Legal and regulatory aspects of conflicts of interest in the operation of wholesale insurance intermediaries

This LLM dissertation is a critical analysis of the law as it relates to the conflicts of interest which face insurance intermediaries trading in London’s wholesale insurance market. When conflicts of interest exist between an agent’s fiduciary duty to its principal; other principals, or its own interests, the law is called upon to provide an equitable resolution to disputes. The diffusion, via multiple layers of market participants, of insurable risks and financial rewards in the insurance market, in order to maximize the efficient use of available capital, including market participants domiciled offshore or under non-UK or EU regulatory regimes, makes traditional legal remedies focused on resolving bilateral disputes between directly contracting parties difficult to apply to London’s international insurance market. Through critical analysis of the functioning of the wholesale insurance market in London (and the role of intermediaries), it is clear that the law of agency and regulatory law both fail to create an effective paradigm for resolving complex transactions. In some instances, regulatory law appears at odds with the doctrine of agency (itself derived from simpler relationships than exist in the wholesale insurance market today) and there are examples of market practices that exacerbate conflicts of interest further. Legislative responses have focused on agency where it has a direct impact on paying insurance claims, but have not created a doctrine that reflects or addresses the complex web of agency relationships found today. As a matter of social policy it is suggested that by re-shaping the doctrine of agency, legislators could provide clarity to situations usually put before the courts to decide on the basis of facts, previous dicta and the binary structure of agency i.e. who is acting for whom?