A frequently recurring aspect of negligence claims against brokers is a fundamental change in the client’s attitude on what is most important to them at different times in the risk transfer process. When a policy is due for renewal, the central focus may be on cost; securing the lowest available premium is pushed to the forefront as being the essential result.
If all coverage was homogeneous, with every insurer using a standardised policy wording and taking a uniform approach to dealing with claims, then it might arguably be a sensible position to use pricing as the main driver in decisions on placement.
Of course, in the real world, there is no such consistency and even subtle differences in cover, along with each individual insurer’s interpretation of the validity of a notification, will make the difference between a matter being accepted or repudiated. The customer who was apparently pleased with the service provided by the broker at renewal will suddenly take the opposite view in the event of a claim not being fully covered by the policy that was recommended.
The end of hard market conditions for most classes of business makes that disparity in attitude all the more stark. Increasing competition as capacity returns and underwriting appetites expand means that rates are generally trending downwards.
In some cases, this will mean that the same or improved cover is available for a reduced spend, which will be welcome news to the insured. However, brokers need to be minded of the danger that the prospect of “more for less” may prove to be illusory where a reduction in premium is, in fact, mirrored by a narrower scope of cover.
How can brokers guard against the possibility that a happy client will later become a disgruntled claimant?
One key element is taking the time and care to fully understand their needs over the long-term. That knowledge will mean the broker is in a position to fully inform the customer about any deficiencies in cover that are specific to their potential risk exposures. Brokers can act as educators in this regard to help ensure that customers are in a position to completely understand how an initially appealing offer may hide a sting in the tail.
The maxim “if it isn’t written down, it didn’t happen” is oft-repeated for the simple reason that it remains true. The points above about educating and understanding are important but if those processes are not backed up by documented evidence, a broker will automatically be on the back foot when it comes to defending itself against claims. A file note or email, which records when such advice was given, is an invaluable point of reference. It may only take a relatively short amount of time to produce but those moments can make all the difference later on.
Even with the best of intentions which are supported by robust internal risk management procedures, allegations of errors and omissions will still be brought against insurance intermediaries.
A specialist broker can help in both finding the best cover and providing expert guidance and advice when claims do arise. Griffiths & Armour has been a BIBA-accredited broker PI provider since 2013 as well as operating dedicated schemes for Bravo Networks and Aviva Club110 members. During that time we have assisted hundreds of firms with securing the right solution for their own PI requirements.
If you have any questions about the contents of this article, please get in touch.
