In several cases, transactions can be carried out by an intermediary without their knowledge. For example, when a person wants insurance, buys a new car or wants to invest a sum of money. They have unknowingly contacted banks and financial and insurance intermediaries. The role of the intermediary is to present, recommend, and sell contracts on behalf of the insurer, bank, or financial institution.
What are the types of existing insurance intermediaries?
There are 2 types of intermediaries: brokers and agents.
- brokers sell contracts for multiple companies; when seeking a financial investment, for example, the intermediary is a investment advisor who offers financial investments from various establishments.
- agents, on the other hand, sell products for a single company. When looking for insurance, the intermediary is a general insurance agent who represents only one insurer and offers its products. A dealer offering a loan to purchase a car is also an intermediary agent in banking.
However, there are other secondary activity intermediaries—brokers or agents—that are often overlooked. A large retail store offering loans, certain price comparison websites, or even the funeral services insurance.
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 careful before signing with an intermediary—they must:
- hold professional liability insurance to be compensated in case of damage
- possess a bank guarantee if they handle payments for a contract taken out on behalf of another company
- provide proof of relevant training diplomas and professional experience
- not have been convicted of financial crimes or offenses
How to verify if an intermediary is fulfilling their obligations?
First, by checking their registration with ORIAS, the single registry of insurance, banking, and finance intermediaries. Just as a doctor must be registered with the medical order to practice, an intermediary must be registered with ORIAS to operate. They have an identification number that they must include in their legal notices and all their documents; otherwise, verify your intermediary’s registration at Orias.fr.
What is an intermediary agent for insurance?
The concept of insurance intermediary agent, also called MIA. This designation appeared with the transposition of the 2002 insurance intermediation directive. It can be a natural person or a legal entity mandated by a general agent, insurance broker, or an insurance intermediary. With this label, the MIA does not work directly with an insurer.
Are there conditions for access to the profession?
Yes, an insurance intermediary agent is a type of insurance intermediary. Consequently, they must meet all the conditions for entering the profession, including the professional capacity requirement, the integrity requirement, and, of course, registration with ORIAS under the MIA status. This registration can be performed by the mandator or the mandator himself.
What are the vigilance points regarding these access conditions?
There are two vigilance points concerning the access conditions:
- subscribing to a professional liability insurance: There are two scenarios in which the insurance code exempts the MIA from such a subscription. The first case, the mandator provides this insurance or an equivalent guarantee. The second case, the mandator 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 imposes some obligations on them, including providing an annual insurance certificate.
- subscribing to a financial guarantee: contrary to common beliefs, issuing a collection mandate from the broker to their intermediary does not exempt them from this subscription; only an explicit mandate from the insurance company to the intermediary would allow exemption.
What missions can they perform on your behalf?
The missions performed by an intermediary agent are strictly regulated by the insurance code. As an intermediary, they can carry out all distribution acts, namely:
- providing recommendations on an insurance contract
- presenting, proposing, assisting with the conclusion
- carrying out preparatory work for this conclusion
An intermediary agent can also bill premiums, but beware—except in exceptional cases, under strict supervision, they cannot perform claims management actions.
Does the intermediary owner their business?
The insurance intermediary agent operates on behalf of and in the name of their mandator. Therefore, they do not establish their own portfolio. In other words, the intermediary agent does not own the business they handle—it belongs to the mandator.
What are the vigilance points when partnering with an MIA?
When partnering with an MIA, intermediaries must be vigilant about certain points.
- the division of responsibilities between the broker and their MIA: It is important here to distinguish civil liability from regulatory liability. Regarding civil liability and in accordance with regulations, the mandator is civilly responsible for the acts of their intermediary agent acting in that capacity. Concerning regulatory liability, the principle is that of personal fault; therefore, the agent alone is responsible for regulatory breaches before the regulatory authority.
- the independence of the MIA: The intermediary agent acts on behalf of and for the account of their mandator. However, they remain an independent professional. Therefore, they have their own obligations, like any insurance intermediary. They must present themselves to the client, provide advice, and have their own letterhead. Be cautious of the temptation for the broker—who is the mandator—to want to control everything, such as requiring the use of the letterhead of the firm or always being present in the brokerage office. The risk would be the requalification of the mandate into an employment contract. The second risk is that the ACPR might hold the broker responsible for regulatory violations given the degree of control exercised over their MIA. A very specific jurisprudence has been issued on this subject.
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