Brokers need to continue to educate their SME clients on the importance of management liability or they could face some serious consequences.
Robert Cooper, director of
CPR Insurance Services, said that brokers need to keep the product front of mind for SME clients as claims could be made against the duty of care of the broker if they don’t.
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“It is an area of insurance where we’ve got to keep advising our clients because if we don’t, or we forget to, we can get the blame for not being covered,” Cooper told Insurance Business. “We’ve got to persist and keep educating our clients about the need for cover.”
Cooper said that clients will often forget discussions on policies such as management liability, and when a claim is made that could have been paid under a policy that the client did not opt to take up, legal advice could see fingers pointed at brokers.
“As a broker, you have to point those sort of things out to them and do it regularly because if something happens in that area and they have a lawyer who asks if the broker ever told them that you could cover all of this under management liability cover, but they say they can’t recall, you have to document all that,” he explained. “Say we discussed at last renewal, or I sent a newsletter talking about examples, or I sent you a newspaper article. You have to do all that to protect yourself if they forget you ever discussed it.”
Rhys Mills, managing director of
Solution Underwriting, said that while it is important for brokers to educate their clients, the wider industry also has a role to play.
“I think it is an insurer and broker role,” Mills told Insurance Business. “It is the insurer’s role to provide the assistance and knowledge to brokers and help them explain it to their clients.
“I don’t believe it is purely the broker’s responsibility. Every policy is different so there is a responsibility for the insurers and agencies to assist brokers to understand the cover and explain it to their clients.”
Both Mills and Cooper agreed that brokers should utilise loss examples as the best way to discuss the cover with their client base.
“I think relatable loss examples are always a good way to highlight to a client where they are exposed,” Mills continued. “Cyber liability is a similar product in that sense where until you explain or apply how real world losses relate to that particular client it is difficult to understand or appreciate what their exposures are.”
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