Fines excluded · outsourcing · promises
Professional indemnity insurance (BAV) for a compliance consultancy
Your client hires you to prevent fines. If he gets one anyway and passes it on, you run into the exclusion that appears on virtually every policy.
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Deze pagina in het Nederlands: Beroepsaansprakelijkheidsverzekering voor een compliance-adviesbureau.
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
A compliance consultancy advises on rules whose observance is checked by a regulator: client due diligence and transaction monitoring under the Wwft, licensing and duty of care requirements under the Wft, processing registers and security under the GDPR (AVG), sanctions lists and outsourcing rules. If something goes wrong in your advice, the client receives a direction, a remediation order or a fine. The claim that follows is pure financial loss and belongs on professional indemnity insurance. The structure of the product is set out on the hub page on the BAV.
You probably already know the main limitation: fines and sanctions are excluded. That applies even where the fine was imposed not on you but on your client and he recovers it from you. A punishment should fall on the party punished; insurers reflect that in their conditions. What can be insurable are the costs of putting things right: redoing client due diligence across a portfolio, extra capacity to clear a monitoring backlog, the external costs of a remediation programme. Check the policy conditions to see whether those items are recognised as loss or in fact limited.
Also note the outsourcing. An institution cannot contract away its statutory responsibility: the client remains answerable to DNB (the Dutch central bank), the AFM (the Dutch financial markets authority) or the Autoriteit Persoonsgegevens (the Dutch data protection authority). Contractually, however, he will recover his loss from you. If you fill the compliance function or the role of key function holder at a client, that is a different insured capacity from advising and sometimes even a position shifting towards that of policy maker. Have that expressly stated on the policy schedule.
This page deals with one situation. The full overview is on Compare professional indemnity insurance (BAV).
What to look out for
Four points that are decisive in compliance advice more often than the sum insured.
Do not promise an outcome
Sentences such as 'after this programme you are Wwft-proof' or 'the licence will be granted' are read afterwards as a guarantee. Liability under guarantees and promises going beyond liability in law is excluded. Describe in the quotation and the report what you investigated, which period and which files you examined and what fell outside the scope.
From adviser to office holder
If you are assessed and appointed to a key function or act as an external compliance officer, you act within the client's organisation. Personal claims then run through Article 6:162 of the Dutch Civil Code and sometimes through administrative law. Assess whether directors' and officers' liability insurance is needed alongside the BAV, because the two cover different allegations.
Recording what the client did not do
Compliance advice often founders on implementation at the client: recommendations left undone, systems not adapted, staff bypassing the procedure. Report recommendations in writing, with a deadline and with a follow-up overview. That is your most important defence, and it can reduce the compensation payable under Article 6:101 of the Dutch Civil Code on the ground of contributory fault.
The fines exclusion and what else falls away
There is no cover for: fines, penalty payments and punitive damages, including where passed on by a client; deliberate or wilfully reckless breach of regulations under Article 7:952 of the Dutch Civil Code; and known circumstances at inception, such as a current investigation at a client about which you have already been questioned. Concealing that affects the cover through Articles 7:928 and 7:930 of the Dutch Civil Code.
What does your premium depend on?
- Turnover and team size: the number of advisers determines the number of simultaneous projects
- Sector of your clients: banks, insurers, trust offices and crypto providers face heavier supervision
- Nature of the assignments: policy documents and training weigh differently from reviews carried out and functions held
- Sum insured and excess: set per claim and per insurance year
- Contract terms: a valid limitation of liability reduces the exposure
- Area of cover: international clients and US jurisdictions are assessed separately
Insurers weigh these details differently. That is where your saving is.
What is covered
| Situation | AVB | BAV |
|---|---|---|
| An acceptance policy you drew up turns out not to comply with the Wwft | No | Yes |
| Your trainer explains a reporting duty incorrectly on a course and the client acts on it | No | Yes |
| The client has to screen his entire client base again after your advice | No | Provided that |
| A recommendation you made in writing with a deadline and that the client left undone | No | Provided that |
| Your consultant damages a server cabinet at the client with his case | Yes | No |
| Your own advisory files leak after a phishing email at your office | No | No |
The distinction that counts is between the sanction itself and the remedial work that follows. Only the second is open for discussion with an insurer.
Frequently asked questions
This is what people ask us most.
Our client received an administrative fine. Can he recover it from us?
He can try, but your insurer does not pay the fine: sanctions are excluded because they are a punishment and not compensation. What can be insurable are the consequential costs, such as redoing client due diligence or externally hired capacity for remediation, provided those items are recognised as loss in the policy conditions. Check that before you sign an engagement with an indemnity clause.
We only supply policies and training. Why would we need cover?
Because a defective policy document multiplies: every member of the client's staff works with it for years. If it is established afterwards that a procedure did not comply with the rules, the remedial task is large and measurable. Defence costs alone can mount up considerably, even where it turns out in the end that you made no mistake. The BAV pays those costs within the cover.
What about advice on the GDPR and a data breach at the client?
If there is loss because your advice on security or processing agreements fell short, that is a professional error and is covered in principle. If your own systems leak, with client files in them, that is another matter: investigation, restoration and notifications belong on a business cyber insurance. Fines from the Autoriteit Persoonsgegevens remain excluded on both policies.
Our client demands unlimited liability in the contract. What does that mean?
That you accept more than the law imposes on you, and it is precisely that excess which is excluded on the BAV. Liability accepted by contract above liability in law is not covered, nor are penalty clauses. Negotiate a limit that matches your sum insured and report unusual terms to your insurer before you sign, not after the claim has arrived.
Read more
Within Beroepsaansprakelijkheidsverzekering
- Beroepsaansprakelijkheidsverzekeringthe main page
- Beroepsaansprakelijkheidsverzekering compliance officer zzp
- Beroepsaansprakelijkheidsverzekering bedrijfsadviseur zzp
- Beroepsaansprakelijkheidsverzekering ai adviesbureau
- Beroepsaansprakelijkheidsverzekering legal counsel zzp
- Beroepsaansprakelijkheidsverzekering ai consultant zzp
- Beroepsaansprakelijkheidsverzekering management consultant zzp
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