The opinions expressed in this article are the author’s own and do not necessarily reflect the view of UKGI.
A Broker's Duty of Care: Gathering Information and the Requirements of the Insurance Act

Well, this is probably the first and last time you will learn about the Insurance Act without actually looking at it but be assured, there is method in our madness!
In the first place you are an insurance broker, not a lawyer, so let us leave the law to them. In the second place your client is not a lawyer (normally) so they cannot be expected to interpret the law.
Let us focus on what we need to tell the client to reduce the risk of a claim not being paid in full.
Is this a case for a warning?
We think it is, so make sure it is prominent and use your red triangle (or skull and cross-bones). You very much want your client to read about their responsibilities.
Where to put it?
This is up to you:
- In a letter/email preferably on its own
- On the page that asks for the premium (often a pointer to where to read about it)
- In a glossary of significant and onerous terms
You are going to be giving a very abbreviated explanation (so the client understands) so always include a reference to where they can find the full detail in the policy document,
Where not to put it?
- In your Terms of Business Agreement. Many brokers do this but the TOBA is the place to define your duty, not to discharge it. What law insists that a business-person reads their TOBA? By all mean include it in the TOBA if you want but always make that a second line of defence, not the primary.
- Printed on the back of anything. Clients often still like paper and copy paper to colleagues and staff. Put it on the back and it may be missed (as it was in the Café de Lecq case!).
- At the end of anything!
What to say?
This is up to you. On a case we are working on at the moment the explanation runs to three pages. Perhaps focus on PI risk management to protect your client. You need to get across a message to the client about their responsibilities, not to summarise War & Peace!
Try This:
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How do you feel about that? Remember it is your responsibility (not ours) to create your own explanation. We are simply giving you informed ideas and examples. Remember the focus is on allowing the client to make an informed decision, not showing off your prowess in quoting extracts verbatim from Acts of Parliament or long-winded insurance documents.
Next week we are going to give you some real-life examples of information not gathered. The 14 weeks of study should have prepared you to know and understand what went wrong. Something you could not have done 3 months ago.
BEWARE! You may find them interesting and you cannot be competent without “The Knowledge”. This is what Chartered Status and the Exams are about. Proving you have the knowledge is a major part of protecting your clients and getting them to where they want to go. Add that to the application on the job (driving the taxi) and you will minimise the risk to your client and to your firm.
Can you imagine if your clients were advised on their insurance needs by someone without the knowledge? An Architect, a PhD in astrophysics or just someone who is important in our industry but with no assessed knowledge.
A situation the FCA should not be very pleased about!
Your job is to protect the public (some of about 65 million people in the UK at the last count), and your duty of care is probably only second to the National Health Service and the medical profession and certainly alongside solicitors, accountants and so on.
Treat your duty of care with a passion. If you get it wrong, the loss to your client is instantaneous and often devastating. A factory, a building, a breadwinner.
The fact that you sued is the effect of getting it wrong. The result of your negligence can be tragic.
In the case studies over the next few weeks, we are going to expose the behaviour of the practitioners who do not have the knowledge (without identifying them personally!) and we hope this will encourage all practitioners to study and to share their knowledge and ideas with colleagues.
You will be quite surprised at how many are senior people, educated people, and people from other professions, and they all have one thing in common: they have never had their knowledge assessed to a reasonable standard and they have put their clients at risk.