Lloyd's members may suffer if SFO inquiry finds fraud

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The Independent Online
MILLIONS of pounds of possible aid for 3,000 stricken underwriting members of Lloyd's whose affairs were mananged by the Gooda Walker agency could be withdrawn as a consequence of new inquiries being carried out by the Serious Fraud Office.

The 96 syndicates at Lloyd's that insure companies, like Gooda Walker, against the financial consequences of suits for damages by individuals or clients for whom they act, are worried that the pounds 925m worth of losses falling on Gooda Walker insurance syndicates may be attributable to fraud.

If the losses prove to be attributable to fraud then the 96 syndicates that provide so called 'errors and omissions' cover for the agency will refuse to pay up on any possible out-of-court settlement on the Gooda Walker affair.

The total errors and omissions cover available in Lloyd's is pounds 663m and Gooda Walker is thought to have a significant share of that protection.

That would mean the 3,000 members of the Gooda Walker insurance syndicates would lose the possibility of collecting their share from insurances arranged to protect the Gooda Walker agency and its directors from claims for damages for negligence.

Already, a critical 1,494-page report prepared by the Lloyd's authorities and sent to the members last October has prompted errors and omissions underwriters to seek to avoid paying claims on the Gooda Walker policy on the grounds of what they claim to be material non-disclosure by the agency when the policy was taken out.

The errors and omissions underwriters took their action last December and their resolve to resist any claims has been hardened by the decision by an independent insurance investigator to refer his own findings to the Serious Fraud office last week.

Ken Randall, the investigator who produced a detailed report on behalf of caretaker managers for Gooda Walker, concluded that the performance of syndicates under the management of the agency in the past had been 'significantly enhanced' by business transactions in order to attract members to the syndicates.

The syndicates subsequently racked up enormous losses.

Mr Randall said there were various issues in his report 'appropriate for a reference to be made to the Serious Fraud Office.'