Advice Under the Spotlight: Insurance Brokers Professional Indemnity
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Advice Under the Spotlight: Insurance Brokers Professional Indemnity. Duncan McGill, Partner, Duncan Cotterill Craig Kirk, COE Manager – Liability, Lumley General. Advice Under the Spotlight: Insurance Broker’s Professional Indemnity. Who’s been swimming naked?.

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Advice under the spotlight insurance brokers professional indemnity

Advice Under the Spotlight: Insurance Brokers Professional Indemnity

Duncan McGill, Partner, Duncan Cotterill

Craig Kirk, COE Manager – Liability, Lumley General


Advice under the spotlight insurance brokers professional indemnity

Advice Under the Spotlight: Insurance Broker’s Professional Indemnity

Who’s been swimming naked?


Advice under the spotlight insurance brokers professional indemnity

Advice Under the Spotlight: Insurance Broker’s Professional Indemnity

Agenda

  • Brokers’ Duties & Obligations

  • Recent Mistakes & Leading Legal Cases

  • Risk Management: Best Practices

  • Conclusion


Advice under the spotlight insurance brokers professional indemnity

Brokers’ Duties and Obligations


Advice under the spotlight insurance brokers professional indemnity

Advice Under the Spotlight: Insurance Broker’s Professional Indemnity

General Legal Principles

  • Insurance Intermediaries Act 1994 governs

  • Common Law Fiduciary duties to your client:

    • Use due skill, care & diligence

    • Confidentiality

    • Act in client’s interest

    • Account for all payments

    • Act in accordance with authority granted

  • Additional Contractual obligations may exist.


Advice under the spotlight insurance brokers professional indemnity

Advice Under the Spotlight: Insurance Broker’s Professional Indemnity

Duty to the Insurer

  • “Contracts of good faith”

  • Insurance Law Reform Act 1977

  • Brokers have a duty not to withhold information

  • If done dishonestly or recklessly this can amount to fraudulent misrepresentation.


Advice under the spotlight insurance brokers professional indemnity

Advice Under the Spotlight: Insurance Broker’s Professional Indemnity

Duties to 3rd Parties?

  • Crowson v HSBC Insurance Brokers (UK)

  • The Broker did hold a duty of care to the third party

  • In New Zealand?


Advice under the spotlight insurance brokers professional indemnity

Recent Mistakes & Leading Legal Cases


Advice under the spotlight insurance brokers professional indemnity

Advice Under the Spotlight: Insurance Broker’s Professional Indemnity

Leading Cases

  • Graham Strategic Ltd v Stratus Financial Services Ltd

  • Aon New Zealand Ltd v The Attorney-General in respect of the Ministry of Agriculture and Fisheries

  • Cee Bee Marine Ltd v Lombard Insurance Co Ltd

  • McCombieGieck Family Trust No 2 Nominees Ltd v Marsh Ltd and IAG New Zealand Ltd


Advice under the spotlight insurance brokers professional indemnity

Advice Under the Spotlight: Insurance Broker’s Professional Indemnity

Claims Scenarios

  • Scenario 1: No Business Interruption Cover

  • Scenario 2: Earthquake Cover Excluded

  • Scenario 3: Lapsed Policy


Advice under the spotlight insurance brokers professional indemnity

Risk Management:

Best Practices


Advice under the spotlight insurance brokers professional indemnity

Advice Under the Spotlight: Insurance Broker’s Professional Indemnity

What is RM in the context of PI?

  • Reduce probability

  • Reduce the impact.

DEFENSIBILITY


Advice under the spotlight insurance brokers professional indemnity

Advice Under the Spotlight: Insurance Broker’s Professional Indemnity

Breakdown of Claim Types – EQ Claims


Advice under the spotlight insurance brokers professional indemnity

Advice Under the Spotlight: Insurance Broker’s Professional Indemnity

Lessons Learnt

  • Valuations

  • Renew!

  • Quote!

  • Security.


Advice under the spotlight insurance brokers professional indemnity

Advice Under the Spotlight: Insurance Broker’s Professional Indemnity

Three Primary Causes of PI Claims


Advice under the spotlight insurance brokers professional indemnity

Advice Under the Spotlight: Insurance Broker’s Professional Indemnity


Advice under the spotlight insurance brokers professional indemnity

Advice Under the Spotlight: Insurance Broker’s Professional Indemnity

Communication

  • “One purpose of communication is to take a thought from one human beings brain and transmit it to the brain of others with the minimum possibility of misunderstanding, confusion or ambiguity.”

  • Major General “Windy” Gale


Advice under the spotlight insurance brokers professional indemnity

Advice Under the Spotlight: Insurance Broker’s Professional Indemnity

Other Best Practices

  • Managing Expectations!

  • Peer Review Process

  • Avoid Conflicts of Interest

  • Graham Strategic Ltd v Stratus Financial Services Ltd

  • PI Insurance.


Advice under the spotlight insurance brokers professional indemnity

In Conclusion


Advice under the spotlight insurance brokers professional indemnity

Advice Under the Spotlight: Insurance Broker’s Professional Indemnity

Don’t get Caught with your Pants down!

  • Know your legal obligations and duties

  • Know where common mistakes can happen

  • Maximise defensibility - effective risk management

  • Protect yourself with appropriate insurance.


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