Brokers have expressed fears that they will be exposed to professional indemnity (PI) claims following insurers' moves to auto-lapse motor policies on the date of renewal.

At present, insurers offer a five-day 'period of grace' following the renewal date, but this is now to be removed completely. The policy will now be automatically lapsed unless notified by the broker of the client's wish to renew.

This follows the industry's move away from the traditional 14 days' grace renewal period in order to improve efficiency in hitting motor insurance database deadlines.

Biba technical services manager Graeme Trudgill said: "If there are no 'days of grace', brokers must tell insurers of the client's wish to renew by the renewal date."

Trudgill said Biba would recommend that brokers follow best practice guidelines, which it would circulate before Christmas.

He added that this could entail the inclusion of a provision in the terms of business agreements between brokers and insurers to ensure that brokers meet renewal date deadlines.

But brokers said the change could cause "a massive headache" for the intermediary market.

Managing director of Marrs Insurance Brokers, Mark Coffer, said: "This is just another service which the insurer is dumping on the broker.

"It could leave the broker open to being sued by a policyholder who doesn't know that 'days of grace' have been cancelled."

Coffer said AXA had informed him that it would lapse non-EDI policies unless physically notified by the broker of renewal.

"Phoning them is a nonsense," he said. "The whole thing is rubbish."

Steve McPherson, sales director of motor broker Allen & Allen, said: "[Auto-lapsing] will cause a big problem unless insurers launch a campaign to inform customers of what they are doing."

Helen Ascroft, Community Broking Group's insurance services manager, said: "Insurers do tell policyholders that days of grace have been cancelled, but it doesn't jump off the page of the policy document so many people don't know about it."