We acted for insurers in connection with a breach of authority by a broker coverholder under a binding authority agreement. The matter comprised two stages: firstly, determining the coverage position in relation to a high value claim under the insurance (including the question of which contract of insurance would respond); then, secondly, dealing with the potential liability of the broker coverholder to insurers.
In the coverage dispute with the insured a number of technical points arose including ‘which policy, which year’ issues and the proper management of multiple stakeholders with different interests (insured, broker coverholder, subscription market insurers, reinsurers). This aspect was resolved by multi-party negotiated settlement. Further issues had to be worked through in the claim by insurers against the broker coverholder, including ratification, estoppel, contributory negligence and loss of a chance. In collaboration with our insurer clients we were able to put forward a range of commercial alternatives to resolution with the broker/coverholder, which led ultimately to a mutually acceptable settlement without undue damage to the overall broker/insurer relationships.