A court ordered a life company to transfer a portfolio of funeral business to the new life underwriter when the independent intermediary terminated its relationship with the company and moved the business to another life insurer. The court held that once the intermediary agreement between life insurer and intermediary was terminated, the parties were restored to the position they were prior to the conclusion of the agreement between them in 2015. On the evidence it was a necessary implication that it was a tacit term that the intermediary had the right to move the business after termination of the agreement.
The existing underwriter alleged that it had the relationship with the policyholders which could not be terminated until each policyholder entered into a new agreement with the new underwriter. It also alleged that the master policy was no longer a group policy because of the change of the definition of “group” under the Insurance Act, 2017. Neither of these arguments was upheld. It was found that the intermediary had lawfully moved the business to the new underwriter and notified the policyholders properly by data message. An SMS to each of the policyholders was found to be sufficient communication of the change.
The previous underwriter was ordered to effect the transfer and to pay all the premiums that it received from the date of termination of the agreement to the new underwriter within 24 hours, and to pay the costs.
These issues have arisen frequently in the funeral space. If the intermediary has moved the business in the past or placed the business in the past without consulting each individual policyholder as to the identity of the underwriter, it is correct to deal with the matter as subject to a tacit mandate from the policyholders for the intermediary to choose the suitable underwriter. Expecting the intermediary to get thousands of policyholders to sign up to the new underwriter is unworkable and not in the interests of policyholders.
