Product Comparison (Please refer to the 'Disclaimer' at the foot of this document)
Audit & Legal Defence Products

Scope of cover provided by QBE supported policies.

External professional fees incurred to assist an insured respond to an audit of a previously lodged return, by a State or Commonwealth Government agency that administers taxes, duties, superannuation and workers compensation. (For workers compensation, the cover has been extended to include workers compensation placed with private insurers). The 'audit' policies can be extended to include 'compliance' audits.

In addition, insureds can also cover professional fees incurred to respond to legal proceedings taken against them by a third party that arise from a commercial dispute.

Policy options. Also see ‘Product Matrix’ below.

• Fee Insure > ‘audit cover’ only > option to cover ‘audits of lodged returns’ or ‘audits of lodged returns & compliance audits’ > ‘occurrence’ wording covering insured financial years, offering permanency of cover and guaranteed run-off. Ability to initially cover the current financial years and up to the 3 previous financial years. Applicable to your general brokered clients.
• Audit Protect > ‘audit cover’ only > option to cover ‘audits of lodged returns’ or ‘audits of lodged returns & compliance audits’ > ‘claims made’ unlimited retrospectivity wording offering a 12 month period of cover, without permanency of cover and run-off. Applicable to your general brokered clients.
• Audit Insure > audit cover only > option to cover ‘audits of lodged returns’ or ‘audits of lodged returns & compliance audits’ > ‘claims made’ unlimited retrospectivity wording. Especially tailored for accountancy, tax agent, book keeping and superfund management firms.
• Fee Insure Plus – combined audit (Fee Insure, including options covered above), plus legal defence cover. Legal defence cover is ‘claims made’.
• Audit Legal Protect - combined audit (Audit Protect, including options covered above), plus legal defence cover. Legal defence cover is ‘claims made’.

Does the scope of cover go beyond ‘audits’?

(US) We were the first to automatically include the words ‘investigations’, ‘inquiry & review’, plus added ‘examinations’, as many activities undertaken by various government agencies aren’t ‘audits’. In addition, insureds can select to include Legal Defence cover.

(OTHERS) Some policies only refer to ‘tax audit insurance’ and others are titled ‘audit insurance’ and either don’t include ‘investigations’ or do include for an additional premium. Seemingly the interpretation of the word ‘audit’ doesn’t automatically encompass ‘inquiries, examinations or reviews’. There’s also no option to expand to include Legal Defence cover, although there are several stand alone policies available.

Does the scope of cover go beyond ‘tax audits’?

(US) All QBE policies offer the same wide scope of cover with respect to State & Commonwealth Government Agencies that administer taxes, duties, superannuation and workers compensation. (For workers compensation, the cover has been extended to include workers compensation placed with private insurers.)

Whilst the standard policies cover audits of ‘lodged returns’, each can be expanded to include ‘compliance audits’.

(OTHERS) Some policies are limited to ‘tax audits’ only. Others provide additional types of audits. We’re not aware of any that cover ‘compliance audits’. On the basis that other policies only refer to audits undertaken by government agencies, workers compensation audits undertaken by private insurers seemingly wouldn’t be covered.

Are policies only written on a ‘claims made’ basis?

(US) We were the first to, and still remain, the only ones to offer an ‘occurrence’ wording. The benefits are permanency of insurance cover for financial years insured, even if the insured subsequently doesn’t renew the policy in future years, plus provides guaranteed run-off cover. Whilst we also offer ‘claims made’ wordings, the downside is total loss of past cover if the ‘claims made’ policy isn’t continuously renewed.

(OTHERS) Seemingly, ‘claims made’ only.

Do policies cover an open audit (‘compliance audit’) of the insured, as well as returns lodged?

(US) Yes, with respect to State & Commonwealth Government agencies that administer taxes, duties, superannuation and workers compensation (whether government or private insurer).

(OTHERS) Seemingly no, although, where additional premium paid, compliance of self managed superfunds may be included.

Do policies only cover Australian based insureds?

(US) Where sought, we can cover a New Zealand subsidiary of an Australian company.

(OTHERS) Seemingly, yes.

Are all risks accepted?

(US) Basically yes. All individuals, self employed, trusts, superfunds and business entities up to $50M turnover and up to $50K sum insured, however, we reserve the right to seek additional information on particular business categories. Above $50M turnover and $50K sum insured and up to $100M turnover and $100K sum insured, acceptance is based on ‘offer & acceptance’.

(OTHERS) Seemingly some individuals or industry types are excluded or if accepted, are heavily rated; spouses of an insured are excluded or included depending on their circumstances and relationship to the insured business entity; self managed superannuation funds are either excluded outright or accepted at additional premium; and risks audited in the last 3 years are excluded. There may be other ‘not as yet identified’ non-accepted risks.

Are there any conditions on ‘returns’ being lodged?

(US) Returns must be lodged within 3 months of the prescribed date or any approved extension for cover to apply.

(OTHERS) Returns, plus any taxes due, must be lodged and paid by or within 2 months of the prescribed date (i.e., date due) or any approved extension, for cover to apply.

Are ‘returns’ covered if there hasn’t been full disclosure of information?

(US) Yes, so long as the relevant government agency doesn’t identify that there was gross negligence or dishonesty involved.

(OTHERS) For cover to apply there must be full disclosure of all financial figures to the relevant government agency.

Is a claim impacted/denied where a tax or duty payer hasn’t maintained proper records?

(US) No, however, any costs incurred to prepare or replace are commercial costs.

(OTHERS) Seemingly, yes.

Do ‘professional fees’ incurred include those of other professionals that assist with the audit?

(US) Yes and without prior approval. Professional fees must be relevant to the audit and be fair & reasonable.

(OTHERS) Yes with some policies, however, prior approval of other than accountancy professionals is required.

What about payment of any amended assessments, fines or penalties?

(US) No.

(OTHERS) No.

Are professional fees incurred to dispute audit findings or any amended assessments covered?

(US) Yes as insureds may want to contest the outcome of an audit.

(OTHERS) No.

Are professional fees incurred with respect to determining if any fines, penalties or further action should be imposed against a tax or duty payer covered?

(US) Yes.

(OTHERS) No.

Are professional fees incurred with respect to determining if an insured has a tax or duty liability covered?

(US) Yes.

(OTHERS) No.

Is there a time limit on how long an audit can take re continuing payment of professional fees?

(US) No, as audit issues can be ongoing over an extended period, particularly where cases are held up or re-opened as a result of legal challenges or court decisions.

(OTHERS) Yes, typically after a final letter or amended assessment is issued.

If an audit is re-opened at a later stage, are professional fees covered?

(US) Yes, but only for any unused portion of the clients sum insured that applied to that audit.

(OTHERS) No.

What?s the level of insurance broker support?

We’re told by insurance brokers that our technical and claims support is unmatched. Accountancy firms enjoy our professional claims handling and the reason for referred new business. We remain at the forefront, in terms of product innovation and insurance policies that truly respond to insured’s real needs; transparency & simplicity; wide scope of cover; policy format options; and customer service. Insurance brokers enjoy our ‘level playing field’ approach. There’s no favoured arrangements or special wordings available to select insurance brokers that allows them a competitive advantage. All insurance brokers have access to the ‘same scope of cover’ range of policies.

 

PRODUCT MATRIX

 

Product	Audit Section	Retro Audit Cover	Legal Defence Section	Retro Legal Cover	Individual Pack	Self Employed Pack	Business Pack	Group Pack
Fee Insure	occurrence	3 previous financial years	n/a	n/a	yes	yes	yes	no
Fee Insure Plus	occurrence	3 previous financial years	claims made	unlimited	yes, but audit only	yes, but legal only on business matters	yes	no
Audit Protect	claims made	unlimited	n/a	n/a	yes	yes	yes	no
Audit Legal Protect	claims made	unlimited	claims made	unlimited	yes, but audit only	yes, but legal only on business matters	yes	no
Audit Insure	claims made		n/a	unlimited	no	no	no	yes

 

 

Disclaimer. This Product Comparison has been prepared for insurance brokers only and is based on Underwriting Australia’s knowledge of tax or audit insurance products (as at 1/9/2008) that are available for distribution via the broader insurance broker market. Underwriting Australia Pty Ltd recognises that insurance policies are under constant review. Whilst we’ll endeavour to maintain the relevance of this Product Comparison, we invite insurance broker feedback.