Advisors’ E&O insurance premiums have fallen sharply for one risk asset group

investmentnews.com:

With inflation having driven up costs for registered investment advisors in the past year, finding things that have actually become less expensive is always welcome.

And despite continued concerns of regulators about digital assets, especially cryptocurrencies, this is one group of risk assets for which advisors should find lower costs for the errors and omissions insurance.

A new report from financial services industry focused corporate insurance brokerage Golsan Scruggs, reveals that premiums for E&O coverage for digital assets has fallen by around one half in the past year as insurance carriers becoming more comfortable offering this coverage to advisors.

“About a year ago, advisors who wanted to add cryptocurrencies to their clients’ portfolios often had to do so without the protection of insurance, since premiums were often prohibitive, assuming they could even find coverage,” said Brian Francetich, shareholder and director of Golsan Scruggs. “The environment has changed dramatically, and now RIAs can better mitigate their own risks if they feel their clients could benefit from increased exposure to the asset class.”

There are several reasons why premiums have fallen, including insurers’ view that the regulatory landscape around digital assets is becoming clearer with the SEC and Finra providing greater oversight of how advisors communicate with clients and prospects about cryptos.

The way that digital assets are custodied is another shift, and there has also been a change in the advisory industry.

“Most financial advisors have been cautious about adding cryptocurrencies, but it is clear that client demand has prompted the industry to do more diligence,” Francetich said. “Advisors are becoming more experienced in