The dealer group has sent out 2021/22 PI renewals for members, with insurance costs "significantly different to previous years".
Advisers operating under the NZFSG FAP will need to pay between $2,500 and $2,600 each for PI coverage over the next year, according to a document seen by TMM Online.
The insurance premium depends on final policy limits and options taken.
Advisers with their own FAP licence will face much higher costs, starting from $4,100. Those with their own licence will see their premiums calculated via a proposal form, with advisers able to pick an indemnity coverage limit.
The costs mark a significant increase on previous years. PI premiums were closer to $1,500 per year across the industry in recent years.
The rising costs are down to a hardening insurance market, while underwriters judge the adviser sector to be higher risk under the FSLAA regime.
Insurance experts, including Crombie Lockwood head of financial and professional risks Andrew Ford, say insurers have suffered poor PI loss ratios across different sectors over the past few years, and expect regulators to take a stronger line on enforcement under FSLAA.
Financial Advice New Zealand also has its own PI scheme, and is set to announce the details in the next few weeks.
Advisers are disappointed with the increased premiums and have called for insurers to explain their decision-making processes.
Jeff Royle, an adviser at iLender, questioned how rates have risen, with a historically small volume of claims from mortgage brokers.
"If anything, there will be a higher amount of compliance under the new regime, the risks should be lower, and PI should come down," he said.
"There is a disconnect somewhere. The regulators are talking about compliance, but the insurers are seeing a different picture," he added.
"I'd love to have a round the table meeting with PI insurers and have a robust conversation with them about their justifications for these hikes in premiums. The loss ratios in the mortgage advice sector must be among the lowest across lines of insurance."
Royle warned the soaring costs could make the sector unviable for some advisers, particularly those wanting to work under their own licence.
"This could lead to an exodus from the industry," he said. "The consumer is not being helped by this at all."
