29 November 2007, Verification of the insured’s declarations and the situation of the insurance company issuing the policy


An insured took out an insurance policy through a broker and paid the premium to the broker. However, the insurance company did not have a licence to do business in Spain. After discovering that the insurer was unlicensed and, therefore, that its policy was invalid, the insured sued the broker seeking a refund of its premium. It also sued the broker’s professional indemnity insurer directly.


The judges held that the broker was negligent because it had not verified that the insurer had the necessary licence to do business.

CGPA comments

The intermediary’s liability in the event the insurer is unlicensed is relatively broad in Spain and, therefore, the broker must conduct a prior verification of the situation of the insurance company to which it refers its client.

Accordingly, the broker will be held liable if it does not perform this verification, which the Spanish judges qualified as negligence, and it will be required to compensate its clients.