Falling between the cracks

Alistair arranged insurance cover for Paul and Julie’s home, including a swimming pool. Insurance premiums were increasing and Paul asked Alistair if he could find a cheaper policy. Alistair offered Paul and Julie an alternative policy with the same insurer, explaining the only difference was an increased excess. Paul and Julie accepted Alistair’s advice and changed to the new policy.

About a year later the insurer terminated its broker arrangement with Alistair, and Alistair arranged for Paul and Julie to transfer to a new broker, Jeremy. Jeremy rolled over the policy previously arranged by Alistair.

Almost a year later the Kaikoura earthquake damaged Paul and Julie’s swimming pool. Paul and Julie submitted a claim to their insurer, but the insurer declined the claim because the new policy would only cover swimming pools if the pool was listed on the schedule and an additional premium paid. The pool was not listed on the schedule, so was not covered by the policy.



Paul and Julie complained to both Alistair and Jeremy, saying they had trusted both brokers to place appropriate insurance. Alistair knew they had a swimming pool, yet failed to list the pool on the schedule of the new policy. When Jeremy took over as their broker he simply rolled over the cover without checking it met their needs.

Alistair acknowledged his error, but said that he was not the broker at the time of the loss and therefore not liable.

Jeremy said that he had not provided any advice and had simply rolled over the existing cover on the same terms, as it was not his error Jeremy considered he was not liable.

Paul and Julie complained to FSCL, and asked us to decide who should be liable for their loss.



We considered that both brokers shared some liability for the error. Alistair made the original mistake, but Jeremy had failed in his obligations, when renewing cover, because he did not check Paul and Julie’s cover was appropriate for their needs. It seemed to us that the best way to resolve the complaint would be for both brokers to attend a conciliation conference with Paul and Julie.

Paul, Julie, and Alistair were all keen to resolve the complaint by conciliation.

Although Jeremy was a FSCL member at the time the policy was rolled over, his company was in the process of being wound up. By the time the complaint arose, Jeremy’s company was no longer a FSCL member and had been deregistered on the Financial Service Providers Register. While Jeremy initially contributed to the conciliation, he withdrew before a decision was made.



We reached a conciliated resolution for Paul, Julie, and Alistair. Paul and Julie received compensation for about half the cost of the damage to the pool. Unfortunately, because Jeremy had withdrawn from the process, and we had no ability to require his co-operation, we were unable to help Paul, Julie, and Jeremy resolve that complaint.


Insights for participants

Brokers have duties on placement as well as on renewal. Alistair made a mistake on placement of the new policy and then Jeremy failed to adequately check his clients needs on renewal. For clients to see a value in engaging a broker, the broker must regularly assess the client’s needs and place appropriate cover.