The Conduct Of Insurance Brokers

Introduction

Are you  considering speaking to an insurance broker for assistance with your insurance policies?. An insurance broker is a professional who acts as an intermediary between clients and insurance companies and their role is to help their clients understand their insurance needs and recommend suitable policies, including  information about insurance companies  which  provide the  policies. Before you decide to work with an insurance broker, here is what you need to know regarding their conduct.

Requirements to operate as an insurance broker in the Kingdom of Eswatini

To carry on the business of an insurance brokerage in the Kingdom of Eswatini, a person should be licensed as such in terms of section 37 of the Financial Services Regulatory Authority Act (FSRA Act 2010) and section 16 of the Insurance Act, 2005.

How do I get an Insurance Broker that is licenced by the FSRA?

You can contact the FSRA through WhatsApp on this number 76580214 for a list of licensed insurance brokers or visit the FSRA offices located at the Ingcamu Building, 2^nd Floor Mbabane and request to be provided with the list.

Conduct Standards for Insurance Brokers

The FSRA issued “The Code of Conduct for Insurance Brokers Directives” Legal Notice No.124 of 2010 which set out the code of conduct for insurance brokers offering insurance services and advice to the members of the public in the kingdom of Eswatini. The directives were issued to protect policyholders who rely on the expertise and knowledge of insurance brokers when sourcing insurance products or services that are suitable to their needs hence a high standard of professionalism and integrity is expected from insurance brokers.

The Code of Conduct prescribes principles that insurance brokers must uphold when advising policyholders or prospective policyholders on insurance products or services. These principles are the following:

Competency

A broker is obliged to maintain a high level of professional knowledge and skill in order to advise clients in accordance with all relevant laws as well as appropriate technical and professional practice and standards and should only provide advice in those areas and subjects in respect of which the broker is technically and professionally qualified unless advice and assistance is obtained from a competent practitioner in those areas.

The FSRA has also prescribed fit and proper requirements for all key functionaries in the non-bank financial services sector including brokers, which sets the minimum qualification and experience required for a person operate an insurance brokerage business.

Integrity and professionalism

The Code of Conduct states that an insurance broker should uphold high ethical standards. The brokers must act with integrity and professionalism, treat consumers with respect, and act in good faith whilst maintaining confidentiality and avoid conflict of interest but apply knowledge and skill to provide the consumer with products and services that will best suit the consumer's needs.

• consumer’s financial circumstances.
• consumer’s existing coverage.
• consumer’s ability to afford the product or service concerned; and
• consumer’s objectives in relation to the insurance service required.

Moreover, brokers should treat their customers fairly and equitably and ensure that they provide the same level of service to all customers.

Product Disclosure and Comparison:

A broker should not force or trick a consumer into buying insurance, alter a policy, or cancelling it. If an insurance broker suggests to the consumer to buy and insurance, they must do it because it is good for the consumer, not because they get more money out of the transaction. Brokers should give advice that is best for the consumer, without letting the chance of earning more influence on their suggestions but should put the consumers’ needs first.

Disclosure of Markets

In order to afford customers, the opportunity to evaluate and chose the right insurer to place their business, brokers are expected to present them with quotes from more than one insurer. If a broker can offer only one company’s quote to a prospective client, there is a duty upon the broker to make this limitation known before accepting and placing any business on behalf of the client.

Consulting Experts

Brokers should not be shy to acknowledge lack of competence in a particular situation and should be open to advice their clients to seek advice from experts especially in a non-insurance field, such as accounting or law, and clients should be encouraged to consult the appropriate experts.

Fee Disclosure:

Insurance brokers should clearly communicate their financial interests when rendering brokerage services. Transparency ensures that consumers make informed decisions.

Confidentiality and non-disclosure:

Insurance brokers get exposed sensitive consumer information about their clients; hence confidentiality is paramount. They should treat information given to them as confidential and should not disclose the information to any other party unless given the authority to do so by the consumer or unless there is a legal duty to do so. A broker should not use consumer information for personal or a third party’s financial gain. Where disclosure is in terms of the law or by order of Court and in this instance the insurance broker should be careful not to give out more information than required.

Conflict of interest:

An insurance broker should make adequate disclosures of relevant material information, including disclosures of actual or potential own interests, in relation to dealings with consumers. A broker shall disclose in writing to a consumer or prospective consumer any conflict or interest or potential conflict of interest of the member that is associated with a transaction or recommendation.

The interest must be sufficient to raise the perception of “influence” over the insurance broker’s “independent” decision-making process, in the mind of a reasonable person, in possession of all the facts. In other words, the influence must be “material” enough that a reasonable person would believe that a consumer could not make an “informed” decision without that knowledge.​

In conclusion, insurance brokers play a critical role in safeguarding consumers’ interests. Upholding professionalism, transparency, and ethical conduct ensures trust and long-term relationships with consumers. They should promote the best interest of consumers. If a broker conducts herself in a manner that is prejudicial to the interests of the consumers, such conduct will be dealt with in terms of the Insurance Act, 2005. The public is therefore, encouraged, to deal with brokers which licensed by the Financial Services Regulatory Authority (FSRA) in terms of the Insurance Act.