The report has been prepared by Ken Randall, the insurance investigator, who has been helping a team of professional underwriters to uncover the background to the pounds 925m worth of losses that have hit about 3,000 members of the Lloyd's insurance market whose affairs were managed by the former Gooda Walker agency.
Among those hit by the losses are Paul Marland, Conservative MP for West Gloucestershire, Viscount Rothermere, the Earl of Carlisle, and Lady Rona Delves Broughton.
Mr Randall said yesterday that his detailed report had been passed to the SFO after it had been considered by the board of GW Run-Off, the company that took over the management of the affairs of the Gooda Walker agency at the request of Lloyd's authorities in October 1991.
Mr Randall said that the board of GW Run-Off had found 'issues in relation to my report appropriate for a reference to be made to the Serious Fraud Office'. The report was passed to the SFO earlier this week, and a spokesman for the office confirmed that it had been received. 'We will be considering it,' an official said.
This is the first time that the SFO has been drawn into Lloyd's affairs since it was asked to examine complaints by underwriting members about the losses of more than pounds 200m suffered by members whose affairs were managed by the RHM Outhwaite agency a few years ago. Then, the SFO decided after a preliminary inquiry that no further action was necessary.
All 3,000 members of the Gooda Walker syndicates are to be sent copies of the Randall report in the next few days.
In April 1992 Mr Randall and GW Run-Off issued an affidavit in which Mr Randall alleged that one of the Gooda Walker syndicates, 290, appeared to have overstated its profits.
In subsequent reports he alleged that some of the syndicate expenses should have been borne by the Gooda Walker agency rather than the syndicates, into which the members were grouped.
An internal report running to 1,494 pages prepared by the authorities of Lloyd's and sent to underwriting members of the Gooda Walker agency last October, was critical of the structure of the agency company. The report concluded that a main cause of the losses was that the risks were concentrated within Gooda Walker syndicates rather than spread throughout the insurance market.
It was usual for one of the agency's syndicates to insure another syndicate under the agency's control against loss. For individuals the losses became severe because certain agents within Lloyd's steered them solely towards Gooda Walker syndicates rather than allowing them to spread their risks throughout the market. Entire families might be placed on the same loss-making syndicate.
So far 2,145 underwriting members affected by the losses have launched a pounds 396m legal action against 67 companies at Lloyd's that looked after their interests. In terms of the numbers of parties involved, the legal action is believed to be the largest mounted in the 305-year history of the Lloyd's market. The action is to be contested by the companies. Lloyd's has described the legal campaign as 'regrettable'.
An action group leading the litigation on behalf of underwriting members has collected pounds 4m as a fighting fund. Last month Michael Deeny, an accountant and concert promoter who is leading the action group, said that 'to avoid any delay in the litigation, the main action is focused on the issue of alleged negligent underwriting, but litigation on other issues and against other parties is being considered and further proceedings may be issued shortly'.
He added: 'The average loss to our members is pounds 184,877, but some individual members have lost up to pounds 1m. The most tragic cases are the many old-age pensioners who thought that their membership of Lloyd's would bring in a little extra income on their retirement. All of these now face total ruin.'Reuse content