On Feb. 17, 2011, the Court of Appeals issued its much-anticipated decision in People ex rel. Cuomo v. Wells Fargo Insurance Services Inc., and held that common law does not require an insurance broker to disclose to its clients incentive arrangements with insurance companies.1 In so ruling, Wells Fargo affirmed New York precedent that insurance brokers have “dual agency status,” and noted that a broker is an “intermediary—not someone with undivided loyalty to one or the other side of the transaction.”2
Wells Fargo’s holding notwithstanding, the brokerage industry in New York has disclosure obligations pursuant to New York Insurance Regulation 194, which the New York Insurance Department enacted in January 2010 to implement minimum disclosure requirements regarding broker compensation from insurers. So, while Wells Fargo declined to find a disclosure duty at common law, brokers currently have such requirements under Regulation 194. Regulation 194 has, however, been subject to judicial challenge; and although it survived, that decision is now on appeal. Therefore, although the Court of Appeals clarified the absence of disclosure duties at common law, litigation regarding Regulation 194 creates uncertainty regarding the future landscape of brokers’ obligations.
‘Wells Fargo’ Decision
This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.
To view this content, please continue to their sites.
Not a Lexis Subscriber?
Subscribe Now
Not a Bloomberg Law Subscriber?
Subscribe Now
LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.
For questions call 1-877-256-2472 or contact us at [email protected]
