Preliminary ruling on the mediation of capital life assurances 24 July 2018
The Court of Justice of the European Union (CJEU) in its judgement taken in Case C-542/16 interpreted the concept of insurance mediation with respect to capital life assurances in more aspects. The request for a preliminary ruling has been made in a dispute comprising two cases. The clients in both cases realized the loss of sums invested in products in the context of capital life assurance taken out through insurance intermediary companies. The insurance intermediaries involved had taken out professional indemnity insurance with the same insurance company.
In the first dispute, the managing director of the insurance intermediary had appropriated those sums that, over the years, a number of clients entrusted to the insurance intermediary in order to be invested in relation to a capital life assurance. Since the clients were seeking compensation under the professional indemnity insurance taken out by the insurance intermediary, it was a relevant question whether the concept of ‘insurance mediation’ covers work preparatory to the conclusion of an insurance contract, even in the absence of any intention of the insurance intermediary concerned to conclude a genuine insurance contract.
On the above question, the CJEU ruled that the lack of intention of the intermediary to conclude insurance contracts is irrelevant for the purpose of classifying that activity as insurance mediation. Consequently, the concept of ‘insurance mediation’ includes work preparatory to the conclusion of an insurance contract, even in the absence of any intention on the part of the insurance intermediary concerned to conclude a genuine insurance contract.
In the second dispute, following advice
On the above question the CJEU held that in the given case the placement of capital in an investment certificate formed an integral part of the insurance contract and that, consequently, the investment advice relating to that placement constituted work preparatory to the conclusion of that insurance contract. The CJEU also observed that although the financial advice