The Gazette 1991

g a z e t t e

a p r i l 1991

respect of non-life insurance and four in respect of life insurance. Insurance Broker An insurance broker is defined as a person who brings together clients and insurance companies and carries out work preparatory to the taking out of policies of insurance. The Act however provides that no person who otherwise fulfils this definition may act as or hold themselves out to be an insurance broker unless he holds appoint- ments in writing from and can arrange insurance contracts on behalf of his clients with at least five companies in non-life business or five companies in life business. The distinction therefore bet- ween an insurance agent and an insurance broker essentially relates to the number of insurance com- panies with whom he is in a position to place insurance. The drawing of the line between insurance brokers and insurance agents is clearly somewhat arbitrary and gives rise to some anomalies in that while there is at present no limit on the number of appointments an insurance agent can hold an insurance broker may hold himself out as such, while holding appointments from only five different companies, all in, for example, the life business. An additional requirement in the case of an insurance broker is that he must either comply with the provisions of the Act or be a member of a representative body of insurance brokers, which by its rules requires compliance with the provisions of the Act. Appointment and Payment of Commission In a sense, the insurance com- panies themselves have been appointed as policemen to the Act as Section 46 provides that an insurance company shall not appoint a person as an insurance broker or insurance agent nor pay any commission to any person unless the insurance company haying made reasonable enquiry is satisfied to the best of its know- "In a sense, the insurance companies themselves have been appointed as policemen to the Act ledge and belief that the person is either a member of a representative body of insurance brokers or alternatively is a person who

complies with the requirements of the Act. Each insurance company must keep a register of all insurance intermediaries, whether brokers or agents, which they may have appointed. This register must be kept at the principal office in the State of the Insurance Company and be open to public inspection during normal working hours. Similarly, an insurance broker or agent may not pay any commission other than to another broker or agent unless he is satisfied, to the best of his knowledge and belief, having made reasonable enquiry, that the person is either a member of a representative body of insurance brokers or alternatively is a person who complies with the Act. For this purpose, a commission payment is widely defined as including a commission or other remuneration, reward or benefit in kind paid or payable by a broker or agent to another broker or agent in connection with the first mention- ed broker's or agent's business and includes allowing time for payment. "The IICB will carry out the necessary investigations and compile a Central Register of insurance intermediaries which will contain [relevant] information Although it is relatively easy to ascertain whether a person is a member of a recognised body of insurance borkers it is indeed extre- mely difficult to judge whether someone is in compliance with the provisions of the Act. To overcome this problem and to avoid the necessity of each insurance company carrying out its own individual enquiries the Irish Insurance Federation set up the Insurance Intermediary Compliance Bureau (the "IICB"). The IICB will carry out the necessary investi- gations and compile a Central Register of insurance interme- diaries which will contain informa- tion in relation to the names, addresses, number of appoint- ments and bank account details of all insurance intermediaries. Insurance companies will therefore be able to check whether a parti- cular broker or agent is in compliance with the provisions of the Act by consulting this Central Register.

Professional Indemnity Insurance Section 45 was intended by the Government to enable the Minister to make separate regulations requiring insurance brokers to take out professional indemnity in- surance in such form, for such period and in such amount as the Minister may from time to time determine. However, immediately prior to the passing of the Act, this Section was amended to apply equally to insurance agents and accordingly the Minister now has power to require professional indemnity insurance in the case of both brokers and agents. However, from comments made by the Minister at the time of the Dail Debates on the Bill as it then was it appears clear that the Minister has no intention of imposing any such requirement on agents in the foreseeable future. However, these last minute amendments give rise to a somewhat curious effect in that having gone to some length to make a distinction between brokers on the one hand and agents on the other, the specific provisions of the Act then proceed to apply equally to both brokers and agents. Accordingly, it would appear that the real distinction intended to be made between brokers and agents will only appear in the regulations which the Minister is empowered to make under this Section. Bonding As in the case of professional indemnity insurance, the require- ments in regard to the taking out of insurance bonds contained in Section 47 apply equally to insurance brokers and agents. (a) Regulations

The Minister has issued regulations under this Section (S.I. No. 191 of 1990) which came into force concurrently with this Part of the Act. These specify the form of the bond, the period for which it is to apply (generally 12 months), the persons with whom such a bond may be taken out (Section 3) and provide that a copy of such bond be displayed at the premises and on the note- paper and sales literature of the broker or agent (Section 6).

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