9: Assignment and agency in insurance

Question 1

Murfitt v. Royal (1922)

Granting Cover, Who is the Principal of an Insurance Agent?, Insurance Contracts Formed Through an Agent

Answer 1

• agent had no actual authority to issue cover, but the company had ratified his ultra vires action on two previous occasions.
• led insured to think agent had authority to issue cover.
• insured would have been prejudiced if this had not been the case. Insurers were bound by policy.

Question 2

North & South Trust Co. v. Berkeley;
Berkeley v. North & South Trust Co. (1970)

(Conflicts of Interest, Insurance Contracts Formed Through an Agent)

Answer 2

• broker negotiating a claim settlement on behalf of the insured was held in the Court of Appeal to be the agent of the insurer…

…when he was shown documents by the latter which were the basis of the repudiation of the claim.

• therefore, broker was not at liberty to disclose contents of the documents to the insured.

Question 3

Dunbar v. A & B Painters (1986)

Reasonable Care and Skill, Duties and Rights of Insurance Agents

Answer 3

• insurance brokers (Whitehouse and Company) failed accurately to disclose to employers’ liability insurers the full claims record of their clients (A & B Painters).
• Workman employed by A & B were injured in a fall.
• employers’ liability insurers avoided claim (£125,000) for misrepresentation and non-disclosure.
• brokers were liable to A & B for loss due to negligence in arranging cover deprived A & B of right to claim.