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g a z e t t e
a p r i l 1991
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").
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
" . . . the
O'Donoghue
Report . . . found that. . .
intermediaries provided a
valuable service and must be
regarded as a practical if not
a theoretical necessity"
independent advice on the
choice of a policy from the
range available from various
insurance companies;
(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
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)
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
Insurance Agent
An insurance agent is defined as
any person who has a written
Alvin Price
125