Insurers put Lloyd's settlement in doubt

Click to follow
The Independent Online
NEARLY 3,000 underwriting members of the Lloyd's insurance market seeking to recover money to meet pounds 700m worth of their losses have suffered a setback in their campaign, writes John Moore.

Professional insurers are seeking to avoid paying out on policies that have protected the underwriting agencies looking after the troubled underwriting members' affairs against suits for damages.

The problems centre around the Gooda Walker underwriting agency, which is now in liquidation. A recent internal report prepared by Lloyd's was critical of the agency structure at Gooda Walker and aspects of its management, and of the level of disclosure and risk assessment at Lloyd's.

In the wake of the publication of the report, errors and omissions underwriters, which insured Gooda Walker against suits for damages by underwriting members or business clients, decided to serve notice that they would seek to avoid any payout on the policy.

They argued that there had been material non-disclosure when the policy was taken out.

Underwriting members had intended in the next few weeks to issue 2,000 writs against 77 agents - including Gooda Walker - which had introduced them to insurance syndicates that later made huge losses.

They had hoped to reach a settlement with the errors and omissions underwriters, but the chances of that happening now look remote.

Arthur Andersen, the accounting firm that is handling the liquidation of Gooda Walker, said it was resisting the arguments of the errors and omissions insurers.