Why Financial Lines Brokers Must Notify Every Fact or Circumstance
Just notify the fact or circumstance…
Before I worked as a lawyer I worked as an insurance broker.
Yes, that’s right. I started my career as a paralegal and studying law but before private practice I was a financial lines broker.
You know, back when HIH collapsed and proportionate liability was introduced. See, I am that old
First with Marsh Finpro and then with AON’s financial lines and Corporate teams.
I worked in global placement at Lloyds of London and I specialised in claims made and largely directors’ & officers’ liability insurance for banks and listed companies and professional indemnity for engineering firms and others.
I’m not saying this to boast, but this background plus being a lawyer in this field gives me some cred to make a point here.
Notify the claim.
Notify the fact or circumstance.
It is that simple.
I see many brokers inexperienced in financial lines pondering what to do or advise.
Every broker dealing in financial lines and clams made must have an awareness of:
- section 40 (3) of the Insurance Contracts Act.
- know duty of disclosure inside out!
- the risk that if a fact or circumstance is NOT notified there are serious risks.
- that if there is a change of insurer a prior known claims exclusion will be applied - and rightly so.
Guys, this is basic stuff. But if you don’t manage it right, you can create your client a gap in cover. And for BIG claims your clients business can be on the line.
Notifying an error in professional conduct or an incident…whether or not there is litigation or any threat of litigation is appropriate to protect the insured.
Why!? The key thing with litigation is that claims can take many years to manifest - that’s because time limitations apply AND these can be quite long (eg. In Victoria 10 years from OP in building litigation or 15 years for cladding recovery) meaning the actual claim may take many many years to manifest.
If you’re an experienced financial lines broker jump in and make a few comments. Share your expertise!
Plus, businesses should implement processes to ensure that employees elevate issues to management so what’s know by a professional gets ‘Known’ by management so notifications can occur.
Notification of facts and circumstances that may give rise to a claim is an important area. It can get complicated. But taking precaution as a broker is not complicated.
This article is a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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