Last week, the Superior Court of Ontario heard a case where a driver who sustained a serious brain injury from an auto collision sued her insurance broker for neglecting to inform her about enhanced IRBs that were available to her for a “modest additional premium.”
Unfortunately, broker liability experts recognize that these types of claims are no longer an anomaly.
“This is the same as many other lawsuits we see,” said Hugh Fardy, senior vice president, The CG&B Group. “Every year we see an increase in the number of claims against brokers that we can attribute to the change in Ontario’s accident benefits changes. This is the perfect example of that.”
Fardy serves as the administrator for the
IBAO’s professional liability coverage, and frequently holds seminars on broker shortfalls that lead to E&O claims – something he considers a growing problem.
“In general, brokers’ error and omission claims are increasing in both frequency and severity,” Fardy said.
He attributes this to the recent shift towards digitalization, and the ensuing speed required for brokers to conduct transactions.
“We’re now doing business in a much different way than years past. We want to be as fast, quick and technological as possible, but we lose out on the benefits of person-to-person contact and the ability to gather information about our clients,” he said.
Brokers are most susceptible during renewal periods, since most personal lines policies are now subject to auto-renewal. As a result, clients maintain the same coverage they had for years, even if their life circumstances may have changed since it was issued.
“There is a duty that courts impose upon professionals to stay current with a client’s exposures,” Fardy said. “If one of our clients has a claim and they aren’t covered the way they should be, there can be an allegations that we didn’t do enough to stay in touch with them.”
As a result, Fardy stresses that brokers must not only maintain frequent communication with their clients, but do so in a manner that yields meaningful responses.
“Stay away from ‘yes’ and ‘no’ answers,” he advises. “A home insurance broker shouldn’t ask ‘Do you have a pool?’ because the answer will simply be, ‘No, I don’t’ and they may have a hot tub but didn’t feel the need to mention it because it was such a narrow question.”
