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3/10 W01/March 2017 Award in General Insurance

H Insurer–intermediary best practice

Insurers and intermediaries have tended to develop bespoke agency agreements reflecting their
particular methods of doing business.
Below is recommended best practice that should be included in an agency agreement between an
insurer and intermediary.

H1 General requirements

3 All agency agreements should:
Chapter • be clear and succinct;

• reflect the business relationship;
• define and allocate responsibilities and rights; and
• ensure compliance with regulatory or statutory rules.

H2 Appointment

It should be stated clearly that the principal appoints the intermediary and the intermediary accepts the
appointment, as the principal’s non-exclusive intermediary to obtain insurance business for the
principal, subject to the terms and conditions of the agency agreement.

H3 Authorisation and prohibitions

The authorised and prohibited actions of an intermediary should be clearly stated in the agency
agreement.

H4 Compliance responsibilities

The intermediary shall comply with relevant regulations and codes of practice. Reference copy for CII Face to Face Training

H5 Commission

Rate scales should be clearly stated and updated. If commission is variable this should be stated,
Rate scales should be
clearly stated together with any minimum notice period for changes. The date when commission is payable should
also be given.

H6 Material information

This relates to the need for prompt passing of information by the intermediary to the insurer. It is
recommended that it should be made clear that an intermediary provides all material information to the
insurer as intermediary of the policyholder. The only exception to this is where the insurer has granted
the intermediary delegated authority to act on its behalf.

H7 Premiums and credit

This section deals with the responsibility for premiums both paid and refunded while in the hands of the
intermediary, as well as terms of credit and the responsibilities for cancelling or recovering
documentation in the event of any breach by the policyholder.

H8 Claim money

This section specifies whether the insurer or the intermediary is to bear the credit risk in relation to
claims money held by the broker.
Broker/client relationship
The Association of British Insurers suggest that under this heading UK insurers should consider
including a non-solicitation clause, effectively barring the insurer from acquiring business, currently
placed through the broker, on a direct basis for a period of five years. This element of guidance is a
suggestion only for UK insurers.