An Insurance Broker’s Duties are Defined by Negligence Law, Not Fiduciary Law


In a published decision, the California Court of Appeal (Second Appellate District, Division Two) has held that an insurance broker cannot be held liable for breach of fiduciary duty. The decision is Workmen’s Auto Insurance Company v. Guy Carpenter & Company, Inc., 2011 Cal. App. LEXIS 533.

The plaintiff insurance company alleged that it had a brokerage agreement with Carpenter which authorized Carpenter to act as a reinsurance intermediary-broker to procure reinsurance for the plaintiff. The plaintiff alleged that the broker did not obtain insurance on the best available terms, and thereby breached a fiduciary duty to the plaintiff. The broker argued in its demurrer and, later on appeal, that it could not be sued for breach of fiduciary duty. Both the trial court and the Court of Appeal agreed with the broker.

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