The court says, “…a broker's duty is to use reasonable care, skill and diligence in procuring insurance. Failure to obtain the lowest possible cost insurance does not in itself violate that duty or a duty of loyalty to the insured in the absence of an agreement imposing such a duty.”

The court also found that Marsh violate no laws when it held the premium Emerson paid into an interesting bearing account saying the practice breached no “duty of loyalty.” The court says that the duty of loyalty extends only to the work the broker does for the client.

The forwarding of premium payments defines a different relationship that is between the broker and carrier, says the court. There is nothing prohibiting the broker from the practice of holding premiums in an interest bearing account until they are passed along to the carrier. The court also noted that state law acknowledges that brokers and agents hold the premium in a trust until sent to the carrier.

On the question of contingents, the court says since brokers earn their living through commissions paid by the insurer, it is again a matter of state law that the broker is allowed to receive those commissions. Because of that, Marsh has not violated the relationship.

On the question of the duty of disclosure, the court remanded the question to a lower court, citing the fact that Emerson presented on evidence to show the extent of the contractual relationship between Marsh and Emerson. However, the court says the lower court erred in dismissing the case and should hear from the parties to determine the extent of the relationship and if a fiduciary duty was violated in placing insurance.

In a statement responding to the court's decision, the broker says, “Marsh is gratified by the court's decision, which adopted many of Marsh's arguments. The issues involved in this lawsuit relate to matters long in the past.”

The case stems from the revelation in 2005 that Marsh was involved in a kickback scheme with certain insurers to steer insurance contracts to carriers in exchange for lucrative contingent commissions. Some carriers produced phony insurance quotes for Marsh to give the appearance it had received the lowest price for the insurance it was placing.

As a result, Marsh agreed to eliminate contingent commissions for a time, but eventually began accepting some on a limited basis after state attorneys general lifted the ban.

The firm, along with three other insurance brokers that were caught up in an investigation into contingents led by then New York Attorney General Eliot Spitzer, agreed to full disclosure statements regarding their compensation arrangements with carriers.