The 1,652 litigating names, from syndicates managed by Feltrim Underwriting Agencies, are suing 59 underwriting managers and members' agents, who are supposed to look after names' interests in the market.
The names claim that the Lloyd's professionals lost them pounds 599m through negligence, giving an average loss of pounds 360,000 for each name. They claim underwriters did not keep track of the risk to which they were exposing names and failed to take out adequate reinsurance.
The case is one of three actions that will be brought by the Feltrim names against the market's professionals and the Feltrim syndicate auditors, Arthur Andersen.
The syndicate names have reason to be confident. The case comes hard on the heels of a favourable judgment in a similar case heard by the same judge who will try the Feltrim case.
In that case the judge agreed with the claim of Gooda Walker names that they were victims of agents' negligence. A House of Lords judgment earlier this year found that Lloyd's agents owe their names a duty of care and must take into account names' wishes and financial circumstances when allocating them to risky syndicates.
The damages to be paid to the Gooda Walker names have yet to be fixed, but names' lawyers estimate the figure to be pounds 502m.
The Feltrim names allege that their syndicate underwriters agreed to reinsure other insurers for potential losses that were unjustified by the premium charges or the names' capacity to bear any loss.
The agents could argue that they were unlucky in that they suffered from an unprecedented series of large claims in the late 1980s - Piper Alpha, Hurricane Hugo and the Exxon Valdez disaster. The agents can also argue that they had no control over premium levels. In the late 1980s premiums were driven down as too many insurers chased too little business.
The names claim that if syndicate managers were unable to track their exposure to a catastrophe to the complex London market excess-of- loss (LMX) spiral they should not have taken on these risks.
The LMX spiral involves syndicate A taking a premium to insure, say, an oil rig in the North Sea. A passes some of the premium onto syndicate B in return for syndicate B taking on a proportion of the risk. Syndicate B goes to syndicate C, which also takes on a proportion of the risk in return for part of the original premium. Then, perhaps surprisingly, C goes back to A, which takes on a proportion of the risk insured by C from B. A takes part of this second-time-round risk back to B, and on it goes.
This complex pattern of reinsurance and re-reinsurance required detailed tracking of the exposure any one syndicate had should a catastrophe occur.
Names will seek to show this was not done by Feltrim syndicate managers.
Despite the similarities with the Gooda Walker case Colin Hook, chairman of the Feltrim Names Association, is avoiding complacency. 'We have to show that the principles established in earlier cases apply to the circumstances of the Feltrim syndicates,' he said.
Ironically, should the names win, the damages will spark another bout of loss being shuffled about the market. The agents took out their own insurance policies with other syndicates to cover them in the event of a successful negligence claim. If an award is made it will mean other names on these syndicates bear the cost.
There are also doubts about the amount of cash available to pay names' claims. The Feltrim judgment is expected in February. Other cases will follow. The insurers of the Lloyd's agents are claiming that there is not enough money even to pay the Gooda Walker names anything like pounds 500m.
Without some form of market- wide settlement, Lloyd's, which is trying to convince the world that all the bad times are behind it, will continue to be dogged by its past.
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