Policyholder requests for information must be given
Failure to carry out a client’s instructions: Where a client has signed the necessary authority for another broker to obtain sufficient information on his policies to provide another quote, you may not refuse to provide ALL information requested by the other and this includes replacement advise as well – if and when it applies. Yet, in practice, brokers still refuse to provide the requested documentation, refuse to provide all the policy info or the broker blanks out specific amounts/information on the policy schedule so that the broker requesting the info cannot see how the premium is calculated…. Frustration levels are high with this practice and it is in contravention of the general code of conduct and should be reported.
You simply don’t have a choice
There’s no excuse,
It’s not an option.
As a legal adviser within a non-life insurer, I am becoming more and more involved in requests from intermediaries for policy information on policyholders, in a situation where they have just received a signed letter of authority from the policyholder.
Reluctance to give information
This can create sensitivity, with both the insurer and the existing broker. The new broker may not have an existing relationship with the insurer, and the defending broker may be loyal to the insurer.
There is also reluctance to give full and complete information to the new broker, given that there is a lot of intellectual property contained in the policy schedule and wording, specifically with respect to premiums and the type of cover being offered. This intellectual property may even belong to the defending broker in the case where this broker is a binder and has the mandate to determine premium.
Unfortunately, the above mentioned cannot be used to refuse any request for information that is made by the policyholder, or any mandated representative of the policyholder, where such mandate is properly given to the new broker.
Entitled to request detailed information
In South Africa there are new Policyholder Protection Rules (PPRs) and they have a specific rule with regards to requests for information, and the rule reads as follows:
An insurer must, at the written request of an intermediary that is authorised in writing by a policyholder, provide that intermediary or the policyholder with the information referred to in the authorisation, within a reasonable time after receipt of the request, irrespective of the fact that the intermediary does not have an intermediary agreement with that insurer. An insurer must, at the written request of an intermediary with whom an intermediary agreement has been entered into, provide that intermediary, within a reasonable time after receipt of the request, with all information reasonably required by the intermediary to comply with any disclosure or other requirements binding on the intermediary by virtue of the Financial Advisory And Intermediary Services (FAIS) Act or any other law.
In terms of contract law, the FAIS Act and the PPRs (and soon to be POPIA), the policyholder is entitled to request detailed information, provided within a reasonable time. This would also apply to any agent appointed by the policyholder. This information would include all information that is contained within the policy wording and schedule and includes the section of cover and premium being charged by the insurer. This information belongs to the insurer and not the defending broker, and it would be the legal responsibility of the insurer to provide the information when requested. Where there is a binder holder who also is the defending broker, however, that binder holder acts as the agent of the insurer, and therefore, should be bound by the same obligations as the insurer.
Binder and intermediary agreements
In almost all binder and intermediary agreements there would be a clause where the binder holder and intermediary binds itself to acting within the terms of the various insurance legislation that is applicable. This means that the issue should not have to be escalated to the insurer directly, but if a binder holder or existing intermediary was asked for the information, it would need to be handed over.
In my mind this is not just a policyholder issue. It is also a legal contractual issue. The policyholder should be free at any stage to request his or her own contractual details and any other specific details with respect to the policy, such as the claims history. If the policyholder is entitled to such information, the policyholder would also be able to mandate his or her agent to request the information if the mandate was clear and signed.
The issue of defending the client should not be translated into refusing to give the policyholder (or duly appointed agent) all the relevant information. It is information the policyholder is entitled to.
by Danny Joffe