Insurance intermediary

Definition

An insurance intermediary is any person who, for remuneration, carries out insurance distribution without being an insurer: advising on, proposing or concluding insurance contracts, or assisting in their administration and performance. The EU Insurance Distribution Directive (Directive 2016/97) uses that definition; the UK kept it after leaving the EU. In South Africa the FAIS Act speaks of financial services providers rendering intermediary services, with key individuals and representatives acting under a licence, while the Insurance Act and the Policyholder Protection Rules refer to independent intermediaries. In Kenya, Nigeria and Ghana, agents and brokers are registered separately by the IRA, NAICOM and the NIC respectively.

What you need to know

The practical point for a brokerage is that the duties attach to the activity, not to the job title. A representative under supervision, a tied agent and a licensed broker all owe disclosure, suitability and record-keeping obligations when they discuss cover with a client on WhatsApp.

In the UK, the FCA requires firms to state their authorised status and registration details; the FCA register number belongs in the brokerage's WhatsApp profile and opening message. In South Africa, representatives must be listed on the FSP's representative register and act within the categories and sub-categories they are authorised for; a representative who discusses a long-term product on WhatsApp while only authorised for short-term cover creates a compliance breach. A brokerage number on the WhatsApp Business API makes it easier to check who said what, because each conversation is tied to a named user.

In other African markets, intermediaries are frequently agents working for one insurer or small brokerages registered with the national regulator; the country pages list each regulator and the registration rules. The compliance hub goes deeper into each regime.

Concrete example

A Nairobi brokerage employs four agents who prospect motor clients on WhatsApp and hand over to a licensed broker for the quote. An audit showed that one agent was quoting premiums himself from his personal phone. The brokerage moved prospecting to the firm's WhatsApp number, so the handover to the authorised broker is visible in the conversation and the quote is sent from the same thread.