Agreement between Underwriter and Insurance Broker
Agreement setting out the details of the agreement including: commission, interim cover, period of agreement etc.
An insurance underwriter evaluates insurance applications to determine
if the risks for which people seek cover are insurable and at what
premiums.
In general, underwriters work in any field where businesses charge
money for assuming other people’s risks, such as banks where they
assess loans and determine interest rates.
When you underwrite you are essentially promising to restore, at a fee,
an entity after the occurrence of a specific risk. The term has its origins
in marine insurance where an insurer would write their name under the
stated risk for which they are promising to cover a ship owner.
In modern practice, however, an underwriter commonly refers to a
person employed by an insurance company to evaluate insurance
applications and to determine what premiums the insured should pay.
But most of the work is done using software and actuarial data. The
underwriter will only intervene in special cases.
On the opposite end, an insurance broker is an intermediary who
advises and procures a policy or contract of insurance on behalf of an
individual or organization. Their allegiance is to the insured, not the
insurer.
Insurance brokers are trained in risk analysis and use their expertise and
experience to advise people on which policies to buy. Their duty is to
make sure the insured get fairly priced and adequate insurance cover.
Rights and Obligations in terms of the Agreement
The parties have the right:
• to request each other to provide the service in accordance with the
contract and brokerage/underwriter terms;
• in case the broker/underwriter violates the contractual terms, the
other party is entitled to use the legal remedies provided for in law.
The Parties are Obligated to:
• inform each other, with a sufficient time margin, whether they wish
to enter into the contract or renew the existing contract before the
next insurance period, that is, enter into a contract for the new
period;
• submit at least the following information to request insurance offers
(data regarding the insured assets, insurable interests and
requirements for the insurance contract):
- details and description of the insured object, as well as
documents upon the broker’s request;
- the list of insurance risks and additional risks;
- all risk circumstances which have had an impact on the insured
object before and that may have a future impact on the object
due to the location or method of use(including natural forces);
- the correct insurance value or recovery or replacement value of
the insured object;
- details regarding previous insured events that have occurred
with relation to the insured object;
- the preferred insurance territory and co-insurance rate;
• check, whether all details concerning the broker and the
underwriter specified in the agreement are correct;
• notify each other when choosing the most suitable insurance offer
within a reasonable time;
• notify each other immediately of changes in the agreement
details.
Important Aspects to Note:
The parties are entitled:
• to receive information from the client about the client’s insured
interests and insurance requirements according to the brokerage
terms and inquiries;
• to inspect the assets before entry into the insurance contract, if
necessary;
• to request the insurance premium to be paid according to its
invoice or another document;
• not to pay an insurance premium for the client, if the client has
failed to pay in a timely manner.
• in case the client has not paid the insurance payment according to
the broker’s invoice in a timely manner or the client withdraws
from the brokerage contract or if the client cancels the contract
extraordinarily, to submit an application to the insurance
undertaking in the client’s name to withdraw from the insurance
contract, cancel the insurance contract extraordinarily or make it
premium-free by applying for transfer of the refundable insurance
premium on its bank account if the Broker has paid it on its own
account;
• in case the client fails to give the parties correct and sufficient data
about the assets or if the client fails to pay the insurance premium
on the Broker’s bank account in a timely manner, the parties have
the right to withdraw from the brokerage contract by not fulfilling
the brokerage obligations.
The Parties are Obligated to:
• provide the client with the insurance broker’s service and other
related services under the terms and conditions set out in the
insurance broker’s contract and brokerage terms based on
the client’s application;
• provide services with the professionalism, independence and due
diligence characteristic of insurance brokers;
• act in the best interest of the client, offer the client insurance
contracts which meet the client’s insured interests and inform the
client sufficiently of the offered insurance products;
• upon renewal of the insurance contract, submit insurance offers to
the client in a timely manner, considering that in case of a lack of
other client information, the broker shall submit an offer based on
the insured interests and requirements of the client determined in
the previous insurance previous, giving the client the opportunity to
complement and specify it with the purpose of not leaving the
client’s assets without insurance cover.
Liability
The parties are liable for failure to fulfil the obligations laid down in
the contract and are obligated to compensate the other party for failure
to perform in terms of the contract or for damages caused by improper
fulfilment of the contract. Damages shall be compensated for, if these
are sufficiently proven by the other party.
The parties are not liable for damages caused by force majeure, a third
person independent of the parties’ activity or an event the exclusion of
which could not have been reasonable expected from the parties.
Upon reviewing the compensation for damages requirement, the parties
proceed from the principle that if the broker has practiced due diligence
to the client, having fulfilled, among other things, all the notification
obligations set out in legal acts and submitted the client with sufficient
explanations and warning, it shall be liable for damages caused to the
client by insurance broker’s activity only as far as the client expressed
its insured interests and requirements to the insurance contract based
on comparative offers or another application. The parties are not liable
for neglecting an interest not disclosed thereto by the client.
R 0.00 FREE