Average Provision

Industry Questions/Comments

[Section 213 of the Insurance Act 2018]

Does the requirement apply to cases where the clients do not deal directly with the insurer or through its agents e.g. broker clients? In a scenario like this the insurer has no contact with the client and cannot guarantee that the broker will inform the insured in writing prior to entering into the contract, whether via the broker's own document or one submitted to the broker by the insurer. Would the insurer's obligation under the requirement be considered appropriately discharged if the insurer were to simply inform the broker in writing of the average provision clause prior to entering into each contract of insurance instead of the client?

Central Bank of Trinidad and Tobago

Whether or not the client goes through an intermediary or deals directly with the insurer, the Act requires that the insurer ensures that the client is advised of the averaging provisions.  Please be advised as follows:

a. The insurers should work with the intermediary to ensure that the relevant documents with the disclosure is handed over to the client.

b. The broker is not the insurer’s agent, but rather the client’s agent.  The insurer has an obligation to ensure that the client receives a document with the disclosure.  It would be prudent for the insurer to obtain the client’s signature acknowledging receipt of the disclosure.

Section 213 (1) clearly states that the insurer is the entity that has the responsibility of advising the insured, either directly (in subsection 1) or indirectly (in subsections 2 and 3).  The insurance company is still legislatively responsible for implementing the objective of section 213.  As such, the CBTT advises ATTIC to consult with IBATT to discuss how to effectively operationalize this requirement.