Court of Cassation, 13 June 2019
An insurance intermediary’s duty to give advice is a judicial construct that has been crafted over many decades in France. This decision is an addition to this construct and sets out the scope of the insurance intermediary’s duty to advise, as well as its limits.
A company, through a general agent, took out a group insurance policy covering the death and permanent total disability of its managing director. Sometime later, the officer became 80% disabled and made a claim against the policy. The insurer denied cover on the ground that cover required a 100% disability rate. As a result, the company that took out the policy and the beneficiaries of the insured started proceedings against the insurer (without however suing the intermediary as they considered the insurer to be liable for the acts of its general agent).
The court rejected the claims of the insured and the beneficiaries because it found that the intermediary had not committed a breach of duty. The court found that the officer had “entered into the contract with full knowledge of the coverage provided and did not need to be provided with additional information”, and that the intermediary did not breach its obligations because the policy’s disability clause was “clear and unambiguous”. Furthermore, the court point out that the agent had “several other coverages” on a document the managing director had signed, which the managing director had “chosen not to take out”.
This decision reaffirms the principle that clear contractual clauses limit an insurance intermediary’s duty to provide information and advice. This decision is a positive point for intermediaries because it specifies that the duties imposed on intermediaries do not require them to take any particular action if, merely by reading the policy or endorsement he signs, the insured will be able to understand for himself the scope of the conditions of the policy taken out.