Underwriting Group Limited – 2016: An “active” duty to advise that meets the needs expressed by the insured and in respect of his personal situation
Facts
After a fire, the insured, the owner of a nightclub destroyed by the fire, submitted a claim for compensation to its insurer. The insurer raised non-compliance with minimum safety requirements and reasonable prudence to refuse to cover for the claim. The broker was sued by the insured for not having drawn its attention to the actions required by the policy.
Decision
The court ruled against the broker, holding that it should have drawn its client’s attention to the safety measures to be taken, as required by the insurer.
CGPA comments
The intermediaries’ duty to advise can therefore be considered to be “active”, requiring it to draw the insured’s attention to the conditions of cover, and highlighting the measures to be taken to comply with the terms of the policy. The intermediary’s duty to advise therefore not only consists in advising the client before the policy is placed, but also includes drawing its attention to the conditions of the cover.