Insurance for ICT Professionals

Occasionally I get asked about the insurance for my work as an independent ICT consultant. First of all there is workers' compensation insurance which my company is required to have to cover me against accident and injury as an employee. The there is Professional Liability Insurance to cover my clients.

Taking out workers compensation insurance is reasonably simple, being based on the salary of the employees and the risk for your area of employment. But Professional Liability Insurance requires filling out a detailed forms with your qualifications and major projects. Also you have to work out how much cover to have. The cover required will probably depend on what your major clients ask for. Large companies and government agencies usually have a standard clause with a set amount of insurance required in contracts and this is typically $5M to $10M.

The Australian Computer Society (ACS) has a "Professional Standards Scheme" which is part of the Professional Standards Councils Cover of Excellence scheme. This covered by Federal and State legislation which limits liability for members who are part of the scheme .The practical result of this is that if you meet the requirements for the scheme, you need only take out a set specified level of insurance, which can be as low as $1.5M.

I was already a Fellow of the ACS (FACS) and then applied to be a ACS Certified Professional (CP), having had my qualifications and experience checked. There is then a further special category of membership for the professional standards scheme called "Certified Computer Professional". Compared to becoming a CP, this is relatively easy, just requiring you to maintain your CP status by doing 30 hours professional development each year, using a standard notice about the scheme and taking out  Professional Indemnity Insurance policy.

One catch I found is that while in theory you could limit your indemnity to $1.5M, your client may not accept this. Rather than try to explain the scheme to clients I found it easer to set my insurance at the level most clients asked for. Also lowering the coverage does not lower the insurance premium proportionally (one tenth the coverage seems to cost half as much, not one tenth as much).

Confusion Over Insurance for Superannuation Members

Australian Ethical Investment (AEI) is informing its superannuation members that legislation requires them to provide members with with Death & TPD insurance on an opt-out basis. AEI will sign up the members for insurance and deduct the premium from their superannuation account, unless the member contacts the superannuation company to say they do not want the insurance. However, the requirement for the opt out insurance only applies to some categories of members, whereas AEI is writing to all members. I suggest that the Australian Prudential Regulation Authority (APRA) should clarify the situation of the opt-out insurance in general, not just for AEI. Any commissions paid by the insurance companies should be disclosed and any interests directors or other staff of the superannuation companies have in the insurance companies should be disclosed.

A worker may have superannuation accounts at different funds. If each fund takes out an insurance policy for them, this could result in a large drain on the member's superannuation, for little or no benefit to the member. The member may not receive benefits from all, or any of the policies, as insurance policies often have clauses which exclude duplicate policies. Also the premiums may drain all the funds from a small superannuation account, at which point the insurance would be canceled.

Poor Business Process Design by GIO General Limited

Returning from a few days away I found three paper letters from GIO General Limited in my letterbox. These appear to have been sent a few days apart and were all about my company worker's compensation Insurance.

The first paper envelope I opened was an invoice for renewal of the insurance, the second was a tax invoice and the third a certificate of currency. Had I opened these one at a time on different days, I may well have paid the premium twice, as I received two invoices.

As I opened all the envelopes at once, I almost did not pay at all. The "Certificate of Currency" shows my insurance current for another year, suggesting I had already paid the premium.

I can think of no good reason why GIO wastes my time and their money by sending three documents in three envelopes. It would make more sense to send one invoice (which can also be a tax invoice) and then send the Certificate of Currency after payment. Ideally there should be the option of receiving these electronically, rather than on paper: who sends out paper invoices any more?