This article focuses on the issue of the liability of an insurance broker towards its client, when the client is the policyholder or the insured. For this, it is necessary first to establish what the obligation of brokers towards the client would be and what would be considered as its breach.
There is considerable diversity between the European countries regarding the definition of insurance brokerage services, duties of insurance brokers and consequences of their breach. This article will particularly address those in Greek, Serbian and UK law. EU legislation attempts to provide the minimum harmonization established for the protection of the policyholders. “At the moment the insurance market, like many other markets, is characterized by imperfect information by each party to the transactions, significant search costs to find the best deal and asymmetric bargaining power”1.
Here the emphasis is on the exchange of information between a broker and the insured before and after the conclusion of the insurance contract, and on the imputation of knowledge of the broker and of the insured. The issue of when it is considered that a broker has an obligation to provide advice and several cases of liability of brokers for providing the advice are presented. Some relevant issues in regard to the proposals of the amendments to the EU Insurance Mediation Directive (IMD)2 are mentioned.
1 The European Federation of Insurance Intermediaries (Bipar) – Insurance intermediation, http://www.bipar.eu/en/home/multidimensional-activity accessed 10.12.2011.
2 Directive 2002/92/EC of the European Parliament and of the Council of 9 December 2002 on insurance mediation called the Insurance Mediation Directive or IMD.