Brokers’ negligence – guidance on the scope of the duty and causation

In Dalamd Limited v Butterworth Spengler Commercial Limited [2018] EWHC 2558 (Comm), Mr Justice Butcher considered a negligence claim against the Defendant insurance broker arising out of a fire at a waste recycling facility. The insured’s claim succeeded in part.

In his decision, the Judge provided a useful recap on brokers’ duties, in particular their duty to advise clients on their pre-inception duties of disclosure. Of particular note, he also considered how causation should be analysed in brokers’ negligence cases where the insured has not pursued the claim against its insurer to settlement, judgment or award. His conclusion – which will be well received by brokers – was that whether a good defence to the policy claim was available to an insurer will be assessed on the balance of probabilities (i.e. a yes/no basis), and not a loss of a chance basis. Whether there was another defence available to the insurer, for which the broker was not responsible, will likewise be assessed on the balance of probabilities, although the issue of whether the insurer would have pursued that point is to be assessed based on loss of chance.

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HIGH COURT RULES THAT BROKER WAS NOT IN BREACH OF DUTY IN FAILING TO PROVIDE ORAL ADVICE IN RELATION TO THE DUTY TO DISCLOSE

In holding that a broker was not in breach of duty by failing to give oral advice in relation to the disclosure of criminal convictions the Court has provided a useful reminder of the extent of a broker’s duty to advise in relation to disclosure. The Court also held that a lack of expert evidence materially limited, but did not exclude, the possibility of a finding that the broker breached its duty to act with reasonable care and skill.

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AML/CFT COMPLIANCE A KEY FOCUS OF RECENT SUPERVISORY INSPECTIONS BY THE HONG KONG INSURANCE AUTHORITY

Late last week, the Hong Kong Insurance Authority (IA) published a circular setting out its key findings from anti-money laundering and counter-financing of terrorism (AML/CFT) onsite inspections of authorised insurers carrying on long term business.

The IA conducted visits of more than 20 insurers to review their AML/CFT policies, procedures and controls and their compliance with the relevant legislative and regulatory requirements. Continue reading

Reminder to brokers of the need to advise insureds on policy terms

In RR Securities Ltd v Towergate Underwriting Group Ltd [2016] the Court held a broker liable for failing to advise its insured client that certain safety precautions were required by insurers as a condition precedent to cover under a property policy.  The case serves as a reminder to brokers of the importance of advising clients on the terms of the policies they place, particularly onerous terms such as conditions precedent.

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A “blot on English insurance law”

Insurers successfully avoided a policy on the grounds of inadvertent non-disclosure. The High Court commented on the different outcome that would have been available under the Insurance Act 2015 which comes in to force in August 2016, remarking that the stringent remedy of avoidance under the present law remains a "blot on English insurance law". 

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