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2019, vol. 57, iss. 7-9, pp. 501-524
Principle that insurance distributors should act in the consumer's best interest: Distributor's fiduciary duty
University of Belgrade, Faculty of Law
Keywords: Directive on Insurance Distribution; insurance distributors; fiduciary duty; protection of consumers; incorrect selling of insurance
The present work provides an approach to the main change brought to the insurance market by the introduction of the Directive on insurance distribution. It is the principle that insurance distributors always act honestly, fairly and professionally in accordance with the best interest of their consumers. According to the author the new regulatory framework offers a highly protective standard as it implies the need to pursue the consumer's interests above the distributors' interests. In this way such an obligation has a pervasive role in ensuring protection of the weaker party in trust-based relationships. In the mentioned context the author is talking about the insurance distributors' fiduciary duty as an instrument with the primary aim of raising consumer confidence. This regulatory technique that combines the best interest duty with the companion duty to act honestly, fairly and professionally becomes the backbone of the new system of distribution. The European legislator has had intention to eliminate incorrect selling of insurance products as a form of the unfair product distribution. Author concludes that the Distribution directive falls short of clarifying with sufficient precision the implications of the best interest duty. That is why Serbia urgently needs adoption of business ethics code for insurance and reinsurance.


article language: Serbian
document type: unclassified
published in SCIndeks: 12/07/2019

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