Aon also considers limiting its liability

Your (re)insurer wriggles out of its underwriting liabilities? Don’t worry; you’ve always got Plan B – sue the broker.

It’s thought to be a growing trend and it also corresponds with brokers finding it increasingly difficult to buy sufficient professional indemnity cover to protect themselves against clients rushing to their lawyers and alleging negligence (typically, when their insurance fails to be triggered).

Now Aon Corp is considering adopting a general policy which comes after rival Marsh Inc announced it was about to limit its liability.

Last month, Marsh began telling clients about its new service agreement that includes a $10mn cap on the firm’s professional liability.

It’s too early to know what the broad consensus is from Marsh’s clients, although it should be pointed out that many other professional firms – such as lawyers and accountants – already do this as a matter of course.

And Aon – the world’s largest broker – is looking at doing the same. According to sources, the Chicago-headquartered firm had been mulling a similar move for some time but, after Marsh’s announcement last month, is now reconsidering its options.

They are thought to include a number of alternatives such as a straight cap – as pursued by Marsh – or one that ties liability to the scale of the client’s cost, i.e. a liability limit at, say, one times the premium paid by the insured.

Steve McGill, chairman and CEO of Aon Risk Services, would not comment on the possibilities being considered by the firm. However, he explained that the broking giant was looking closely at the issue. “Every professional services firm has to make its own decisions on how it serves clients, including limiting liability. It is clear that in this current economic turmoil many clients are looking at counterparty exposures which, in turn, raises questions about the balance sheets of such counterparties,” he explained.

McGill added: “Aon Risk Services currently limits liability in parts of our business and we are always considering if it makes sense for our clients to implement similar standards throughout the rest of the organisation.”