Court of Cassation, First Civil Chamber, 24 October 2018, 16-16743, judicial liquidation of a broker and removal from the single register (orias): what impact on the remuneration of intermediaries?
In France, since 1 February 2007, the Insurance Code has required insurance intermediaries to be registered on a single register kept by the French registrar of insurance intermediaries (ORIAS). In addition, brokers must prove they are registered in the Trade and Companies Register in order to engage in intermediation.
Up to the moment that a broker was put into judicial liquidation, it continued to distribute insurance policies, before finally being struck off the ORIAS register. Upon learning that the broker had been struck off the register, the insurer with which it worked decided to stop paying commissions on current contracts, on the grounds that the law prohibited it from making payments to an insurance intermediary that was not properly registered, under penalty of criminal and disciplinary sanctions.
The judicial liquidator of the broker sued the insurer to obtain payment of the commissions that had become due from the date the broker had been struck off the register, contending that registration in the Trade and Companies Register was sufficient to receive commissions for its insurance brokerage activities.
A broker may only collect commissions if it is registered in the single register of insurance intermediaries. In the event of judicial liquidation, being struck off this register will deprive a broker of the right to commissions, including those arising from contracts entered into before it was struck off.
This is the first time that the Court of Cassation has ruled on the right to commissions of a broker struck off the ORIAS register. The decision is harsh: it deprives intermediaries of all remuneration on contracts concluded before they were struck off on the grounds that this ensures the effectiveness of the registration obligation imposed on intermediaries.