Insurance broker mandates in Iraq define the relationship between a client and the broker that arranges its insurance. In practice, many broker relationships operate on informal understandings, an exchange of emails or a brief appointment letter. That informality works until something goes wrong: a policy fails to respond, a renewal is missed, material information is not disclosed to the insurer or a dispute arises about the broker’s remuneration. At that point, the scope of the broker’s authority and duties becomes central, and an unclear mandate leaves both sides exposed.
A well-drafted mandate clarifies what the broker is authorised to do, what information the client must provide, how disclosure to insurers will be managed, how the broker is paid and what support it will provide during claims. For businesses with operations in Iraq, often insured through a combination of local policies, fronting arrangements and international programmes, the mandate also needs to address the interaction between local and international brokers.
The Insurance Business Regulation Law No. 10 of 2005 governs the licensing and conduct of insurance brokers in Iraq under the supervision of the Iraqi Insurance Diwan. The Iraqi Civil Code No. 40 of 1951 governs agency relationships, including the duties of an agent to its principal, and the insurance contract, including the insured’s disclosure obligations. The Anti-Money Laundering and Counter-Terrorism Financing Law No. 39 of 2015 and related insurance instructions are relevant to customer due diligence, particularly for life and investment-related insurance business.
Why insurance broker mandates in Iraq matter
A broker typically acts as the client’s agent in placing insurance. That relationship carries duties of care, loyalty and diligence. But the precise scope of those duties depends on what the broker agreed to do. Without a written mandate, disputes about whether the broker should have advised on a particular risk, sought a particular cover or reminded the client of a renewal will turn on conflicting recollections. A clear mandate protects the client by setting expectations and protects the broker by defining the limits of its responsibility.
Defining the scope of services
The mandate should describe the services the broker will provide, which may include:
- Risk assessment. Reviewing the client’s operations and contractual obligations to identify insurable risks.
- Market placement. Approaching insurers, negotiating terms and recommending placements.
- Policy review. Checking policies against agreed terms and highlighting exclusions and conditions.
- Renewal management. Tracking expiry dates and starting renewal processes in good time.
- Claims support. Assisting with notification, preparation and negotiation of claims.
- Contract review. Advising on insurance requirements in the client’s contracts with third parties.
Services not included should be stated, to avoid assumptions.
Placement authority
The mandate should specify the broker’s authority to bind cover. Can the broker accept terms on the client’s behalf, or must it obtain the client’s approval? Are there limits on premium, deductibles or insurer security? Who approves the final placement? Clear authority avoids disputes where the client later objects to terms the broker accepted, or where cover was not bound because the broker awaited instructions that were never given.
Disclosure responsibilities
Under the Civil Code and policy terms, the insured must disclose material facts to the insurer. The broker typically prepares the submission, but the information comes from the client. The mandate should require the client to provide complete and accurate information and to notify changes, and should require the broker to explain disclosure obligations, prepare submissions accurately and present all information provided. It should also address who reviews the submission before it is sent. Non-disclosure is a common ground for insurers to avoid policies, and clarity on responsibility is essential.
Security of insurers
Clients rely on brokers to place cover with financially sound insurers. The mandate should set out the broker’s approach to insurer security, any minimum requirements and how the client will be informed of the security of each insurer. Where applicable law or the project contract requires local placement, the broker should explain the reinsurance arrangements behind the local policy.
Remuneration and transparency
Brokers may be paid by commission from insurers, fees from clients or both. The mandate should state the basis of remuneration and require the broker to disclose commissions and other income received in connection with the client’s placements. Transparency on remuneration helps the client assess whether the broker’s recommendations are influenced by its own financial interests.
Client money
Premiums paid through the broker and claims payments received by the broker are client money. The mandate should address how these funds are held, when they will be passed on and the client’s position if the broker fails. Regulatory requirements on client money accounts should be reflected. Commercial contract advice in Iraq can help draft client money provisions.
Local and international brokers
Multinational clients often appoint an international broker that works with a local Iraqi broker for local placements. The mandate should define each broker’s role, who is responsible to the client for local policies, how information flows and how remuneration is shared. Gaps between the two brokers’ responsibilities are a frequent source of uncovered risks.
Liability, insurance and termination
The mandate should address the broker’s liability for errors, any caps and the professional indemnity insurance the broker maintains. It should also provide for termination and the transfer of records and ongoing policies to a successor broker. Litigation and dispute resolution advice in Iraq can assist where disputes arise about a broker’s performance.
Reviewing the mandate periodically
A mandate signed at the start of a relationship may no longer reflect the client’s operations a few years later. New projects, acquisitions, entry into new governorates or changes in contractual requirements can expand the risks the broker is expected to address. Clients should review the mandate at least annually, ideally before renewal season, to confirm that the scope of services, authority and reporting remain appropriate. The review is also an opportunity to assess the broker’s performance against agreed service standards, such as response times, quality of policy reviews and claims support, and to agree improvements.
Illustrative example. A construction company appoints a broker by email to place contractor’s all-risks cover for an Iraqi project. The broker places a policy that excludes damage caused by defective design, which the company’s contract with the employer requires it to insure. When a design-related loss occurs, the claim is declined. The company argues the broker should have identified the contractual requirement; the broker argues it was never given the contract. A written mandate requiring the broker to review insurance obligations in project contracts, and requiring the client to provide those contracts, would have clarified responsibility and likely prevented the gap.
Key takeaways
- Insurance broker mandates in Iraq should define services, placement authority, disclosure responsibilities and remuneration.
- Disclosure to insurers depends on accurate client information and careful broker preparation; both duties should be explicit.
- Client money and insurer security require specific provisions.
- Where local and international brokers work together, each one’s responsibilities must be clearly allocated.
How Etihad Can Help
Clear insurance broker mandates in Iraq reduce the risk of uncovered losses and disputes between clients and brokers. Investing time in the mandate at appointment pays off when a claim tests the relationship.
Etihad Law Firm advises corporate clients and brokers on broker appointments, placement disputes and insurance programme structures in Iraq. We help clients establish broker relationships with clearly defined authority and duties.