The increasing focus on Brokers and Intermediaries by the Financial Services Authority and the prospect of tougher regulation in the future suggest that early membership of the General Insurance Standards Council is an essential preparation for inevitable Statutory Compliance.

In the meantime, Professional Indemnity rates have increased considerably.

Brokers can do a lot to reduce their exposure to claims under their own Professional Indemnity policies by following the few simple guidance rules given below by ISL Associate Derrick Cole:

1. Know your Client's business and the risks involved. Recognise your own competence.
2. Do not fill in Proposal Forms for clients. Emphasise that all material facts must be disclosed and explain the purpose of the Declaration Form to be signed by the client.
3. Confirm instructions to your client and insurer(s). Put recommendations in writing and retain a record on your Placing File.
4. Do not delay in Placing. Telephone or fax and follow up with hard copy. Always contact your client if you experience any delay in placing.
5. Keep full attendance notes of all meetings.
6. Keep file notes of any telephone conversations, properly dated and timed with name of person to whom you spoke.
7. Keep copies of the Proposal Form, other placing information and the Policy but do not keep your client's Policy for him. Make sure your client is told to read the Policy carefully and send a specimen Wording if there is a delay in issuing the Policy.
8. Do not make your client's decisions for him - let him choose.
9. Explain all Warranties, special conditions, exceptions, and the like and confirm all discussions in writing. Make sure your client understands and can comply with them.
10. Do not take responsibility for obtaining Alarm or Sprinkler quotations - let your client do this.
11. Make sure your staff know the Codes of Conduct of the General Insurance Standards Council.
12. Make sure that your own Professional Indemnity policy has no flaws, give a complete declaration to your own Underwriters of any matters likely to result in a claim and ensure that the Indemnity you buy covers any potential exposure from your largest client.
13. Identify for your client any areas of possible dispute with their insurers and do everything to protect them from litigation.
14. Do not rely on warnings in Summary of Insurances without full discussion with your client.
15. At Renewal, follow your own Checklist and remind your client of their Duty of Disclosure.
16. Select only responsible insurers that are authorised to write business in the UK. If any non-admitted insurers have to be used, explain to your client the problems that can arise when it comes to requesting payment of claims.
17. Recommend that your client obtain Professional Valuations on plant and buildings where appropriate, with regular updates.Make sure that your client keeps an Asset Register and deposits it away from his premises.
18. If arranging Business Interruption insurance, consult with your client's Auditors.

When faced with a possible P/I claim

1. Beware of any enquiring letter from your Client or their Solicitors if they are seeking your help to get a claim paid. Take advice on your reply.
   
2. If you do have a claim made against you, take advice from your insurer's Solicitors before you say anything. However, recognise your errors and be prepared to pay a reasonable sum if you are wrong. It may be cheaper in the long run!

Insurance Times published these guidelines under the heading "Common sense can avoid a claim".

Derrick Cole is a Vice-President of the British Insurance Law Association and has acted in over 200 cases as an Expert Witness, involving mainly with Non-disclosure and Broker's Negligence. Derrick was the principal witness in the pivotal case of J W Bollom & Co -v- Byas Moseley & Co Ltd.