Wakilii

Alfa Insurance consultants Limited v Empire Insurance Group [1996] UGSC 8

Supreme Court · 1996 Appeal Allowed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Civil appeal from the High Court's dismissal of a suit for the balance of brokerage commission
Decision
Appeal allowed; judgment entered for the appellant broker for Shs. 7,447,868.4 plus interest and costs

Observed later treatment

No later-treatment classification is recorded for this judgment.

Citator coverage is limited to judgments in the Wakilii corpus and source-matched treatment records. Absence of a signal is not an assertion that the case remains good law.

AI-generated summary. This summary was generated by AI from the full text of the judgment. It may contain errors or omissions—always read the source judgment before relying on it.

Holding

The Supreme Court allowed the broker's appeal. Where a registered insurance broker has solicited or negotiated a policy and is shown to be the efficient cause of the transaction, it is entitled to full commission; it need not complete every negotiation or collect the premium. A broker is an independent contractor acting for the insured under s.57 of the Insurance Decree, so the insurer's demand that it be a trained, contracted producer was misconceived. The two policy covers formed a single package brokered by the appellant. As no commission rate had been agreed and no usual rate proven, the Court assessed a reasonable rate of 12% on the full insured sum, less the amount already paid.

Outcome

Appeal allowed; judgment entered for the appellant broker for Shs. 7,447,868.4 plus interest and costs

Facts

The appellant, a registered insurance broker, through its director Mr. Mulindwa, approached the American Embassy in Kampala and negotiated a group medical insurance scheme for Embassy staff. It sourced the respondent insurer's terms, which the Embassy accepted, for a total insured sum of Shs. 95,395,720 issued in two policy covers. The respondent then dealt directly with the Embassy to sign the policy documents and collect the premium, side-stepping the broker. The appellant was paid Shs. 4,029,800 as "servicing commission" on the basis that it was a non-contracted producer. The appellant claimed the balance, contending it was entitled to full commission at 20%. The respondent denied that the broker had procured the policy and asserted that, being uncontracted and untrained by it, the broker could not earn full agent/broker commission. Evidence established that a broker is an independent contractor acting for the insured, not an agent of the insurer, and that no commission rate had been agreed.

Issues

  1. Whether it was the appellant broker or the respondent insurer who procured the insurance policy with the American Embassy.
  2. Whether the appellant, as an insurance broker, was entitled to full brokerage commission notwithstanding that it was not a contracted producer of the respondent and did not conclude the final policy documents.
  3. At what rate the commission should be assessed where no rate had been agreed between the parties.

Orders

  • Appeal allowed.
  • Judgment and decree of the High Court set aside.
  • Judgment entered for the appellant company for Shs. 7,447,868.4 plus interest at 45% per annum.
  • Costs of the appeal and of the suit in the High Court awarded to the appellant.

Rules and key headnotes

Insurance — Broker distinguished from Agent — Status of a registered broker
An insurance broker is an independent contractor who solicits or negotiates insurance for a commission on behalf of the insured, not an agent of the insurer; an insurer cannot require a registered broker to be its trained or contracted producer as a condition of earning full commission.
Insurance — Brokerage commission — Efficient cause of the transaction
A broker who has solicited or negotiated an insurance policy is entitled to full commission once shown to be the efficient cause of the transaction; the broker need not complete or take part in every negotiation, though merely introducing the parties is insufficient.
Remuneration — Quantum of commission where no rate agreed
Where no commission rate has been agreed between a broker and an insurer, the usual commission in the brokerage business applies; where no usual or ruling rate is established, the broker is entitled to a reasonable commission assessed in the circumstances of the case.

Legislation cited (2)

  • Insurance Decree (No. 19 of 1978) s.57
  • Supreme Court Rules r.84(1)

Cases cited (2)

  • McNeil v Law Union & Rock Insurance Co Ltd (1925) 23 Lloyd's List LR 341
  • Baring v Stanton (1876) 3 Ch D 502

Full judgment

↓ Download PDF

The original judgment as reported. Read the original PDF before relying on any passage.

Alfa Insurance consultants Limited v Empire Insurance Group [1996] UGSC 8 (1 February 1996)
Source: this page presents Wakilii’s issue analysis and metadata for a publicly reported Ugandan judgment. Any AI-generated summary is marked as such. Judgment text is sourced from the Uganda Legal Information Institute (ulii.org). Wakilii is not affiliated with ULII.