Court of Cassation, Second Civil Chamber, 3 May 2018, No. 14-15044, “Our body”, the duty of a broker acting under a contract of underwriting delegation to provide a warning

France

Mapping of claims against insurance intermediaries

The profession and litigation procedures have evolved significantly in recent years and judges, and above all insureds, are becoming increasingly demanding. The bulk of liability claims today are brought on the grounds of the duty to inform and advise the client, for which there is little difference between a general agent and a broker.

The case-law of the Supreme Court is consumer-oriented, and the enabling of the Insurance Distribution Directive will doubtless bring little change to the duty to advise already imposed on intermediaries. France is certainly ready to implement the concepts promoted by the European Union as it has been putting them into practice for a long time.

The duty to advise is a key issue in disputes before the French courts. This duty has been imposed by the courts since 1964 and is defined more broadly by the case-law than the French Insurance Code; according to the Court of Cassation, the intermediary must be “a reliable guide and experienced advisor”.

Thus, particular importance is placed on insureds and their protection, along with ever-increasing expectations and increased requirements on the part of intermediaries in terms of formalities.

Court of Cassation, Second Civil Chamber, 3 May 2018, No. 14-15044, “Our body”, the duty of a broker acting under a contract of underwriting delegation to provide a warning

Facts

A company that specialised in putting on events was planning an exhibition presenting corpses claimed to be Chinese that had been dissected and plastinated, and that would be displayed in various positions, in particular sporting postures. It therefore took out an insurance policy for the purposes of this event through a broker with an authority of underwriting delegation on behalf of several insurers. When the exhibition was scheduled to begin in Paris, it was banned as being illegal. The company then submitted a claim under the cancellation cover it thought it had obtained from its insurers and, when cover was declined,
it sued the insurers, as well as the broker. In particular, it was claimed that the intermediary had given the policyholder an agreement in principle on the organisation of this event at the time the insurance was taken out, and the insured contended that, based on this agreement, it had decided to invest in the exhibition that was ultimately cancelled.

Decision

The Court of Cassation dismissed the insured company’s claims on the grounds that it could not contend that it was the agreement in principle given to it by the broker that had caused it to decide to hold the exhibition in Paris, and to make the investments that proved to be a total loss because the exhibition was banned. In fact, the decision to hold the exhibition had already been taken and the dates had already been decided when the insurance policy was taken out. Therefore, according to the court, there was no evidence that the company would have abandoned its project if the broker had advised it about the risk that the exhibition could be cancelled.

CGPA comments

This decision is interesting because it considers the liability risk of an intermediary acting under underwriting authority delegated by the insurers. The court noted that the insurance intermediary could not be held

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Court of Cassation, Second Civil Chamber, 3 May 2018, No. 14-15044, “Our body”, the duty of a broker acting under a contract of underwriting delegation to provide a warning

Facts

Decision

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