Insurers liable for agent actions

Various legal actions ensued in which Chicago Title argued that it was not responsible for its agent's actions.

However, Kreidler said that, "Chicago Title's arguments were contrary to a century of insurance law."

"In order to effectively regulate insurers and protect consumers, it's important to hold insurers responsible for the actions of their agents," he said.

Rich Roesler, a spokesman for Kreidler, said that the commissioner's office is still examining the potential impact of the decision, but it appears to be "broadly written" and apply to all types of insurance products.

"For most insurers, this is how they do business," said Roesler. "It is unusual for a company not to accept responsibility. We have been regulating for a century. In terms of conventional insurance, this is how most insurers act. They stand behind by the actions of their agent. But in the case of Chicago title, they decided, and it is their right, that they wanted to litigate the issue."

The argument, he noted, was not about the underlying violations, but who was responsible. 

Judge James M. Johnson wrote in a dissent that Chicago Title and Land Title Insurance entered into a contract that limited the agency relationship and "allocated the risk of regulatory noncompliance solely to Land Title.

"Business relationships such as the one at issue here thrive on the freedom of contract and often result in lowered costs and increased services for our state's citizens."

Johnson explained that, "As long as the business relationship properly limits the scope of agency and leaves open avenues for punishing noncompliance, the ore should be forced to directly pursue the entity violating the anti-inducement laws."