What does a broker mandate authorise – and what does it not?

What is the legal basis of the mandate?

Under Section 398 of Act LXXXVIII of 2014 on the Business of Insurance (the Insurance Act, Bit.), an independent insurance intermediary – a broker – acts on the basis of a contract concluded with the client and on the client's behalf; the broker prepares the conclusion of the insurance contract, and the broker's activity may extend – acting in the client's name – to concluding the contract and to assisting the client in enforcing their claims. The broker is entitled to accept the insurance premium only if the insurer has specifically authorised the broker to do so. A broker mandate is therefore a mandate contract under the Hungarian Civil Code (Ptk., Section 6:272): you entrust a task to the broker, who carries it out in your interest and in line with your instructions, and who is liable for professional errors under Section 402 of the Bit. Two things are worth remembering from this. First, the direction of the mandate is clear: the broker is not the insurer's representative and cannot make statements on the insurer's behalf. Second, the scope of the mandate is determined by the wording of the contract – the law only sets the framework; whether the broker may also act “in your name” is decided by the mandate and by any power of attorney.

What it authorises me to do – in practice

Under the mandate, I do the following: I assess your needs; I request quotes from insurers and pass them on to you in a comparable format, together with a recommendation; I prepare the proposal forms and other forms; I forward the proposal, declaration or cancellation you have signed to the insurer; and during the life of the policy – if you let me know – I help where I can with amendments, the comparison at the renewal date and claims. The mandate also entitles me to request information about your policy from the insurer and to review your existing policies. For this, I need to process your personal data: the mandate is also the basis for processing your data; I pass your data only to insurers, and only for the purpose of requesting quotes and handling your affairs, and I too am bound by insurance secrecy under the Bit.

What does it not authorise – and why is this good for you?

The mandate does not empower me to make decisions in your place. You sign the proposal, any amendment and any cancellation: your signature is your own declaration and cannot be transferred, just as the duty of disclosure and the duty to report changes under Section 6:452 of the Civil Code (Ptk.) remain with you – whoever provides the information intended for the insurer is responsible for its accuracy. Nor does the mandate entitle me to terminate or switch your existing policy on my own initiative: every new policy requires your explicit decision and signature, together with the reasons for it. I do not accept premiums: the insurance premium goes to the insurer's account, which is also how Section 398 of the Bit. regulates it. And the mandate does not entitle me to provide legal representation: in a claims dispute I help where I can, but I do not act as a lawyer against the insurer. This is not a shortcoming but a clearly defined role: you know at all times that nothing happens to your policy without your signature.

One-off or ongoing? How long does the mandate last?

A mandate can cover one specific matter – for example, obtaining competing quotes for a home insurance policy – or all your insurance matters in general; you decide which it should cover. A general mandate is more useful if you want your policies handled in one place: that way, you do not have to sign new paperwork for the comparison at the renewal date or for a claim. The mandate is for an indefinite period and there is no need to renew it every year, but it does not run “on autopilot” either: the broker does not keep track of renewal dates and does not get in touch of their own accord – if you let me know before the renewal date, I prepare the comparison and the paperwork; the renewal notice is sent by the insurer. Insurers also record the existence of the mandate: on this basis they regard me as your contact person, which is why I receive copies of certain letters – but you remain the original addressee.

Withdrawal, changing broker and what happens to your data

Under Section 6:278 of the Civil Code (Ptk.), you, as the principal, may terminate the mandate at any time without giving reasons – written form may be required not by the law but by the wording of the mandate contract, so that the termination can be proved later. A short, signed notice of termination is enough for this. Withdrawing the mandate does not affect your insurance policies: they continue between you and the insurer, and the only change is who acts on your behalf – if you choose another broker, the insurer will regard that broker as your contact person on the basis of their mandate. I have described the steps in the article on changing broker. After withdrawal, I process your data only for as long as and to the extent that the law requires – for example, under insurance secrecy and record-keeping obligations; a withdrawn mandate cannot be used for new quote requests.

What to do in practice: read the mandate before signing it and check whether it is one-off or general; check that it does not contain an authorisation to sign or to switch policies that you do not want to give; ask how it can be withdrawn – and keep your own copy. If any point is unclear, ask: the mandate is your tool, not the broker's.