In several cases, transactions can be carried out by a third party without knowing. For example, when a person wants insurance, buys a new car or wants to invest a sum of money. They have inquired with banks and financial and insurance intermediaries unknowingly. The role of the intermediary is to present, recommend, and sell contracts on behalf of the insurer, bank, or financial institution.
What types of insurance intermediaries exist?
There are 2 types of intermediaries: brokers and agents.
- Brokkers sell contracts for several companies. The intermediary, when seeking a financial investment, for example, is a financial advisor in investment. They offer financial products from various institutions.
- Representatives sell products for a single company. When seeking insurance, the intermediary is a insurance agent representative. They represent only one insurer and offer its products. A dealership offering credit to buy a car is also an intermediary representative in banking.
But there are other secondary activity intermediaries, whether brokers or representatives, that often go unnoticed. Large retail stores offering credits, certain price comparison websites, or even funeral service insurance providers.
What expectations can be placed on these intermediaries?
More importantly, they are required to provide advice to deliver a contract that suits the client. They must inquire about the client’s situation and needs.
They must also submit interview reports on the contracts and their costs, and confirm any agreement by signing.
But be cautious before signing with an intermediary; you must verify that they:
- Hold professional civil liability insurance to be compensated in case of damage
- Have a bank guarantee if they collect payment for a contract underwritten on behalf of another company
- Can justify relevant diplomas, training, and professional experience
- Have not been convicted of financial crimes or offenses
How to know if an intermediary fulfills their obligations?
First, by verifying their registration with ORIAS, the official register of insurance, banking, and finance intermediaries. Just as a doctor must be registered with the medical board to practice, an intermediary must be registered with ORIAS to operate. They should have an registration number displayed on their legal notices and all their documents. Otherwise, check your intermediary’s registration at Orias.fr.
What is an insurance intermediary agent?
The term “insurance intermediary agent”, also known as MIA, appeared with the transposition of the 2002 Insurance Mediation Directive. It can be a natural person or a legal entity mandated by a general agent, a broker, or an insurance agent. With this designation, MIA does not work directly with an insurer.
Are there conditions for entering the profession?
Yes, the insurance intermediary agent is a type of insurance intermediary. Therefore, they must meet all the access conditions for the profession, including the professional competence requirement, the requirement of good repute, and of course, registration with ORIAS under the MIA status. This registration can be carried out by the intermediary themselves or their principal.
What vigilance points are there regarding these access conditions?
Two key vigilance points concern the access conditions:
- Signing a professional civil liability insurance: There are two situations where insurance law exempts the MIA from this requirement. In the first case, the broker providing this insurance or an equivalent guarantee to the MIA. In the second case, the principal assumes full responsibility for the acts of their MIA. In practice, the broker working with an MIA can declare them to their professional liability insurer. However, this involves certain obligations, including issuing an annual insurance certificate.
- Signing a financial guarantee: Contrary to popular belief, issuing a collection mandate from the broker to their intermediary does not exempt them from this requirement. Only an explicit mandate from the insurance company to the intermediary would do so.
What missions can they perform on your behalf?
The missions performed by an intermediary agent are strictly regulated by the insurance law. As an intermediary, they can carry out all distribution acts, that is to say:
- Providing recommendations on an insurance contract
- Presenting, proposing, assisting in the conclusion
- Carrying out preparatory work for this conclusion
An intermediary agent can also charge premiums, but caution: with rare exceptions and under strict oversight, they cannot perform claims management actions.
Does the agent own their business?
The insurance intermediary agent operates on behalf of and for the account of their principal. Therefore, they do not establish their own portfolio. In other words, the intermediary agent does not own the business they handle; the principal does.
What are the vigilance points in a partnership with an MIA?
In a partnership with an MIA, intermediaries must be vigilant about certain points.
- The division of responsibilities between the broker and their MIA: Here, it is important to distinguish civil liability from regulatory responsibility. Regarding civil liability and according to regulations, the principal is civily responsible for acts carried out by their intermediary agent in this capacity. Regarding regulatory responsibility, the principle is personal accountability; therefore, the agent alone is responsible for any regulatory misconduct before the supervisory authority.
- The independence of the MIA: The intermediary agent acts in the name and on behalf of their principal. However, they remain an independent professional. They have their own obligations, like any insurance intermediary. They must present themselves to the client, provide advice, or even produce their own headed paper. Care should be taken to avoid the broker principal’s temptation to control everything — for example, by imposing the use of the firm’s headed paper or systematic presence in the brokerage office. The risk here is twofold: firstly, reclassifying the mandate as an employment contract; secondly, the ACPR (French Prudential Supervision and Resolution Authority) might hold the broker responsible based on the level of control exercised over their MIA. A very specific jurisprudence has been established on this matter.
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