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Member, Beacon International Group, Ltd.
ST. LOUIS—A Missouri judge has rejected claims that Marsh & McLennan Cos. Inc. and several related defendants breached fiduciary duty to a client under state law by allegedly receiving contingent commissions and earning interest on premium payments sent to MMC before it sent them on to the insurer.
In Emerson Electric Co. vs. Marsh & McLennan Cos. et al., Emerson brought the action against MMC, Marsh USA Inc., Marsh Inc. and a Marsh employee that alleged breach of fiduciary duty for receiving and failing disclose contingent commissions. Emerson also held that Marsh engaged in civil conspiracy.
According to St. Louis Circuit Court Judge Robert H. Dierker’s Tuesday decision granting summary judgment for Marsh, Emerson said that Marsh had received a “substantial, undisclosed commission or ‘kickback’ from third-party insurers.” Emerson argued that it sent its payments to Marsh rather than the insurers, and that Marsh invested the premiums to earn interest before sending them on to the insurers.
Emerson said Marsh retained the interest earned as “fiduciary interest income” without disclosing the income to Emerson.
Emerson sought both economic and punitive damages.
“No Missouri case” known to the court “has expanded the fiduciary duty owed by an insurance broker beyond the duty to procure or maintain a level of insurance sufficient to its client,” Judge Dierker wrote in his decision. “It is not the place of the court to impress a fiduciary duty upon an insurance broker, above and beyond that which currently exists.”
Judge Dierker wrote that there was “no allegation” that Marsh had failed to procure insurance on Emerson’s behalf. “As such, this court believes that there is no fiduciary duty owed by the defendants to (the) plaintiff which would be violated by the receipt of kickbacks or interest earned on the premiums.”
The judge also dismissed the civil conspiracy count.