Insurance brokers: entitlement to commission

The entitlement of and payment to, insurance brokers of commission is an area of law which is both archaic and confused. It seems now to be settled that the broker is paid by the insurers (although there is a doubt as to whether that rule applies to reinsurance) and that entitlement to commission accrues where the broker’s activities are the proximate cause of the business coming to the underwriters.

ARB International Ltd v Baillie [2013] EWHC 2060 (Comm) was a claim by a Lloyd’s broker against its former managing director for damages for breach of contract, those damages including loss of commission, and so the case directly raised the question of whether commissions had been lost by reason of the defendant’s conduct. The case was heard by Robin Knowles QC, sitting as a Deputy High Court Judge.