Advice Under the Spotlight: Insurance Brokers Professional Indemnity

1. Advice Under the Spotlight: Insurance Brokers Professional Indemnity Duncan McGill, Partner, Duncan Cotterill Craig Kirk, COE Manager – Liability, Lumley General

2. Advice Under the Spotlight: Insurance Broker’s Professional Indemnity Who’s been swimming naked?

3. Advice Under the Spotlight: Insurance Broker’s Professional Indemnity Agenda • Brokers’ Duties & Obligations • Recent Mistakes & Leading Legal Cases • Risk Management: Best Practices • Conclusion

4. Brokers’ Duties and Obligations

5. Advice Under the Spotlight: Insurance Broker’s Professional Indemnity General Legal Principles • Insurance Intermediaries Act 1994 governs • Common Law Fiduciary duties to your client: • Use due skill, care & diligence • Confidentiality • Act in client’s interest • Account for all payments • Act in accordance with authority granted • Additional Contractual obligations may exist.

6. Advice Under the Spotlight: Insurance Broker’s Professional Indemnity Duty to the Insurer • “Contracts of good faith” • Insurance Law Reform Act 1977 • Brokers have a duty not to withhold information • If done dishonestly or recklessly this can amount to fraudulent misrepresentation.

7. Advice Under the Spotlight: Insurance Broker’s Professional Indemnity Duties to 3rd Parties? • Crowson v HSBC Insurance Brokers (UK) • The Broker did hold a duty of care to the third party • In New Zealand?

8. Recent Mistakes & Leading Legal Cases

9. Advice Under the Spotlight: Insurance Broker’s Professional Indemnity Leading Cases • Graham Strategic Ltd v Stratus Financial Services Ltd • Aon New Zealand Ltd v The Attorney-General in respect of the Ministry of Agriculture and Fisheries • Cee Bee Marine Ltd v Lombard Insurance Co Ltd • McCombieGieck Family Trust No 2 Nominees Ltd v Marsh Ltd and IAG New Zealand Ltd

10. Advice Under the Spotlight: Insurance Broker’s Professional Indemnity Claims Scenarios • Scenario 1: No Business Interruption Cover • Scenario 2: Earthquake Cover Excluded • Scenario 3: Lapsed Policy

11. Risk Management: Best Practices

12. Advice Under the Spotlight: Insurance Broker’s Professional Indemnity What is RM in the context of PI? • Reduce probability • Reduce the impact. DEFENSIBILITY

13. Advice Under the Spotlight: Insurance Broker’s Professional Indemnity Breakdown of Claim Types – EQ Claims

14. Advice Under the Spotlight: Insurance Broker’s Professional Indemnity Lessons Learnt • Valuations • Renew! • Quote! • Security.

15. Advice Under the Spotlight: Insurance Broker’s Professional Indemnity Three Primary Causes of PI Claims

16. Advice Under the Spotlight: Insurance Broker’s Professional Indemnity

17. Advice Under the Spotlight: Insurance Broker’s Professional Indemnity Communication • “One purpose of communication is to take a thought from one human beings brain and transmit it to the brain of others with the minimum possibility of misunderstanding, confusion or ambiguity.” • Major General “Windy” Gale

18. Advice Under the Spotlight: Insurance Broker’s Professional Indemnity Other Best Practices • Managing Expectations! • Peer Review Process • Avoid Conflicts of Interest • Graham Strategic Ltd v Stratus Financial Services Ltd • PI Insurance.

19. In Conclusion

20. Advice Under the Spotlight: Insurance Broker’s Professional Indemnity Don’t get Caught with your Pants down! • Know your legal obligations and duties • Know where common mistakes can happen • Maximise defensibility - effective risk management • Protect yourself with appropriate insurance.