April 17, 2014

Supreme Court Holds That Insurer Liability for Violations of the Connecticut Unfair Trade Practices Act are Limited by the Connecticut Unfair Insurance Practices Act

On August 27, the Connecticut Supreme Court issued a ruling in State v. Acordia, Inc., reversing a lower court decision that had held insurance broker Acordia liable for violating the Connecticut Unfair Trade Practices Act. The action was brought by the Connecticut AG’s office, which had accused Acordia of entering into agreements with several insurers (Travelers, Hartford, Chubb, Atlantic Mutual and Royal & Sun Alliance) to steer Acordia’s broker clients to these insurers in return for the insurers’ payment of 1% of the premium amount to Acordia.

At trial, the State alleged that Acordia’s failure to inform its insured clients that it was receiving the additional commission from the insurers was a breach of its fiduciary duty, which the State maintained violated “public policy” and thus constituted unlawful conduct under the Connecticut Unfair Trade Practices Act (the “UPTA”). The State also alleged that Acordia’s conduct violated the Connecticut Unfair Insurance Practices Act (the “UIPA”), arguing that it constituted “misleading conduct” on the part of the broker, which the UIPA expressly prohibits. The trial court ruled for the State on both claims, and Acordia appealed.

In a ruling to be applauded by insurers everywhere, the Connecticut Supreme Court reversed the lower court decision, holding that a UTPA claim against an entity subject to the UIPA (generally insurers and brokers) must  be based upon conduct that constitutes a violation of the UIPA. Thus, because the State had failed to establish that Acordia’s breach of fiduciary duty also constituted a violation of the UIPA (as opposed to the UTPA), the State’s UTPA claim failed as a matter of law. (Notably, this ruling by the Connecticut Supreme Court differs considerably from the recent ruling by the California Supreme Court in Zhang v. Superior Court,  which took a more expansive view and held that, under California law, an unfair competition law claim  can  be asserted against an insurer independently from, and without regard to, whether such conduct also violates the California insurance law.) Moreover, the Connecticut Supreme Court also held that the State’s trial failed to show that the Acordia employees that had dealt with the broker clients were aware that Acordia had negotiated the additional payment from the insurers and thus there was no basis to conclude that their conduct was influenced by the additional payments.

Accordingly, for all of these reasons, the Connecticut Supreme Court reversed the lower court decision in all respects, and directed that judgment be entered for Acordia in the case.

© Copyright 2014 Dickinson Wright PLLC

About the Author


Jim Burns is Co-Leader of the firm's Antitrust Practice Group.

Mr. Burns has focused his practice on antitrust law for over 25 years. During that time, he has litigated antitrust and related claims in trial and appellate courts all across the country, advised clients on antitrust compliance issues, and represented clients before the DOJ Antitrust Division and the Federal Trade Commission on a wide variety of antitrust matters, including mergers and governmental investigations. While his antitrust practice is broad-based, he has had a particular focus on the representation of...


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