“Buyer’s Remorse,” or Did the Nature of the Reinsurance Commissions Really Violate Florida Law?
A Florida circuit court recently denied defendants’ motions for summary judgment in a suit filed by a Costa Rican insurer against two reinsurance brokers – one from the United States and one from England – alleging breach of contract and a host of claims involving negligence, breach of fiduciary duty, and misrepresentation. The crux of the plaintiff’s complaint is that the brokers’ commission earnings were unreasonable, excessive, and undisclosed because a less-than-$200,000 flat commission bid for the brokerage business during an initial bidding stage (which was allegedly terminated) grew to nearly $2 million in a subsequent bidding stage wherein the bid quoted only a total price of over $12 million, without separate premium and brokerage commission line items. The defendants’ motions asserted that Florida law does not impose limits on broker compensation, particularly in arms-length transactions between sophisticated parties, and does not mandate voluntary disclosure of brokers’ earnings, lest a contract requires it. In addition, the insurer chose to award its business as it did because the defendants presented the best price, terms, and other conditions of the reinsurance. Since the Order does not provide any analysis or reasons for the ruling, although it may have given some indication during argument, the Order does not indicate whether the Court denied the motion due to the presence of disputed issues of material fact or because of a disagreement with the legal arguments made by the movants. Instituto Nacional de Seguros v. Hemispheric Reinsurance Group, Case No. 10-33653 CA 04 (Fla. Cir. Ct. Oct. 7, 2013).
This post written by Kyle Whitehead.
See our disclaimer.
