Brokers must educate clients on the risk of flooding: NICC 2017

Client discussion is “fraught with E&O pitfalls”

Insurance brokers have a responsibility to educate clients on the risk of flooding, says Gord Enders, president of Direct-Line Insurance.

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“Now our role has changed so much more to being that of an advisor and making sure we’re helping the client manage the risk long-term so that when those large losses such as a flood take place, there is coverage in place,” Enders said, speaking at a panel discussion on flood insurance at the National Insurance Conference of Canada (NICC).

Many insurers now offer overland flood policies, but Canadians may not realize it isn’t included in their home insurance, or be confused by the wording of policies. Enders also noted that brokers may face legal action if they fail to advise clients of the risk of flooding.

“There have been enough court decisions against brokers that legal duty to advise is setting precedent,” he said. “Preparing for a client discussion is fraught with E&O pitfalls. In the case of a renewal, the broker must review the file and confirm that if overland water is on the policy, has the wording of the offering changed?”

But it can be a challenge for brokers to convince clients of the risk of flooding if they haven’t experienced a loss.

“From the consumer’s perspective, if you haven’t experienced a flood and you haven’t had those challenges, you don’t see it as a risk to your own property,” Enders said.

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