A company that says it incurred more than $10,000 in gas and electricity costs due to its broker’s failure to provide updates on its business interruption claim has lost a dispute before the complaints authority. 

The Canberra hospitality business lodged two claims through its Insurance Advisernet broker for interruptions caused by the 2019-20 bushfires and the closure of its premises during the covid pandemic.   

The claimant said the broker committed to providing monthly updates on its claim while the Federal Court heard test cases on covid-related BI cases. It said it was using the updates to inform creditors, including energy providers, on the status of its claim and when it could pay its bills.   

It said the broker’s failure to provide updates resulted in its energy supplier starting debt collection procedings in 2022, and it incurred electricity and gas bills amounting to $10,924. It said the broker should pay for these.

The broker denied it had breached its duty, saying any delays in providing updates had not disadvantaged the complainant or the energy providers in their decision-making.

The Australian Financial Complaints Authority accepts there were instances when the broker provided delayed updates, but says it informed the company it was “highly improbable any decision would be made about its business interruption claims without the outcome of the test cases being known”.  

“It is evident the advice the broker gave to the complainant on various occasions was realistic and was intended to set reasonable expectations about time frames, particularly given the complex legal issues being tested in the Federal Court,” the authority said.  

“Moreover, the insurance broker attempted to moderate and manage the complainant’s expectations about an ultimate outcome in light of the complainant’s profit, loss and associated financial records during the relevant period.”  

The authority questions the claimant’s assessment that the updates would have better prepared it to meet its financial obligations.  

“In any event, even if I did find that the broker breached the duty of care it owes to the complainant (which I do not), I am not satisfied any such breach on the part of the broker would have deleteriously affected the complainant’s ability to negotiate with its energy providers and, ultimately, meet its financial commitments to them as necessary.”  

Click here for the ruling.

From Insurance News magazine: Broker client satisfaction is at an all-time high in the latest Vero survey of SME insurance buyers