COLORADO COURT OF APPEALS RESTRICTS BROKER CLAIMS AGAINST INSURER
The Colorado Court of Appeals has published an opinion addressing two important issues arising from the relationship between broker and insurer. (MDM Group Associates, Inc. v. CX Reinsurance Company Ltd., et al., Case No. 04CA2614.)
First, the court held that a broker cannot maintain a cause of action against an insurer for intentional interference with prospective economic advantage (alleged lost commissions) based on the manner in which an insurer handles insureds' first-party claims. Because the broker would not be a party to any prospective insurance contract on which the broker would earn a commission from the insurer, the broker has no claim for interference with such a prospective contract.
Second, the court
held that a broker cannot maintain a cause of action against an
insurer for breach of
fiduciary duty based on the manner in which an insurer handles
its insureds' first-party claims.
In an agency relationship, the agent owes fiduciary duties to the
principal (insurer), but not vice versa.
Click here to read the Colorado Court
of Appeals' 19-page opinion.
Horvitz & Levy partners Mitch Tilner and David Axelrad handled the insurer's appeal. If you have any questions about this case, feel free to contact Mitch or David by e-mail (mtilner@horvitzlevy.com or daxelrad@horvitzlevy.com) or by phone, (818) 995-0800.
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