Forum

Insurance Business forum is the place for positive industry interaction and welcomes your professional and informed opinion.

Brokers are ‘easy target to be sued’

Notify me of new replies via email
Insurance Business | 28 May 2012, 12:05 AM Agree 0
EXCLUSIVE: In the continued wake of a Brisbane broker being sued for $2.7m, a lawyer has branded insurance brokers an "easy target" for clients looking to recoup failed policy pay-outs in court.
  • Sam | 29 May 2012, 11:00 AM Agree 0
    In this case, would the broker in question be covered by his professional indemnity cover? i.e. would PI cover the $2.7 million in damages?
  • Ben | 29 May 2012, 11:25 AM Agree 0
    Depends on the broker's policy limit and conditions but generally yes. However the bigger concern is the irreparable damage to the brokerage and the broker's name. Not to mention their confidence would be shot.
  • Stuart | 29 May 2012, 12:03 PM Agree 0
    I’ve read the judgement. What really stands out to me is that the broker who used the online quote system, appears never to have kept a record of what questions were posed at the time of completing the online form including a record of the responses the broker entered to those questions. In this case it fell entirely on the insurers records to show the IT platform was working correctly and questions and responses it recorded.
    It would make it more difficult for the PI Insurers of the insurance broker to defend the brokers liability when the brokers use these IT platforms/online quote systems if the broker doesn’t record the question posed and responses given at the time of completing the online quote. In the interim the quote system may have changed, weighting given to questions may have altered. In this case it was a major contention as to whether the Vero online system was pre-populated with the answer “Zero” to the relevant questions regarding the ‘% of EPS in the building’ – The broker gave evidence the question didn’t even come up when they performed the online quote, however, the broker had no evidence to support what questions the quote system asked them on that day and the responses they gave.

    My Thoughts: Imperative that screen dumps of questions and answers are saved unless you are provided with a record that shows questions asked and responses given at the end of the online quote.
  • itmoin | 29 May 2012, 12:12 PM Agree 0
    No, the bigger issue is that the broker is responsible for every answer entered on an electronic trading platform, and this is often left to non qualified data entry staff who have no knowledge of the risk. When renewals are transfered to an electronic platform who is responsible for data integrity?
  • Stuart | 29 May 2012, 01:43 PM Agree 0
    Itmoin: I agree with your comment in relation to the non qualified staff undertaking data entry.
    The question of data integrity is interesting. Not sure which point of view you are looking at it from? However, the policy had been placed with Suncorp for some years. From my reading of the judgement, Suncorp didn’t ask a question with respect to % of EPS as part of their underwriting assessment. Suncorp decided to transfer SME business to the Vero brand and as a result Suncorp pre-populated the Vero systems with the policyholders details - if this is the case and Suncorp (as I understand it) never asked a question about EPS on their system it makes me wonder whether during the pre-population of the Vero system that somehow the ‘% of EPS’ question was pre-populated with the answer ‘Nil’ and thus the question was never posed to the broker to answer – on the balance of evidence presented the judge found that the system did ask the question and that the broker either selected ‘Nil’ or failed to correct the ‘Nil’ answer if it was pre-populated as ‘Nil’. So either way they were going to find the broker at fault. If the broker had kept a copy of online quote step by step, it would of showed what was pre-populated, questions asked and responses given - it may have made their liability position much clearer early on.
  • A R | 29 May 2012, 02:22 PM Agree 0
    Get proposal forms signed people, simple - most electronic platforms (except Vero ironically enough) allows you to print a proposal form at the end which includes all of the answers. Get the client to check all answers and sign it, and it goes a long way towards protecting your brokerage from a PI claim.
Post a reply