Every stage in the contract of insurance, from the inception of the negotiations to the receipt of the payment of the loss, involves to a greater or lesser degree the employment of agents.
On the part of the insurers, agents are universally employed; insurance companies must necessarily act through agents,whilst underwriters are usually associated in syndicates, one member of the syndicate acting as agent for the others.
The assured may be compelled by usage to employ an insurance broker, or he may find it convenient to do so; apart from this, any duty imposed upon the assured under the contract may be performed by an agent on his behalf unless, on the construction of the policy, personal performance is required.
It may, therefore, be useful to show how the general principles of the law of agency are to be applied to insurance business.
There are three relationships to be considered:
– The relationship between the principal and the agent.
– The relationship between the principal and third parties
– The relationship between the agent and third parties.
Further, the course of business at Lloyd’s and the fact that insurance brokers must be registered under the Insurance Brokers (Registration) Act 1977, should also be noted.