Broker Not Liable for Contingent Expenses Resulting from Insurer’s Downgraded Financial Rating
Aon Risk is a commercial insurance broker that served as the broker of record for Synagro, a Texas-based waste management company. Aon Risk obtained insurance from Reliance National Indemnity Company for Synagro in 1998 and 1999. Synagro filed suit against Aon Risk in 2001, asserting that Aon was responsible for contingent expenses that Synagro might incur as a result of Reliance’s downgraded financial rating and its liquidation. A jury found that Aon Risk was not responsible for Synagro’s alleged damages, and a judgment was entered in favor of Aon.
Aon Risk filed a counterclaim against Synagro seeking payment for the cost of the insurance plus its commission. A Texas Court of Appeals recently affirmed an award of $316,000 to Aon Risk, finding that there was sufficient evidence for a jury to conclude that Synagro breached its contract with Aon Risk. Synagro of Texas-CDR v. Aon Risk Services, Case No. 13-04-663 (Tex. Ct. App. Jan. 4, 2007).
