It is settled case law that if the insurer is obliged to provide information on the characteristics of the proposed insurance contract, the broker, as his client’s agent, is obliged to provide advice, which consists in scrutinizing the needs of his client and proposing the most appropriate and personalized investment solutions.
In an old judgment dating from 1964 the Court of Cassation had established the principle according to which the insurance broker had to be a “safe and experienced guide” for his client. The case law subsequent to that decision continued to increase the degree of requirement applicable to this insurance professional in line with the legislative reforms relating to the status of this intermediary.
Thus, it is the responsibility of the broker to provide the applicant for insurance, in particular, with an information note drawing his attention to, according to the formula established by the case law on the subject, “the less favourable aspects and risks that may be the corollary of the benefits stated”, it being specified that it is the responsibility of the broker to provide evidence of having fulfilled his duty to advise.
Case law is abundant with respect to unit of account investments.
A new illustration is provided in a recent judgment rendered on April 18, 2019 by the Court of Cassation (Civ.II, 18 April 2019, n° 18-10. 377).
The facts are devoid of any originality.
A person takes out a life insurance contract denominated in units of accounts and sees his investment move downwards. She takes legal action against her broker on the basis of fraud.
Ruling on the dismissal after cassation (Civ. 4 February 2016, n°15-12. 740), the Court of Cassation rejected the appeal on the grounds that the information note provided by the broker was perfectly legible and understandable for an insurance candidate with sufficient knowledge of economic concepts, circumstances which excluded, according to the High court, that the insured could misunderstand the exact scope of his commitment to insurance. :
“But whereas having noted that the broker had given Ms. Z an information note which, in particular, provided her with all the essential indications on the amount of the subscription fees as well as the terms of their payment and which was perfectly legible and understandable for a person who, like her, was a graduate of higher education and accustomed to handling abstract economic notions, then held that it could not usefully argue that its salary income did not allow it to make annual payments of 300 000 euros on the Luxavenir contract since it was not disputed that it had a significant wealth likely to provide it with the necessary liquidity, while the subscription of this contract was likely to provide it with tax advantages in the short term, the Court of Appeal, who thus pointed out that Ms Z had been given information on the general economy of the contract enabling her to measure the conditions of her profitability in view of the size of the subscription fees, the terms of their payment and the amount of annual payments that she had to make to ensure that profitability, was able to deduce that the broker had, at the time of the subscription of the said contract, fulfilled its obligation to inform and advise taking into account the personal situation of the person concerned (… ) “.
The solution adopted by the Court of Cassation confirms the consideration by the judges of the merits of the personal abilities of the candidate for insurance (age, level of education, profession, previous experience in investment) recalling that the clarity of the mentions of the information note provided by the broker (and therefore the effectiveness of the advice adapted in the end) is assessed in view of the personal skills of the candidate for insurance.