The role of the insurance broker at law : how central should it be?

Abstract

The role of the Insurance Broker is often forgotten about, yet what one fails to realize is that this role offers a great deal of benefits to the Insured. When analysing the legal role of the Insurance Broker, it is governed by the notions of Mandatary and Fiduciary Obligations, which arise from the Civil Code. This conveys that, as opposed to Insurance Agents, who are bound to the Insurers, Insurance Brokers are bound to the Insureds, that is, they are the Insureds’ agents. Nevertheless, other local legislation which is relevant to the Insurance Broker is the Insurance Distribution Act, and the Commercial Code, which also provides a legislative framework on the basis of which the Insurance Broker can be seen as a Commercial Agent or a Commission Merchant. Considering the European, German and English positions, it can be seen that the Insurance Broker’s role, in their jurisdiction is very similar to what it is in Malta. Unlike Malta, in the EU and Germany, its legal nature and its duties are clearly stipulated in one act in their jurisdiction. Therefore, it is proposed that in Malta, a unified and specified statute needs to be promulgated, so as to combine all relevant legislation which deals with this role. Through the interviews and questionnaires conducted, the thesis also reveals that the role of the Insurance Brokershould be more central. It wasinterpreted that it is essential for the Insurance Broker’s role to become more central in relation to commercial entities, since the risks in this sector are ever-growing. It was felt that, in the future, the Insurance Broker will take on an advisory role, and become part of risk management processes. This central role of the Insurance Broker needs to be legally recognised.