Financial Supervision Authority orders Insurance broker services OÜ to cease illegal activity
The Financial Supervision Authority issued a precept ordering an insurance broker called Insurance broker services OÜ to immediately bring its activity into line with the Insurance Activity Act and to cease illegal activity, i.e. offering market positioning service.
Insurance broker services (www.iiziservices.eu) has provided market positioning service to various insurance companies in Estonia. This consists of price comparisons made on the basis of information at the insurance broker’s disposal, and is offered to non-life insurance companies as a paid service.
The Financial Supervision Authority established that the sales promotional materials and sales activities aimed at insurance companies, Insurance broker services emphasized, without exception and systematically, the possibility of raising the price of insurance services by way of possessing the information. Materials sent to specific insurance companies specified how many percent a respective insurance company could raise the price of, say, motor hull insurance or motor TPL insurance and what gains that would mean for the company in monetary terms. The market positioning service has been offered to many non-life insurance companies, and several companies have purchased it as well.
An insurance broker is a re-seller of insurance, and must, by law, represent without any exceptions only the interests of customers – the policyholders. The broker represents the policyholder, not the insurance company. The broker has a duty of loyalty to the policyholders, not the insurance companies. The broker’s duty is to determine people’s insurance interests and then offer the customer the best and most suitable offer from the ones provided by the insurance companies.