Mohanan, et al. v. Liberty Mutual Personal Insurance Company, 2023 WL 8026106 (E.D. Pa. Nov. 20, 2023)

The court granted the defendant’s motion to dismiss to strike references to a “special relationship” owed to the plaintiffs premised on the defendant’s purported “cultivat[ion of] a relationship of trust and confidence.” The court agreed with the defendant’s position that the relationship between an insurance broker and an insured is an arm’s length business relationship; a fiduciary duty does not arise simply because the insurance agent or broker possesses superior knowledge or skill as compared to a lack of sophistication of the insured (see Wisniski v. Brown & Brown Ins. Co., 906 A.2d 571, 577-78 (Pa. Super. 2006); Stern Family Real Estate Partnership v. Pharmacists Mut. Ins. Co., 2007 U.S. Dist. LEXIS 22296 (W.D. Pa. March 27, 2007); Yenchi v. Ameriprise Fin., Inc., 161 A.3d 811, 820 (Pa. 2017)).

The analysis of the existence of a special relationship is an important one with respect to the standard of care applied. If an insured can establish a special relationship—for example, as analyzed here, through overmastering influence and/or final decision-making power ceded to the insurance agent or broker—the insurance agent or broker is assumed to have undertaken additional, fiduciary duties. In other words, the existence of a special relationship elevates the duty owed from a duty to procure to a duty to advise or recommend.

The Mohanan decision is a welcome addition to the existing precedent in Pennsylvania limiting the imposition of a fiduciary duty on an insurance agent or broker. Consistent with the Pennsylvania Supreme Court’s 2017 decision in Yenchi, supra, the bar remains high to establish a confidential or fiduciary duty between an insurance producer and an insurance customer.