chap 1 Flashcards
1
Q
requirements of the law of agency
timely, skill, interests, disclose, personal x ri, moneys
A
- perform all principals lawful instructions timely. 2. exercise reasonable skill & care. 3. act in best interests of principal. 4. avoid conflicts of int & disclose circumstances that may give rise to a conflict. 5. make full disclosure to principal for any personal interest (placing r/i offer to disclose but no need to unless asked). 6. account to principal for all moneys received on behalf
2
Q
follow instructions of principal
exe.. con,, fid... (poca_) ci mcoi
A
- exercise reasonable skill and care
- conflicts of interest.
- fiduciary duties (no secret profits under prevention of corruption act
- confidential info
- managing conflicts of interest
3
Q
situations where conflicts of interest can arise
close links with... pc ins & ri lloyds con comm
A
- close links with particular insurer
- personal conflicts
- insurance & reinsurance (large firm should handle seperately
- lloyds brokers - savonita affair - acting for insured on claim but told uw’s claim was fraudulent
- contingent commission/ overriders (add comm or profit share) - could come from premium financier or claims management comp
4
Q
implications of receiving commissions/ overriders
influe.. unsuitable 2 parties totality churning v needs
A
- brokers may allow decisions on where business is placed/be influenced by own income
- broker may select insurer that is unsuitable for client
- effectively broker being paid by 2 diff parties - conflicts of int arise
- totality of brokers earnings concealed from client
- broker more interested in churning income than client needs
5
Q
other inducements - conflict related - fca
A
- premium finance - broker may own or have interest
- soft loans & cash gifts- eg frm product providers
- binding auth and claims hand auth- inherent conflict eg profit comm, delib send good business to binding auth- broker may handle claims not in best interest of PH. * conflicts reduced if broker acts at ‘arms length basis’ - seperate from servicing team
6
Q
broker may work for 2 of more clients with similar interests - conflicts of interest arise when:
same claim
trans/dispo
same con
lcim
A
- involved in same claim & acting for more than 1 party
- involved in a transaction/disposal of a business
- competing for same contract - eg building contractors
- competing for limited capacity in market
7
Q
duties owed by principal to their agent
A
- remumeration (pryke&velos) broker earned all comm when contract formed- comm is kept if pol cancelled.
- indemnity
8
Q
breach by agent, the principal will have a right to
A
terminate agency and sue for a breach of contract
9
Q
common law tort - duties to clients
A
- youell and bland - duty of care regardless of contract bound or not
- hih casualty v jlt - broker cant act as a post box
- GNER v JLT - continuing duty owed
- Arbory group v west craven - failure to explain insurance terms
- rudour jones v marsh- must warn client
- hedley byrne & heller …? go read it
10
Q
brokers duty to uw’s - duty of care, broking chains and duties of sub brokers
A
- pangood v barclay brown- failure to advise about a warrnty. wholesale broker brought to action- the placing broker did not owe a duty of care. for the placing brokers to be liable cause of loss had to be the reliance on the placing brokers.
- Fisk v Thornhill & son- court did find wholesale brokers owed a duty of care- failure to obtain properly completed proposal form as required by insurers before placing cover.
- pryke & others v gibbs
brokers voluntary undertook a problem with a usa binding auth, they were not obliged. they assumed responsibility to uws. failure to report resulted in expensive judgemenr.
4.Tudor jones v marsh & crowley - blame for not checking pol wording- clients instructions proportioned between producing and placing brokers.
11
Q
statute law involves;
A
- marine insurance act
- material facts
- consumer insurance disclosure and representation act
- the prudent uw
- inducement - pan atlantic v pinetop
12
Q
consumer insurance act- insurer rights - qualifying mirepresentation/ reckless
(3 points - D - C - HP)
A
- insurer can avoid contract and not return premium
if delib. - if the misrep was careless- remedy based on what insurer would have done- eg contract entered into as if it had started on diff terms (however exludes anything relating to premium)
- if the insurer would have charged a higher premium they can proportionately reduce the amount of the claim
13
Q
the consumer ins act assumes that the intermediary acts for the consumer unless they appear to act for the insurer. an intermediary will act for insurer if:
A
- it is an AP of an insurer
- has received express authority from insurer to enter into contracts on insurers behalf
- has received express authority from insurers to collect info as their agent
14
Q
factors confirming agent is acting for consumer
a
fa
pays f
A
- agent gives impartial advice to consumer
- agent conducts a ‘fair analysis’ of the market
- the consumer pays a fee to the agent
