still bring claims against you for years about advice given in the past. Because the BAV works on a claims-madebasis, what matters is whether cover is in force at the moment of the claim. Buy run-off cover before you cancel and record in the sale agreement who carries the past.
What does your premium depend on?
- Commission and retainer income: the usual basis for calculation
- Product groups: general insurance, income, pensions or mortgages weigh differently
- Business or private customers: business files involve larger interests
- Size of the portfolio: the number of policies determines the chance of a series of mistakes
- Advice or execution only: advising brings a heavier duty of care with it
- Retroactive date: cover for advice given in earlier years
Insurers weigh these details differently. That is where your saving is.
What is covered
| Situation | AVB | BAV |
|---|---|---|
| Your customer turns out to have no cover for tenant's improvements because it was never discussed with him | No | Yes |
| The new policy starts a day after the old one ended and there is a burglary that very night | No | Yes |
| A customer loses his no-claims discount because you reported a claim he wanted to bear himself | No | Yes |
| A customer trips over the threshold of your home office | Yes | No |
| Your customer demands the return of the commission you received on his policies over the past years | No | No |
| Your mailbox is hacked and the data of your entire portfolio are out in the open | No | No |
It is always about the customer's detriment. What you repay or lose yourself remains for your own account.
Frequently asked questions
This is what people ask us most.
Is this insurance compulsory for a financial services provider?
Yes. Article 4:75 of the Wft requires intermediaries to hold professional indemnity insurance or a comparable arrangement, with requirements as to the amount and the number of claims per year. Without that cover you do not meet the conditions of your licence. Check at renewal whether the policy still meets the current requirements, including where your turnover or product mix has changed.
What if the insurer I placed the business with does not pay out?
Then the question is whether the refusal is justified. If the refusal can be traced back to cover you did not advise appropriately, or to information you did not ask for, that is a professional error belonging on your BAV. If it is down to the customer's own conduct, it is not. Loss arising solely from the insolvency of a financial institution is usually excluded.
Am I covered for a complaint to the complaints institute?
Affiliation with a recognised dispute resolution body is compulsory for financial services providers. A complaint that leads to a claim for damages can be reported to your insurer; handling costs and defence are then usually covered by the policy, provided you report in good time. Article 7:941 of the Dutch Civil Code requires you to inform the insurer as soon as possible, so do not wait for the decision.
What if a mistake in my system affects several customers?
That is the scenario your policy should be checked against. A renewal process set up incorrectly, or a standard clause you used for everyone, leads to a series of similar claims. Look at how the conditions treat related claims and what the maximum per policy year is. In such a scenario that maximum matters more than the amount per claim.
Read more
Within Beroepsaansprakelijkheidsverzekering
- Beroepsaansprakelijkheidsverzekeringthe main page
- Beroepsaansprakelijkheidsverzekering financieel adviesbureau
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- Beroepsaansprakelijkheidsverzekering hypotheekkantoor
- Beroepsaansprakelijkheidsverzekering financieel adviseur zzp
- Beroepsaansprakelijkheidsverzekering notaris zzp
- Beroepsaansprakelijkheidsverzekering makelaarskantoor
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