Misrepresentation, Non-Disclosure and Breach ... - Law Commission

When is the intermediary the agent of the insurer?
9.26 Although an intermediary will usually be considered as the insured’s agent for
disclosure purposes, there are some instances in which the intermediary will be
held to be acting for the insurer.
EMPLOYEE OR APPOINTED REPRESENTATIVE OF THE INSURER
9.27 The insurer’s own employees will normally be regarded as acting for the insurer,
unless they have exceeded the terms of their authority by acting outside the
scope of their employment. 15
9.28 The Financial Services and Markets Act 2000 states that if an insurer appoints a
firm or person as its “appointed representative”, it is responsible for the
representative’s actions or omissions. Under section 39(3), the principal
is responsible, to the same extent as if he had expressly permitted it,
for anything done or omitted by the representative in carrying on the
business for which he has accepted responsibility.
9.29 Technically, it could be argued that this only covers regulatory issues, within the
scope of the Act, rather than all issues of civil liability. However, it appears
accepted practice within the industry that if an appointed representative gives
poor advice about how to complete a form, the insurer is responsible for it.
AUTHORITY TO GIVE COVER
9.30 Some cases suggest that an intermediary should be regarded as the insurer’s
agent if it has specific authority to bind the insurer to cover. In Stockton v
Mason, 16 a consumer asked his broker to transfer cover from one car to another.
The broker told him that was fine for a temporary period, and the consumer
assumed that insurance had been issued on the same terms as before. In fact,
however, the insurance only covered the insured and not other authorised
drivers. The Court of Appeal held that the fact the broker had authority to bind the
insurer to temporary cover meant that the representations they gave about that
temporary cover were made on behalf of the insurer.
15 Even where an employee has acted outside the scope of their authority, they may still be
regarded as the insurer’s agent on the grounds that they had apparent authority to act as
they did.
16
[1978] 2 Lloyd’s Rep 430.
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