Intermediaries - Advice as to identity of insurers

(Frost v James Finlay Bank Ltd, [2002] Lloyd’s Rep IR 429)

The decision of Hart J in Frost v James Finlay Bank Ltd , June 2001, [2002] Lloyd’s Rep IR 429 , concerns insurance advice given by a bank acting as insurance broker. The facts are complex, but some important points are made concerning the obligation of a broker to ensure that the assured’s insurance cover is not prejudiced by a change of insurer. It is settled law that a broker owes a duty of care to give careful advice as to the appropriateness of a particular insurer for the risk in question: Frost makes the obvious point that the duty is a continuing one. Although the case concerned a bank which had assumed the responsibilities of an insurance broker, all of the elements of the decision – including scope of duty, measure of damages and limitation – are relevant to claims against brokers.