I write to endorse the need for brokers not to be complacent about the new regulations.
Since retiring from full time employment as a broker after 42 years in insurance I have undertaken further training in order to establish a new career acting as an expert and mediator in insurance disputes.
Recently I have twice tried to explain in reports to the courts how I believe a broker acting with reasonable care and skill should handle, in one instance, renewal reporting, and in the other, the general management of a client's portfolio. It is apparent to me in many disputes that brokers have insufficient perception or appreciation of their obligations under the GISC code of practice. In each case I have seen the broker breach very many of the GISC code requirements.
My experience after three years examining cases in which brokers have been accused of negligence is that brokers in general already greatly underestimate their responsibilities. They especially fail to appreciate the essential need to communicate with their clients, or to understand their need to protect their own backs where clients are inadequate at communicating with them. Some clients do not take insurance seriously until they have a problem. Its up to brokers to disabuse them of this attitude.
My perception is that brokers are simply not good enough at spelling out to their clients consistently and in writing:
Nor are they good at keeping adequate file notes and notes of telephone conversations. They neglect simple basic office disciplines.
"It will not just be when an uninsured loss arises that the broker's inadequacies will be at risk of exposure"
Currently they only get caught out when an uninsured loss arises and the client starts looking for a way to get it paid by someone.
In the new regime there will be tough inspections and it will not just be when an uninsured loss arises that the broker's inadequacies will be at risk of exposure. I am afraid they are likely to get a very rude awakening when the FSA regime comes in and you are absolutely right to highlight the need for them to take the matter of compliance with these rules very much more seriously than many have previously taken professional rules and the GISC code.
RA Jewell, FCII
Chartered Insurance Practitioner
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