The Gazette 1991

a p r i l 1991

g a z e t t e

Regulation of Insurance Intermediaries This article was originaiy delivered as a paper at a Seminar held in the Law Society on 16 November, 1989.

Part IV of the Insurance Act, 1989 ("the Act") which is entitled "Regulation of Insurance Intermediaries" came into force on 1st October, 1990 and provides for the control and regulation of insurance agents and brokers ("insurance intermediaries").

appointment from an insurance company enabling him to place insurance business with that insurance company. Under Section 49, however, a person who fulfils this definition of an insurance agent may not act as such or hold himself out to be an insurance agent unless he has an appointment in writing from each insurance company for which he is an agent and the names of such insurance companies and the fact that he is an agent are set out on his notepaper and unless he informs each of his clients that he is an insurance agent and of the name or names of the insurance companies for which he is an agent. While the minimum number of appointments required to qualify a person as an insurance agent is one, at present there is no maxi- mum number. The Minister for Industry and Commerce ("the Minister") is however empowered by Section 49(3) of the Act to bring into force not earlier than 1st October, 1992 a requirement that insurance agents may not hold more than four appointments in

(c) thirdly there was no super- vision of the financial affairs of insurance intermediaries not- withstanding that they handled substantial amounts of money on behalf of clients and insurance companies. So, ten years later the Insurance Bill 1986 was published and was ultimately enacted as the Insurance

While there is no obligation on the public to deal with insurers through the medium of an intermediary, in fact approximately 75% of Irish domestic insurance business is placed through intermediaries. The final report of the committee of Inquiry into the insurance industry, the O'Donoghue Report, published in 1976, found that there was no question but that intermediaries provided a valuable service and must be regarded as a practical if not a theoretical necessity. The O'Donoghue Report identified a number of defects in the regime applicable to insurance inter- mediaries which called for remedies. The primary defects so identified were: — (a) firstly that the legal relationship between insurance interme- diaries and the public on the one hand and the insurance company on the other was quite unclear. Particular criticism was levelled at the convention under which an insurance agent in completing a proposal form was deemed to be the agent of the client rather than of the insurance com- pany; and (b) secondly the public looked upon and were entitled to regard insurance brokers as competent persons prepared to give disinterested expert and O'Donoghue Report . . . found that. . . intermediaries provided a valuable service and must be regarded as a practical if not a theoretical necessity" " . . . the

by Alvin Price, Solicitor.

Act 1989. Part IV of the Act sought to remedy some of these defects and has been in operation since 1st October, 1990. Insurance Intermediaries An insurance intermediary is either an insurance agent or an insurance broker. Certain classes of persons are disqualified from acting as in- surance intermediaries without the prior permission of the High Court where the person: — (a) has been convicted of an offence in connection with his business; is adjudged bankrupt; fails to meet his financial or legal obligations in relation to any monies received from a client; is convicted of an offence involving fraud or dishonesty; is disqualified under Section 184 of the Companies Act, 1963. (b) (c) (d) (f) Insurance Agent An insurance agent is defined as any person who has a written

independent advice on the choice of a policy from the range available from various insurance companies;

Alvin Price

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