Professional Liability

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.

_{Case Law Alerts, 1st Quarter, January 2024 is prepared by Marshall Dennehey to provide information on recent developments of interest to our readers. This publication is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. Copyright © 2024 Marshall Dennehey, all rights reserved. This article may not be reprinted without the express written permission of our firm.}