It makes the broker a fiduciary as to the funds deposited but does not require the broker to segregate the premiums from its other funds, nor does it set out any obligations as to interest on the premiums. Similarly, section 375.051 2 anticipates that a broker will deposit premiums in an account pending their payment to the insurer or refund to the insured. 1 The Court uses the terminology set out in the 2000 version of section 375.116 that was in effect during much of the period in dispute but notes that, in 2001, the statute was amended to replace the phrase insurance carrier or agent thereof or broker with the phrase insurance company or insurance producer. 1 Emerson cites no authority requiring disclosure by a broker of statutorily authorized payments or other aspects of its financial arrangements with an insurer. Whether Emerson is correct that a broker s additional receipt of undisclosed contingent commissions for steering business to a particular insurer breaches a common law duty to the insured is not reached by this Court, for Missouri statutes specifically authorize a broker to receive commissions from the insurer, without distinguishing between types of commissions. Their receipt of such commissions is not a breach of the duty of loyalty or other fiduciary duties owed to insureds. Brokers are independent agents, not employees, who are paid by commission. This Court, therefore, rejects Emerson s claim that brokers have an additional duty to find insureds the lowest possible cost insurance available to meet their needs. While a broker has a duty to act with reasonable care, skill and diligence in procuring insurance, Missouri long has held that a broker has no duty to advise the insured about what insurance he needs or what insurance to buy unless it specifically undertakes to do so. But the scope of the agency, and hence of the duty, of a broker to an insured is limited. This Court agrees that this necessarily includes a duty of loyalty to the insured during the scope and course of that agency. As discussed below, it is settled law that when a broker is acting as the agent of an insured, it has a fiduciary duty to perform its duties with reasonable care, skill and diligence. In addition, Emerson argues that Marsh breached a duty to find it the least costly policy possible, in part due to the commissions and interest income it received. Lampen (collectively Marsh ) on Emerson s claims that Marsh violated a fiduciary duty of loyalty to Emerson by not disclosing that Marsh received contingent commissions from insurers for directing Emerson s business to them and that Marsh kept all interest earned on the premiums Emerson sent it between the time Marsh received them and the time they were forwarded to the relevant insurers. Dierker, Judge Opinion issued MaEmerson Electric Company appeals the circuit court s grant of judgment on the pleadings to Marsh USA Inc., Marsh & McLennan Companies Inc., Marsh Inc. SC92026 Appeal from the Circuit Court of St. MARSH & McLENNAN COMPANIES, et al., Respondents. SUPREME COURT OF MISSOURI en banc EMERSON ELECTRIC CO., Appellant, vs.
#A PRODUCER WHO FAILS TO SEGREGATE PREMIUM MONIES TRIAL#
The Supreme Court reversed, holding (1) brokers do not have a duty to find insureds the lowest possible cost insurance available to meet their needs (2) Missouri law specifically authorizes a broker to receive commissions from the insurer and to deposit premiums in an account pending their payment to the insurer or refund to the insured but (3) the trial court erred by dismissing the petition because it could not be said as a matter of law that Emerson could not recover on one or more of its claims. In addition, Insured argued that Broker breached a duty to find it the least costly policy possible. Insured appealed the circuit court's grant of judgment on the pleadings to Broker on Insured's claims that Broker violated a fiduciary duty of loyalty to Insured by not disclosing that Broker received contingent commissions from Insurers for directing Insured's business to them and that Broker kept all interest earned on the premiums Insured sent it between the time Broker received them and the time they were forwarded to the Insurers.
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