Insurance firm ordered to honour indemnity for broker

Legalbrief Today

The SCA has ordered an insurance company to honour professional indemnity cover for a broker who led his client to invest in the Sharemax scheme. Volksblad reports that a widow, Marisa Oosthuizen, invested R2m on the advice of her broker, Jose Castro. Centriq Insurance was previously ordered to indemnify Castro against a claim for damages from the widow. However, Centriq relied on an exclusion in its indemnity cover policy to repudiate the claim. The SCA held that an insurance company should explicitly note exclusions for their clients in order for it to be enforceable. The very nature of the alleged exclusion in the policy document would pervert the reason for the insurance as Centriq would never have to pay out when its client gives wrong advice.

Supreme Court of Appeal Media Summary

Volksblad (subscription required)