What counts as insurance intermediary activity
Insurance intermediary activity in the sphere of insurance is the paid intermediary activity carried out by a person for the conclusion of an insurance contract or a reinsurance contract. The law defines this activity concretely: it includes at least one of the following actions:
- making an offer for the purpose of concluding an insurance contract or a reinsurance contract;
- performing the preparatory work for concluding such a contract and organizing the conclusion of the insurance contract;
- concluding the insurance contract in the name of the insurer and/or the reinsurance contract in the name of the reinsurance company;
- administering the procedures for assessing the loss and paying the insurance compensation arising from the insured event under the insurance contract or reinsurance contract;
- assisting in the performance of the contract within the limits pre-determined by the insurer or the policyholder — including the right to collect the insurance premium and to pay out the insurance compensation.
At the same time, the law clearly defines what is not regarded as intermediary activity: the activity described above when it is carried out by the insurer itself or by its employee; the provision of additional information to a consumer within the framework of another professional activity, where its purpose is not to assist in concluding or performing the insurance contract; and the management or settlement of an insurance organization's loss or claim, or expert assessment, within another professional activity. This distinction matters, because it is precisely intermediary activity that is connected with the special requirements established for agents and brokers.
The insurance agent — who it is and what it does
The insurance agent is a natural or legal person who acts on the instruction and in the name of the insurer, within the scope of the authority granted to it by the insurer. The agent stands in a mandate relationship with the insurer: it represents the insurer's interests and exercises only those powers that the insurer has conferred upon it. When dealing with an agent, the consumer is therefore effectively dealing with a representative of the insurer, although familiarizing oneself with the scope of the agent's authority remains important.
It is also useful to know who the insurer is under the law: an insurer is a legal person in the organizational-legal form of a joint-stock company, created for the purpose of carrying out insurance activity and holding, in the procedure established by the law, a license for the relevant type of insurance; or a branch (representation) founded in Georgia by insurance and reinsurance organizations registered in member countries of the Organization for Economic Cooperation and Development (OECD) and licensed by the relevant authorities, registered in accordance with the procedure established by Georgian legislation for the registration of branches (representations).
The insurance broker — an independent intermediary
The insurance broker is an individual entrepreneur or a legal person created in accordance with Georgian legislation who is registered, in the procedure established by the law, with the legal entity of public law — the State Insurance Supervision Service of Georgia — and independently carries out insurance intermediary activity as a type of its entrepreneurial activity. Unlike the agent, the broker is not tied to a particular insurer: it enters the market as an independent player, and it is precisely for this reason that it is subject to registration with the Service.
The law establishes that insurance intermediary activity in the sphere of insurance is carried out by the insurance agent and the insurance broker. The insurer may carry out insurance activity both directly and through the insurance agent and the insurance broker. The same norm also provides for the insurer's obligation — to carry out insurance activity only through a duly registered insurance broker. For the consumer, this means that a broker's registration status is an indispensable condition of its lawful activity.
Protection of the firm name and the significance of registration
The firm name of a person carrying out the activity of an insurance broker must contain the words "insurance broker" or another word combination using these words. No one has the right, without registration in the procedure established by the Service, to use the words "insurance broker" or another word combination using these words in their firm name — except where the use of these words is established or recognized by law or by an international treaty of Georgia, or where it follows from the context in which the words are used that the person concerned does not carry out insurance intermediary activity envisaged by the law. For consumers, the presence of these words in a firm name is therefore a signal worth verifying.
Who is regarded as a consumer
The law also defines the notion of the consumer precisely. A consumer is a natural person intending to receive insurance services or, at the stage of concluding the insurance contract, a policyholder who is a natural person. At all stages of the performance of obligations arising from the insurance contract, the consumers are the policyholder, the insured, the beneficiary and/or a third person — from civil liability insurance, the person who suffered the damage. This definition is particularly important when using the services of an agent or a broker: it is precisely the protection of consumer rights on which modern regulation places its emphasis.
Agent or broker — what to consider when choosing
Both the agent and the broker carry out intermediary activity, but their legal positions differ. The agent acts on the instruction and in the name of the insurer and is accordingly tied to a particular insurer. The broker is an independent subject that must be registered with the Service and conducts intermediary activity as its own entrepreneurial activity. If you plan to cooperate with a broker, verify that its firm name contains the words "insurance broker" — this is a perceptible sign of registration. If rights are violated, the issues of protection are regulated by other norms of the law on insurance, while the scope of an agent's or broker's authority can always be scanned and verified directly with them.