Obligations of Insurance Broker as Insurance Distributor

Abstract

The Insurance Distribution Act introduced a wide variety of notions and imposed a number of new statutory obligations, in particular, the definitions of insurance distribution and insurance distributor. The aim of the article is to present the statutory obligations imposed on insurance and reinsurance brokers as insurance distributors. The author points out that these duties can be divided according to different criteria and emphasizes that the broker's obligations towards the client are the most important in insurance practice. She discusses the duty to analyse client's needs and requirements, to prepare brokerage recommendation and provide a product card or prepare it if the broker is its creator. Moreover, she discusses the necessity to reveal the nature (and sometimes even the amount) of brokerage remuneration as well as to give the information about the method and procedure of handling claims (so-called claims policy). Having analysed the statutory obligations imposed on the insurance broker, the author comes to the conclusion that the basic purpose is the protection of clients and their interests. However, there is a concern that some duties might be treated as formal ones to be fulfilled in order to avoid legal liability. Additionally, the obligation of loyalty towards the client may be derived from the duty to keep good faith and perform due diligence.