Professional Indemnity Insurance For Insurance Brokers
As an insurance broker you need to have professional indemnity insurance in order to adhere to the guidelines that are laid out by the Financial Conduct Authority. Being in the insurance business means that there is always a risk, no matter how small, that your customer could suffer a loss if you sell them the wrong policy for their needs. If that happens, there is a very big chance that they will sue you for the losses that they incur. Having professional indemnity insurance could protect your business by allowing you to pay your customer, if it is deemed that they have a justified claim, without risking insolvency in the process. The Financial Conduct Authority advises that insurance brokers have cover for single and aggregate claims; the minimum recommended level is €1,120,200 for single claims and €1,680,300 for aggregate claims, as of 2013. Yes, the figure is calculated in Euros but your insurer may prefer to round it up to one million pounds single claim, two million pounds aggregate. These are just minimum figures, however, so it is a good idea to think about the type of insurance you offer and decide if that is likely to be enough in the event that there is a claim made against you in the future. Professional indemnity insurance is not just protection for your business, it provides protection for your customers too, and it should give your clients even more confidence in your standing as a reliable company to do business with.
The insurance industry - what could possibly go wrong??
Whilst we"ve often heard of people lying on insurance claims forms in order to benefit financially (and it's estimated that millions of us lie on our car insurance proposal forms in order to save money on motoring), sometimes (thankfully very rarely) it's employees of the insurance companies who cheat, lie, or simply mess up. Here, we take a look at some pretty egregious cases of unprofessional practice by insurance companies, causing much humiliation, stress, and financial cost to their customers along the way.
A Serious Mistake by The Pru Costs One Couple Thousands from their Pension Savings
According to the Daily Mail, owing to alleged mistakes made by insurers The Prudential in 2012, one couple found that their pensions pot would be thousands of pounds lighter than they had been told. Despite budgeting carefully and basing their estimates on exactly the figures that The Pru shared with them, unbeknownst to the couple, there had been a miscalculation on their insurers" part, which led them to believe that their annual pension payout would be much higher than was actually the case. They had been told that the payout would have been £10,241 a year (a figure they felt was the minimum sum necessary to cover all reasonable outgoings), when in fact it would be £7962.00. To add insult to injury, the insurance company realised its mistake, but didn't share this information with Joyce and Colin Howard. Had the insurers contacted the Howards when they realised the error had been made, the couple would have had an extra year and a half to save more, re-budget, and alter their plans- and the mistake itself was only discovered due to Colin Howard's diligence in checking and re-checking his wife's future income if he should predecease her.
Pru offered the Howards the inconsiderable sum of £200 for their considerable trouble and blamed "human error".
This behaviour by an American Medical Insurance Company Will Make You Even More Grateful for the NHS
Young New England resident Thea Shaheen was delighted when she discovered that she was entitled to gender reassignment surgery by her employer's medical insurance policy offered by Blue Cross Blue Shield. This was an opportunity she had longed for all of her life, and she was so relieved and happy when she finally found a way to physically assume the gender she"d always known herself to be.
Shaheen naturally made all of the necessary enquiries, checking directly with her medical insurers that her surgery expenses would be covered. When all was confirmed, she found a hospital and booked a surgeon, and paid for expensive trans-national flights to California and a multi-thousand dollar three week stay in the state for her post-op recovery period. Just three days before she was due to board her flight for her life-changing operation, however, she received a call informing her that her insurers had altered course, and were now declining coverage for the scheduled gender reassignment. Not knowing what to do for the best, Shaheen boarded her flight to California anyway, as her travel arrangements and stay were non-refundable.
Sadly, she was unable to have the promised surgery, and as she didn't have the necessary resources to meet the $30,000 out-of-pocket expense for the surgery herself, she had to go back home to Providence, Rhode Island. This story does have a happy ending, though: following widespread media publicity on her case, Shaheen discovered that her insurers were now willing to pay for the surgery as a good-will gesture (or as a public relations exercise, if you"re a cynic). She received the good news on New Year's Eve 2014, and has re-scheduled her surgery for spring 2015.
If Your Motor Insurance Company Makes A Mistake, You Could Lose Your Licence
England and Wales-wide Mary Monson Solicitors list a series of (successfully defended!) case studies on their site which just go to prove how much hot water a mistake on your motor insurers" part can really land you in. One of the solicitors" cases involved a company director, who had purchased a private insurance plate for his car, and informed his insurance company of the fact through the post. The motor insurance company neglected to amend their records, and a short time later the man was stopped by the police, who seized his car, and he was charged with driving without insurance.
The second story told by Mary Morton Solicitors of motor insurance company blunders involves a courier, who happened to have six points on his licence. The courier purchased appropriate cover in order to do his job, and was given a timeframe in which he had to submit his proof of no claims through the post. He claims he did this, but the insurers claimed never to receive it, and cancelled his policy without letting him know. The courier was stopped by the police and taken to court, facing a penalty of six months" disqualification, meaning that if found guilty he would lose his job owing to what he believed to be the insurers" error.
Sadly the couriers" experience was not unique; there are numerous similar allegations on the Internet about cancelled policies owing to "unreceived documents".
The Moral of the Story Is: You Can't Be too Careful.
While most of these stories of insurance-based woe couldn't have been predicted, it always pays to double-check any insurance policies you may hold, particularly if they relate to your livelihood (as in the case of the courier who nearly lost his licence, and therefore his job along with it). While most of these stories described here had an eventual happy ending, the stress and trouble of a potential court case just doesn't seem worth it, especially when cars are involved- and police will often charge drivers for recovery costs if their vehicles are seized.