Clients can pay a fee to extend broker's liability beyond £1.6m

Aon Risk Solutions, the broking division of Aon, is seeking to put a global cap on the amount it pays in damages to clients, it has emerged.

Under a new scheme called Aon Choice, the megabroker will assume up to $2.5m (£1.6m) of liability to its clients free of charge, according to a client letter seen by Insurance Times.

It means clients that sign up to the scheme will only be able to recoup $2.5m from the broker in damages, costs or expenses if there is a problem related to its products or services.

If clients want Aon to assume greater liability, they will have to pay a fee.

They can pay for an upgraded version of Aon Choice, under which the broker will accept up to $25m of liability, or Aon Choice Plus, where Aon will assume $50m.

Aon would not seek to limit its liability for damages arising from fraud or intentional misconduct.

However, the group will make no change to the liability regime it has in the UK market, and will not be introducing Aon Choice there.

“In the UK and a couple of other territories Aon already has had an established approach to limiting liability, so the global focus in establishing a more uniform approach is on other territories,” the broker said in a statement issued to Insurance Times.

In the UK, the company will “continue, as before, in seeking to limit liability taking into account clients’ needs and good risk management practice.”

Airmic, the association for UK risk managers, said brokers in general were increasingly looking to limit potential damage payouts to clients.

“The practice of brokers capping liabilities appears to be a growing trend within the market,” a spokesman said.

“Up to now the feedback from Airmic members has been that, in practice, these arrangements have flexibility built into them and most members are able to negotiate a satisfactory compromise with their brokers.”