Insurance Agents, Brokers: Fiduciary Duties

With respect to fiduciary duties, the law treats insurance agents and insurance brokers differently. By insurance agent, I mean an individual who works directly for the insurance company. By insurance broker, I mean an individual who doesn’t work for the insurance company but sells, solicits, and/or negotiates insurance on behalf of the insured with an insurance company.
Generally, an insurance agent represents the insurance company, and because this usually means that he/she is an employee of the company, the agent owes a fiduciary duty to the company. The consequence of this is that the agent will not owe a fiduciary duty to the insured.
An insurance broker, unless otherwise agreed upon, represents the insured and is the insured’s agent. Under Missouri law, when an insurance broker agrees to obtain insurance for a client, with a view to earning a commission, the broker becomes the insured’s agent and owes a duty to the client to act with reasonable care, skill and diligence.  A.G. Edwards & Sons, Inc. v. Drew, 978 S.W.2d 386, 394–95 (Mo.Ct. App.1998). If a broker is asked to procure a certain type of insurance, but fails to do so or fails to inform the insured that the policy is not the one requested, the broker has breached his/her fiduciary duty.
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