G&A broker claims series – The 7 Deadly Sins
Having proactively assisted and advised their broker clients through hundreds of claims, the team at Griffiths & Armour have undertaken a detailed analysis of the causes of claims across all sectors of the broking profession, and uncovered common themes.
To help you identify similar risks to your business and avoid the same pitfalls, the team have developed a claims and risk management series entitled ‘Broker Claims – The 7 Deadly Sins’. Take a look at the first piece below.
To find out more about the Compass PI scheme and how it can make an impact on your business, speak to your Strategic Account Manager.
Deadly Sin 1 – ineffective communication
This series will be broken down into sections and published in the Compass Newsletters throughout the course of 2019 and we trust they will provide some useful insights and assist you in minimising the risks your businesses face within the insurance broking profession.
If you would like to discuss any particular areas of concern for your business or advice on mitigating them then please do feel free to get in touch with one of our Broker PI experts here at Griffiths & Armour.
As many of you will probably suspect, rather than simply being one of the deadly sins, we could have probably based the majority of the series around ineffective communication as it is a common strand that runs through many different types of claims against brokers. Through the analysis of claims data from our broker client base we have estimated that around 75% of claims either result from (or are significantly contributed to by) a breakdown or weakness in communication at some stage of the advice or distribution chain.
Looking at our both own statistics and the insights we have gained from the wider market, including the expert legal and compliance firms we work with, the main areas by which ineffective communication frequently result in claims against brokers include:
- Communication of important policy terms, conditions or warranties to clients,
- The securing of material facts from clients or the communication of them to insurers, and
- Effecting a policy of insurance that suitable or meets their demands and needs.
There have been several high profile examples from the Courts in recent years of claims against brokers where one of all of the above have been a leading factor in the loss or perceived negligence. These include the Jones v Environcom and Café De Lecq v Rossborough cases and if you are not familiar with these then we would urge you to look them up and consider the where the brokers in question could have been seen to fail in effective communication and the learnings that these examples present for other brokers to mitigate their own risks.
The latter of the above is a problem which has multiple potential lines of causation and so has an entire chapter dedicated to it later in the series.