The House of Lords was right to overturn Lord Justice Morritt's decision in Brocklesby v Armitage, says Andy Cook

The House of Lords has come up trumps. In overturning the decision of Lord Justice Morritt in the case of Brocklesby v Armitage, it has righted a great wrong (see page 12). And it has also helped ensure the survival of brokers and the entire professional indemnity market.

If a professional gives bad advice, of course there must be an opportunity to put things right - especially where bad advice is given and then deliberately covered up to avoid claims and embarrassment. That's common sense.

But if advice is given in good faith, but is mistaken - it can happen to the best of us - then it cannot be treated in the same way. How on Earth could you deliberately cover up something that you don't know is wrong?

So congratulation must go to Beachcroft Wansboroughs' Helen Staines for bringing the case forward and winning. Now professional indemnity (PI) insurers will be able to estimate liabilities more accurately because if a claim is not brought within 15 years and a mistake was made in good faith then there can be no claim.

If a mistake was made, then realised and deliberately covered up, a claim may come at any time - even if the adviser has retired. But this should be a relatively small amount of cases and underwriters should be better able to identify these risks through usual research, rather than having to lump all advisers together.

Better underwriting will help restore profits and see premium inflation come under control. The decision may even prompt some risk carriers to start offering more capacity in this very tight market.

Many brokers who worked with failed insurers will feel relieved. Rumours have circulated that negligence cases would be brought against intermediaries for placing business with insurers who subsequently failed.

These are often decisions made in good faith by brokers, but then turn out to be bad advice because, behind the apparent financial stability of the insurer, there is instability. The subsequent failure of the risk carrier and cessation of cover leaves clients fuming.

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