Illinois Supreme Court has Opportunity to Clarify Fiduciary Duties Owed by Insurance Producers to Clients

Before 1997, Illinois plaintiffs routinely asserted breach of fiduciary duty claims against insurance brokers for ordinary placement errors, even when no client funds were mishandled, but the Illinois Insurance Placement Liability Act was enacted to replace that regime with an ordinary-care standard and to limit fiduciary-duty liability to cases involving misappropriation of client monies. Despite the Act, confusion persists, as reflected in Skaperdas v. Country Casualty Insurance Co., where the Illinois Supreme Court held that both brokers and captive agents are “insurance producers” subject to ordinary-care duties while simultaneously reiterating—without addressing subsection (b)—that only brokers owe fiduciary duties. That tension is now squarely presented in American Family Mutual Insurance Co. v. Krop, where the appellate court applied fiduciary-duty principles to a negligence claim against a captive agent, giving the Supreme Court an opportunity to clarify that, absent mishandled funds, insurance producers in Illinois are governed by ordinary-care, not fiduciary, standards.