CR9 Conclusion of contract of insurance

• Conclusion of contract of insurance – intermediary not authorised to act on behalf of insurer- estoppel


The complainant took out life insurance from X Life Insurance covering his own as well as his wife’s life. A dispute arose about the amount of the premium and the negotiations had to be reopened. The complainant wanted to deal with a senior person at managerial level. He asked for such a person but what he did not realise was that he was dealing with senior officials employed by X Advisory Services and not X Life. X Advisory Services was a separate company appointed by X Life to market their products and also to assist clients with financial advice. They had no actual authority to conclude or amend contracts.

The parties agreed on a discounted premium based on the complainant’s membership of a scheme affiliated to X Life. However, according to the house rules of X Life, the complainant did not qualify for such discount because his wife was not a member of this scheme. The complainant recorded the terms of the varied agreement by sending a fax to the representatives with whom he had dealt. He asked X Life to implement the agreement. To this X Life answered that they were not aware of the dealings between the complainant and X Advisory Services and that the latter had no authority to bind X Life.

The complainant was all along under the impression that he was dealing with senior officials representing X Life and he regarded X Advisory Services as a department of X Life. Various factors related to X Life, contributed to the complainant’s wrong impression. First, in its correspondence with him, X Life provided the contact details of X Advisory Service and was informed that if he needed any more information, he must contact his financial adviser. Second, the word “X” formed part of the name of both companies but the precise relationship between the two entities was never explained to the complainant. Third, a quotation received from X Life contained the following sentence: “In terms of the Long Term Insurance Act commission paid to financial advisors is regulated. However, since the application has been submitted to a salaried employee of X Life, no commission is payable.” Fourth, the email addresses of both companies were identical.


In the circumstances we found that as a result of the conduct of X Life the complainant reasonably came to the conclusion that the officials from X Advisory Service were entitled to contract on behalf of X Life. The complainant acted to his detriment and consequently X Life was estopped from raising absence of authority as a defence.