UNDERWRITING members who formed a Lloyd's insurance syndicate under the management of Cuthbert Heath Underwriting were not treated fairly across various trading accounts, according to an internal report commissioned by the authorities of Lloyd's.
The report, prepared by the accountant Peter DuBuisson, is critical of the events that led to losses of pounds 4.4m falling on nearly 200 members in syndicate 1084 in the 1988 underwriting acccount.
The syndicate's loss was due to insufficient reinsurance protection against claims from the Piper Alpha oil rig explosion in 1988, according to Mr DuBuisson, who headed a three-man inquiry committee.
He said the active underwriter, Graham Naish, 'has not given the committee an explanation for the shortage of reinsurance protection'. The directors of Cuthbert Heath, the managing agent, 'acknowledged that their own inquiries were inconclusive'.
The report points out that there were no control systems at the trading box on the floor of Lloyd's where the risks were underwritten. Nor had the managing agent monitored the syndicate's exposure to risk ahead of the Piper Alpha explosion.
The purchase of subsequent reinsurance protection for the syndicate by the managing agency meant that members who participated in the 1988 trading account received dollars 5m. But associated costs of the recovery under this policy had to be borne by members who joined in 1991 and subsequent years, which the committee felt was unfair.
'Insufficient regard was given by the managing agent and auditors (Ernst & Young) to the principle of equity between names (the members) on different years of account,' the committee concluded.
In our report of 24 October Ernst & Young was incorrectly identified as the firm of accountants criticised in an internal Lloyd's report into losses that arose on syndicate 1084.Reuse content