Continual reviewing of PI removes risk of under insurance.
Insurance brokers who are advising their corporate/commercial clients once a year have to pick up their act to avoid unwanted Professional Indemnity (PI) claims, according to Charmian Holmes, Solicitor Director of The Fold.
“The end of financial year can be a risky time for insurance brokers who are advising commercial and corporate clients, as many brokers take over new accounts or have a large number of policies due for renewal,” Ms Holmes said. “Brokers should therefore explain uninsured risk exposures throughout the year when talking to their clients and present them with a range of options for their insurance program.”
Ms Holmes said by communicating with clients at least twice a year, brokers can make sure their clients are covered for new business activities commenced during the year.
“Brokers should always re-evaluate new clients, in case the previous broker has ‘dropped the ball’ and something important has been missed by the last broker,” she said. “It is very important to make sure the client’s insurance program is suitable for their business needs and other activities. Sometimes during the busy June renewal season there isn’t enough time to do this, so brokers should review in the months after the end of June.”
Checking the fundamentals of the client’s position sounds basic, but Ms Holmes said brokers need to be confident they have correctly identified business needs and other risks to ensure the policy is properly suited.
“Once the fundamentals of the client’s business are understood, brokers should explain what risks can’t be insured so the client understands what is reasonably available in the market and the limitations of their insurance program,” she said.
Having a conversation with the client about the terms of the policy is crucial.
“The client needs to know how the policy operates to make informed decisions about the adequacy of the cover and how to manage risks that can’t be insured,” Ms Holmes said. “If the exclusions in the client’s policies significantly limit the coverage for their business and you can’t get additional cover, explain this to the client and put it in writing so it is on the record.”