With the pandemic seeing us settle into a hybrid working model, reducing your risk requires a little extra planning. Here's what to watch for
This article was produced in partnership with Bizcover.
We talk to Jane Mason, Head of Product, Channels & Risk at Bizcover about what working from home may change for brokers in terms of risk and liability.
Q: As we look set to settle into another year of hybrid working, it seems frequent remote working will remain the norm. What does this change or add for brokers in terms of risk?
JM: Change often brings added risk, and from an insurance perspective, mortgage professionals are not immune.
From the knock-on effect of government incentives and low interest rates to the slowdown of physical valuations and viewings during lockdowns, mortgage professionals have had a turbulent time during the pandemic. However, the increased risks they face are usually preventable.
We are seeing that as mortgage professionals change their work environments from being in-office to working from home, the new working environment can increase the risk of brokers being lax about disclosure statements and financial payments, which could increase the chance of a Professional Indemnity claim.
There is also the ever-present risk of cybercrime that, just like other sectors, could increase because of a change to security protocols when working from home.
Q: What steps can be taken to mitigate these risks?
JM: With respect to cyber and social engineering frauds, mortgage professionals should be careful with bank account details. They should have a payment process in place that includes call and identity verification, and they should be advising clients they will never request deposits or payments to any account via email. Better yet, get a conveyancer or financier to arrange the payment for you to avoid such situations.
Just because you are working from home doesn’t mean you can throw your security protocols out the window! They were implemented for a reason in the office, and they should equally be adhered to at home. If you’re not sure what these are or are not sure what they should include, it could be time for an audit and update.
In terms of disclosure problems, failures to verify identity on loan documents is a disclosure problem. The broker should ensure they have all the identity documents and have independently verified the identity of an applicant. Criminals are increasingly sophisticated in stealing identities. We have even seen claims even where large financiers have been duped.
Q: Are there any mistakes you've seen commonly made around insurance specific to the pandemic?
JM: Professional Indemnity insurance (PI) is an essential form of cover for brokers as it is designed to respond to claims against your business for losses because of actual or alleged negligent acts or omissions in the provision of your professional advice. However, PI insurance is written as a claims-made policy. What this means is that claims are only covered if it is advised during the period of an active policy. Essentially, brokers cannot claim past the policy lapse date.
With many brokers in and out of work for long periods during the pandemic, some may make the decision to reduce or cancel their policy. This potentially catastrophic judgment is largely done as they may think that since they are out of work, they can cancel their policy to save a few dollars. But a claim can occur months after the event, and if you don’t have an active policy when the claim is made, you will have no leg to stand on.
Fortunately, this has not been the case for the mortgage professionals we’ve seen in Australia. While we have seen dips and troughs from an insurance perspective, brokers have largely stuck with their policies and avoided cancelations even when they’ve hit difficult times.
Q: Do you have any advice on what brokers should look for in their cover when it comes to remote working?
The biggest risk comes from the heightened risk of cybercrime. With reduced safety protocols and a dependency on virtual communication, working from home has made brokers – and indeed almost everyone – more susceptible to attacks. Whether it’s phishing emails that steal valuable client data or ransomware attacks that cripple your entire operations, you cannot afford to not be covered for cyber in this day and age.
Generally speaking, a good policy for mortgage brokers should adequately protect them against the risk they face - whether that’s because of remote work, or otherwise. Ensuring you have the right Professional Indemnity cover is a must in this line of work as the damages for giving the wrong advice can be quite substantial. This will also help protect you against the risks of breeching disclosure agreements or generally omitting or submitting paperwork incorrectly, which seemed to have risen among brokers recently.
Jane Mason, Head of Product, Channels & Risk at BizCover.
Jane has two decades of experience in business insurance and leads a diverse range of product portfolios from Public Liability to Professional Indemnity. Her commercial insight and knowledge of the Australian business insurance landscape has enabled her to become a leading expert in her field, speaking at many industry events and appearing in numerous articles.
