Deadly Sin 7 – Not sticking to what you’re good at
Brokers are often seen as ‘the helpful advisor’, and because they invariably share an ambition to grow their businesses, forgetting to stick to what you’re good at can be a common pitfall. Most brokers reading this article will remember a moment in your careers where you were involved in an unfamiliar piece of new business, and you didn’t truly understand all you might need to ensure the best outcome for your client.
When brokers get this wrong the negligence claims are often much larger and more severe than the other sins in this series, as it more frequently results in a dangerous gap in cover or fundamental failure in policy response. In fact, it’s been the cause of three of the five largest claims (totaling almost £2m) with which we have assisted our broker clients in recent years.
The source of this type of danger can be business-wide and linked to strategy or an aggressive new business culture; or, it can be down to a training or oversight issue with individual staff members. Whatever the reason, we see this arising most frequently when:
- Securing a client in a new sector, but the broker does not fully understand the nuances
- Staff or teams advising on insurance lines and products which they do not fully understand
- Big or complex clients are ambitiously taken on without the necessary experience and/or resources to manage their insurance and servicing needs
- Brokers diversify into new areas without developing sufficient expertise during the early planning stages.
It is not just insurance brokers who are guilty of this – it is a source of major claims across many professions including lawyers, accountants and construction designers. PI underwriters commonly use the phrase ‘beware of the dabblers’ and this issue can make them wary of such firms.
It can be tricky not to branch out in an industry known as ‘general insurance’, but we definitely see that brokers who are specialists or stick to what they are good at suffer fewer and smaller negligence claims than those who ‘dabble’ on the fringes of their expertise. There is a reason why we have chosen this as the final sin of the series – it is the one that can cause the most significant damage to businesses. So, our final piece of advice is to stick to what you know!
Here’s a reminder of the seven deadly sins…
Since we started this series to highlight common pitfalls and offer practical guidance, the market has changed a lot and our world is becoming increasingly litigious. It is now more crucial than ever for brokers to get things right.
Below is a reminder of the areas we have covered – but we know there is more we can help you with.
7. Not sticking to what you’re good at
Visit Griffiths and Armour at the Compass Conference
As the custodians of the Compass PI Scheme, it is our job at Griffiths & Armour to help all Compass members to minimise the risks they face. However, bad things do happen to good businesses. When they do, the Compass PI Scheme will continue to be here to provide security and support and resolve issues as best it can. We aim to be your ‘ultimate safety net’.
If you do not currently place your cover on the scheme, please visit our stand at the Compass Conference so we can discuss providing robust security for the future of your business.