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Florida Risk Planning Consultants Inc. v. Transport Life Insurance Co.

decided: April 20, 1984.


Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 79 C 3159 -- Prentice H. Marshall, Judge.

Eschbach and Coffey, Circuit Judges, and Celebrezze, Senior Circuit Judge.*fn*

Author: Eschbach

ESCHBACH, Circuit Judge.

The issue presented is whether the plaintiff is entitled to commissions for procuring insurance business for the defendants. Because the plaintiff is not a licensed insurance agent for the defendants, we hold that commissions may not be recovered. Accordingly, we affirm the district court's grant of summary judgment in favor of the defendants.


The plaintiff, Florida Risk Planning Consultants ("FRP"), is an organization that produces insurance business. Beginning in 1973, FRP acted as an agent for the Zurich Insurance Company in the production of cancer-expense policies. According to FRP's version of events, which is supported by documents filed in response to the defendants' motions for summary judgment, Transport Life Insurance Company ("Transport") expressly assumed Zurich's obligations in 1976; thus Transport became obligated to pay commissions owing to FRP for work performed on behalf of Zurich.

An entity based in Chicago and known as Center Insurance Agency ("CIA") then began to play a prominent role in this case. CIA had an arrangement with Transport whereby CIA administered the Zurich business. Thus CIA acted as a conduit between FRP and Transport. FRP contends that Transport, acting through CIA, requested FRP to promote and service two other products -- a new cancer policy and an accident policy. A similar request was made through CIA by an insurer called All Amercian Life and Casualty Company ("All American"). FRP acceded to both requests and produced business across the nation for both Transport and All American.

To this point, we have stated that FRP "produced business" or "promoted" insurance. A more detailed account is required to resolve the issue whether FRP acted as an unlicensed insurance agent. We therefore turn to that description with the understanding that FRP performed the same functions for Transport, All American, and Zurich.

The district court stated that "FRP acted in the classic salesman mode." FRP, however, did not focus its efforts directly on individual insureds. Rather, the policies that FRP promoted were group policies. FRP's employees thus directed their activities toward the leaders of associations such as auto clubs. FRP sent unsolicited mailings, sought appointments with association executives, and traveled the country attempting to interest the associations in the policies. A letter sent by an FRP employee to an auto club president in 1973 is typical:

Just to put in writing what we will do: Mail to all Master Members twice, thirty days apart, and everything else necessary to make the program a real success, at no expense to you.

The record shows that this Cancer Expense Plan is a success in AAA Clubs. The results of member's acceptance and their appreciation at claim time speaks loud and clear that members feel this protection, at group rates, is a service to them.

If FRP's efforts were successful, the association would apply for a group or "master" policy. FRP would transmit the application to CIA; when issued, the master policy would be returned to FRP to deliver to the association.

For each association an individual was designated as a "subagent" of FRP. This subagent, who was closely connected to the association, was responsible for personally soliciting members. FRP, however, did not remain uninvolved with individual solicitations. Among other things, FRP prepared solicitation materials, stuffed envelopes, and mailed individual solicitation forms. Furthermore, in many instances, initial premiums were sent to FRP for transmittal to CIA.

FRP and the designated subagents, of course, did not volunteer their services. Commissions based on the amount of premiums collected were paid by CIA to FRP, which, in turn, paid commissions to the subagents. The subagents were properly licensed agents; FRP was not.

This attenuated system of delivering insurance coverage to individuals collapsed in 1978 with the financial demise of CIA. FRP contends that since July of 1978, it has received no commissions. The precise amount claimed owed has not been quantified. We do know, however, that because Transport and All American have ...

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