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GAZETTE
SEPTEMBER 1990
P r a c t i ce
N o t e s
Insurance Act, 1989
Part IV - Regulation of
Insurance Intermediaries
Solicitors should be aware of the
provisions of Part IV of the
Insurance Act, 1989 which came
into operation on 1st October, 1990
and which deals with the regulation
of insurance agents and brokers
("Insurance Intermediaries").
From that date, an insurance
company may not appoint a person
as an intermediary or pay any
commission to an intermediary (i.e.
a broker or agent) unless it is
satisfied, having made reasonable
enquiry, that the intermediary is
either a member of a recognised
representative body of insurance
brokers (under Section 44 (1) (a) of
the Act) or complies with the
requirements of the Act.
To qualify as an insurance broker
for the purposes of the Act one
must be in a position to arrange
insurance contracts on behalf of
clients with at least five companies
in non-life business or five com-
panies in life business.
Any intermediary whose
business is such as would bring him
outside the definition of a broker is
termed an insurance agent for the
purposes of the Act. Insurance
agents may not hold themselves
out as such unless they state on
their letter headings and business
forms that they are insurance
agents and the name or names of
every insurance company for which
they are agents and must inform
their clients that they are insurance
agents and of the name or names
of the insurance companies for
which they are insurance agents. In
addition, there is provision for
enabling the Minister for Industry &
Commerce ("the Minister") to
bring into force not earlier than two
years from the coming into effect
of this Part of the Act a requirement
that insurance agents may not hold
more than four such appointments
in respect of non-life insurance and
four in respect of life assurance.
Both insurance agents and
brokers must hold appointments in
writing from each insurance
company for which they act.
To avoid the necessity for each
insurance company to carry out its
own individual enquiries in respect
of each of its intermediaries, mem-
bers of the Irish Insurance
Federation have established a
separate body, the Insurance
Intermediary Compliance Bureau
("HOB"), which will carry out the
necessary investigations to ensure
that all intermediaries comply with
the provisions of the Act. This is
now being done by means of a
questionnaire which should be
completed fully and accurately and
returned as soon as possible to the
IICB. The IICB proposes to create a
Central Register of insurance
intermediaries which will contain
information in relation to the
names, addresses, number of
agencies and bank account details
of all insurance intermediaries.
The principal obligations im-
posed on insurance intermediaries
under the Act are:-
1. the maintenance of separate
bank accounts, one relating to
non-life business and the other
relating to life business
designated "Section 48 -
Non-Life Insurance Account"
and "Section 48 - Life Assur-
ance Account" respectively;
2. the taking out of an insurance
bond to the value of, in the
case of non-life insurance
business, IR£25,000 and, in
the case of life assurance
business, to the value of the
greater of IR£25,000 or 25%
of the intermediary's life assur-
ance turnover in the previous
accounting year with no bond
being required where the
turnover is under IR£25,000;
3. the issuing of a receipt to
clients containing the details
set out in Section 52 of the
Act a precedent of which may
be obtained from the IICB.
This is necessary where either
a completed insurance pro-
posal is accepted or where
money is accepted in respect
of a renewal of a policy which
has been invited by the insurer
or in respect of a proposal
accepted by an insurance
company; and
4. observe the provisions of any
codes of conduct prescribed
by the Minister from time to
time (see the
Gazette
of
July/August, 1990).
In addition the Act provides that
the Minister may, by regulation,
require that policies of professional
indemnity insurance in a specified
form be effected by insurance inter-
mediaries indemnifying them to
such sum, in such a manner, in
respect of such matters and valid
for such minimum period as the
Minister may prescribe. The
Minister has, however, indicated
that he does not intend to impose
such requirements on insurance
agents in the foreseeable future.
Solicitors therefore who come
within the definition of an in-
surance intermediary should note
the coming into effect of this Part
of the Act (1st October, 1990) and
should have registered with the
IICB prior to such date.
Professional Purposes
Committee
Redemption of Mortgages
and Title Documents
Where a mortgage is redeemed the
title documents must be returned
to the mortgagor.
Bearing the foregoing in mind it
is imperative that where a solicitor
who has given an undertaking re-
garding the title documents
redeems a mortgage on behalf of
his client he includes with the
cheque or draft redeeming the
mortgage an authority from his
client authorising the mortgagee to
release the documents to him.
Unless such an authority is
furnished and notwithstanding that
the redemption came from the
solicitor, there is no onus upon the
mortgagee to deliver the docu-
ments to the solicitor or to make
any comment regarding same.
Accordingly for a solicitor's own
protection, the foregoing should be
strictly adhered to.
Please further note that where a
second mortgage is outstanding
the documents would usually go to
the second mortgagee and it is
therefore vital that a solicitor
should do a search before giving
any such undertaking regarding the
title documents.
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