Federal Court of Justice, 14 January 2016: Litigation relating to the status of intermediaries
A cleaning company took out a policy to insure its premises through a broker. After a loss, the broker decided to take charge of the claim management and took various steps in connection therewith. The central issue raised in this case was a conflict of interest because the insurer sued the broker on this ground, contending that the broker could not represent the insurer’s interests and manage the claim, while at the same time representing the client’s interests as the client’s broker.
The court agreed with the insurer, holding that a broker is supposed to act on behalf of the insured. Therefore, they found a conflict of interest because the broker could not advise the insured and at the same time perform claims management on behalf of the insurer.
In this case, the judges describe the status of brokers and the role they play. It is not possible for brokers to represent the interests of their clients, as well as the interests of the insurer by taking charge of the management of a claim, because the only person the broker can represent is the insured who appoints it.