Opinion ID: 2540396
Heading Depth: 2
Heading Rank: 5

Heading: Contingent Commissions

Text: As noted, brokers are independent agents rather than employees, and normally they earn their living through commissions paid by insurers. See Jeffery E. Thomas and Francis J Mootz, III, New Appleman on Insurance Law Library Edition 2-19 (2011) (explaining that a broker typically . . . is compensated by way of commissions paid by the insurers with which he places coverage). But Emerson alleges that Marsh breached its fiduciary duty when it secretly agreed to accept additional contingent commissions from insurers to which it steered business. Emerson said this prejudiced it because it prevented Marsh from obtaining insurance meeting Emerson's needs at the lowest possible cost. [9] This Court need not determine whether Marsh's receipt of contingent commissions would constitute a violation of the duty of loyalty or the duty to use reasonable care, skill and diligence in procuring insurance under the common law, [10] because the legislature again has acted in this area by specifically authorizing a broker to obtain commissions from insurers with which it places insurance. Section 375.116 specifically states: 1. An insurance carrier or agent thereof or broker may pay money, commissions or brokerage, or give or allow anything of value, for or on account of negotiating contracts of insurance, or placing or soliciting or effecting contracts of insurance, to a duly licensed broker. 2. Nothing in this chapter shall abridge or restrict the freedom of contract of insurance carriers or agents thereof or brokers with reference to the amount of commissions or fees to be paid to such brokers and such payments are expressly authorized. Id. (emphasis added). Emerson admits that section 375.116 expressly authorizes a broker to receive commissions. It does not distinguish between contingent and other commissions. This Court rejects Emerson's request that the Court nonetheless hold that this authorization applies only to the broker-insurer relationship and also hold that Marsh's statutorily authorized receipt of contingent commissions nonetheless violates the broker-insured relationship. The legislature clearly and unambiguously has held that such payments are authorized. It is not for this Court to substitute its own view of public policy for that expressly stated by the legislature.