Arthur J. Gallagher Insurance Brokers Limited · DRN-6209642

The complaint A company, which I’ll refer to as B, complains that Arthur J. Gallagher Insurance Brokers Limited (AJG) sold a business protection insurance policy that wasn’t suitable and left B without cover when a claim was made against it by an employee. B is in liquidation. The liquidator has given their consent for a director, Mr C, to represent B in the complaint. What happened B bought business protection insurance through AJG in 2015 and renewed the policy each year after that. There was an accident in August 2019 when an employee carrying out work for B was injured. The employee made a claim against B for damages for personal injury. B made a claim on its policy but the insurer declined the claim. It said there was an exclusion for claims arising from manual work away from B’s own premises (the “Work Away Exclusion”). B complained that the policy sold by AJG wasn’t suitable, because employees regularly carried out manual assembly work away from B’s premises in different countries, and it wasn’t told there was no cover for this. B said AJG should not have recommended a policy with this exclusion. In its final response to B’s complaint, AJG said: • B was aware it needed to keep AJG informed of its activities. It never told AJG its employees were carrying out installation and maintenance activities abroad, gave AJG any reasons to enquire further about this, or said it needed cover for work activities abroad. • The exclusion was in the policy wording for 2018 and specifically highlighted to B in the renewal letter. • Although not specifically highlighted at the 2019 renewal, it was contained in the policy documents and had been highlighted the previous year, so B was (or should reasonably have been) aware of it. When B referred the complaint to this Service our investigator did not think it should be upheld. She said the evidence didn’t show B had told AJG it had an employee working abroad; the policy information provided to B in 2018 made it clear there was an exclusion for work away; and this exclusion was again included in 2019. Mr C disagrees and has requested an ombudsman’s decision. He has explained that B has been advised it has no grounds to defend the claim, so has admitted liability. The employee’s claim is substantial and because the claim on the policy is not covered, it has affected B’s financial stability to the extent that it is now entering voluntary liquidation.

-- 1 of 4 --

What I’ve decided – and why I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. B made this complaint after a claim on its policy was declined. AJG is a broker. It sold the insurance to B but isn’t responsible for claims on the policy, which are dealt with by the insurer. I’m not considering the claim that was declined by the insurer; this complaint only concerns the sale of the policy by AJG. This was an advised sale, which means when advising B about taking out the insurance AJG had a duty under the relevant rules and guidance, to: • provide the information B needed at the right time and in a way it could understand, so B could make good financial decisions about the cover needed; • assess B’s demands and needs and, when proposing a contract of insurance, ensure it was consistent with those demands and needs; • ensure the suitability of its advice; and • ensure the information it gave to B was clear, fair and not misleading, with any significant terms brought to B’s attention. In addition, the basis on which AJG dealt with B was set out in its terms of business, which included the following: “We act on an ‘advised’ basis which means that we will be making a recommendation as to the purchase of a specific insurance policy/ies based on information you have given us around your particular demands, needs and circumstances.” AJG first sold insurance to B in 2015. The policy renewed with the same insurer each year until 2018, when AJG said it wasn’t possible to obtain cover with that insurer, so it recommended a policy with a different insurer. The new policy included the “Work Away Exclusion”. The crux of the matter in this case is what happened at the renewal in 2018, when the policy changed and the new policy had this exclusion. The covering letter said the recommendation was based on B’s requirement for a commercial combined package with the levels of cover they had discussed, as summarised in the quotation schedule and policy wording. The letter included a section headed “Significant Terms, Conditions, Warranties, Exclusions and Subjectivities”, which said “Outlined below are significant terms, conditions, warranties endorsements or exclusions applicable to your policy which we would like to draw to your attention. Please read these carefully as it may have an impact on your cover and/or any claims made.” There was then a bullet point list of five endorsements in the policy. The fourth bullet point said: • Liabilities - Endorsement - AWGL/W01 Work Away Exclusion Notwithstanding any other terms of this Policy to the contrary, no General Liability Section will indemnify the Insured in respect of: any liability arising in connection with any manual work, by the Insured or any Employee, away from the Insured’s own premises other than for collection and delivery only.

-- 2 of 4 --

At the end of the list was a warning in bold type, saying “It is important that you read and make sure that you understand the extent and limitations of the policy.” The letter went on to say, “If you have any questions, please speak to me as soon as possible…” Mr C says he was never told the change of insurer would involve this exclusion being introduced; it wasn’t explained clearly and, if it had been, B would not have accepted the policy with this exclusion. On the other hand, AJG says it was never told B had employees who were carrying out installation and maintenance activities abroad, and only found out employees travelled away to carry out installation work after the claim was made. I’ve considered this carefully. Where the evidence isn’t clear, I need to make a judgment about what I think is most likely to have happened, based on what evidence is available. The documents say the recommendation was based on the information B had provided. It’s not entirely clear what information was given to AJG; much of this was dealt with in phone calls, going back to the original sale in 2015, and there are few records relating to that. But I’m satisfied the evidence does show Mr C was told about the exclusion being added. The covering letter sent to him had a section for significant policy terms, and this was one of the terms in the list. It was specifically brought to B’s attention. Mr C was asked to read this section carefully, make sure he understood the limitations on the policy, and contact AJG if he had any questions. On that basis, if it was so important for B to have cover for employees carrying out work abroad, it’s reasonable to expect Mr C to have questioned this. Before the next renewal, there was correspondence in January 2019 about obtaining cover for subcontractors in France and Italy. So AJG was made aware at that point of people working abroad. But these were subcontractors, not employees. AJG tried to obtain cover for them but wasn’t able to, and advised B any subcontractors would need to get their own insurance. So AJG was made aware the following year of subcontractors carrying out work abroad and attempted to get cover for this. This indicates that if AJG had been told there were employees working abroad it would have done the same, but it wasn’t told that. If it was so critical for B to have cover for employees carrying out work abroad, it’s reasonable to expect B to let AJG know this – and to question an exclusion that took any such cover away, when that exclusion was highlighted. If B had questioned the exclusion when it was added in 2018, or had told AJG it had employees working abroad during the discussions about subcontractors working abroad, AJG would have been aware of the need for this cover. It could then have found an insurer who would provide this cover for B, or let Mr C know it wasn’t able to do that. My final decision My decision is that I don’t uphold the complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask B to accept or reject my decision before 28 April 2026. Peter Whiteley

-- 3 of 4 --

Ombudsman

-- 4 of 4 --