The relationship between an insurance agent or broker and theperson acquiring insurance requires that the agent treat theinsured with the utmost good faith. An insurance agent or broker isobligated to explain to the potential insured the coveragesavailable and to help him understand the relationship between theinsured and the insurer. The agent or broker who lies to apotential insured risks E&O claims for fraud or negligentmisrepresentation. If the insured can prove fraud or negligentmisrepresentation by the agent or broker to the insured, seriousdamages can be assessed. The insured often has a difficult timesuing an agent or broker for fraud. Because the burden of proof ismore than a preponderance, or 50 percent plus 1, the plaintiff mustprove fraud by clear and convincing evidence. Failure to providesuch evidence will defeat the suit. In the following case, theagent made multiple representations that the plaintiffs consideredfalse and fraudulent but were not capable of proof. The Court ofAppeal concluded they were statements of opinion or of futureevents that are not actionable. The lesson all insurance agents andbrokers should recognize is to limit sales pitches to statements ofopinion rather than absolute statements that can–if not true–betrotted out as evidence of fraud. In addition, the agent or brokermust make it a practice to always speak the truth to insureds andpotential insureds. Case background
InTurner v. Milliman, 671 S.E.2d 636, 381 S.C. 101 (S.C.App.01/12/2009), the Court of Appeals of South Carolina concludes thatthe insureds had no viable cause of action against their insuranceagent. John and Charlene Turner (collectively “the Turners”)appealed the trial court's grant of summary judgment in favor ofthe respondents. On appeal, the Turners argued that the trial courterred in finding that their claims were barred by the 3-yearstatute of limitations; in finding that Douglas Milliman'srepresentations to the Turners were insufficient to support a claimfor fraud or negligent misrepresentation; in holding thatMilliman's statements to John Turner were not attributable toMidAmerica Life Insurance Co. or Consumer Benefits of America Co.(CBA) because Milliman was an insurance broker and not an insuranceagent; and, in holding that Turner's wife did not have standing tosue respondents. In November 1996, John Turner needed healthinsurance coverage after he left his prior employment at anaccounting firm. One of Turner's customers recommended Milliman, alocal insurance agent, whom John Turner subsequently contacted. Atthe time, Turner was employed at the family's radiator servicebusiness. The Turners and Milliman discussed John Turner's healthinsurance options, specifically the option to purchase group healthinsurance. Milliman represented to the Turners that a group policywith CBA would be a good option because the future premiums wouldnot increase dramatically, or as dramatically as the premiums withindividual insurance plans. Turner also alleged that Millimanstated group health insurance would be beneficial because: JohnTurner was at an age when he could start developing medicalproblems and this policy would allow him to keep his coverage;companies writing individual insurance policies were going out ofbusiness and the prices of those policies were skyrocketing; andthe only way people could afford insurance was to purchase groupinsurance. John Turner further stated that Milliman told him CBAacted as a watchdog over the insurance industry for the benefit ofits members and would notify its members when better group coveragewas available. Insurance was issued and the premium increasedregularly until it became so expensive the plaintiffs could not payand the policy was cancelled. On Dec.19, 2003, the Turnersinitiated suit against respondents for fraud, negligentmisrepresentation, and violation of the South Carolina Unfair TradePractices Act. The Turners alleged that Milliman, as an agent ofrespondents, made false representations that induced Turner to signthe insurance application and purchase the group policy from CBA.The Turners stated that because of the excessive premium increases,they were unable to maintain the policy, which ultimately causedthem to suffer damages. In turn, each respondent filed a motion forsummary judgment based on the statute of limitations, a lack ofmaterial evidence to support the Turners' causes of action, andCharlene Turner's lack of standing as a real party in interest. TheTurners contend that the trial court erred in finding Milliman'srepresentations to the Turners did not support an action for fraudor negligent misrepresentation because the statements were made aspart of a general scheme to induce the Turners to purchase grouphealth insurance. A plaintiff asserting a claim for fraud in theinducement to enter into a contract must establish by clear andconvincing evidence the following:

1 Representation

2 Falsity 3 Materiality 4 Knowledge of its falsity or recklessdisregard of its truth or falsity 5 Intent that the representationbe acted upon 6 The plaintiff's ignorance of its falsity 7 Theplaintiff's reliance on its truth 8 The plaintiff's right to relythereon 9 The plaintiff's consequent and proximate injury. In thesecases, fraud “must be established by evidence which is clear,definite, unequivocal, and satisfactory, or such, as has been said,as to lead to but one conclusion, or as to leave no reasonabledoubt” as to the conclusion to be drawn (All v. Prillaman,200 S.C. 279, 304, 20 S.E.2d 741, 750 [1942] [specifying thestandard of proof to establish a constructive trust as a result ofparty's fraudulent actions]). Judgment
Evenif Milliman made the alleged statements to the Turners, theserepresentations are not actionable as they cannot be construed asmore than Milliman's opinion as to future events. Turneracknowledged that Milliman's statements about the policy being the“best group insurance product he had ever seen or offered for sale”was Milliman's opinion. When questioned as to whether Turnerthought Milliman was lying when he told Turner the premiums wouldnot drastically increase, Turner said no and that he thoughtMilliman was giving him his honest, informed belief. The courtconcluded that even if Milliman made the alleged statements, theserepresentations are not actionable as they cannot be construed asmore than Milliman's opinion of future events. Turner acknowledgedthat Milliman's statements about the policy being the “best” wasonly Milliman's opinion. The court also concluded that becauseunfulfilled promises or statements of future events are notactionable, and because no evidence was presented to show Millimanmade those statements to induce the Turners into procuring thepolicy, the trial court properly granted respondents' summaryjudgment motions. As to Milliman's remaining representations,Turner acknowledged they related to future events. Becauseunfulfilled promises or statements of future events are notactionable, and no evidence was presented to show Milliman madethose statements only to induce the Turners into procuring thepolicy, the trial court properly granted respondents' summaryjudgment motions on this ground.