Policyholders owed thousands of pounds by Jordan-based insurer, Arab German Insurance (AGI), were handed a lifeline this week when the insurer took tentative steps towards making settlements.

The insurer, which prompted a backlash in 2005 when it refused to pay hundreds of thousands of pounds in claims, has begun to offer new settlement terms to brokers, Insurance Times has learned.

Biba this week confirmed it had now negotiated a tentative agreement for 12 of its members. The 12 brokers are fighting to recoup £200,000 worth of claims.

Peter Staddon, Biba head of technical services, said he had entered direct negotiations with AGI after it severed ties with its UK based adjusters, Adjusting Associates.

AGI has already offered to add £4,500 to the £4,500 already offered on a £9,900 claim, Staddon said.

It is thought a further £500,000 worth of claims are outstanding for brokers who have been unable to make contact with the insurer.

Thousands of policyholders were affected when AGI refused to pay claims in full. Insurance Times reported (News 18 August 2005) that AGI's claims handler Adjusting Associates had written to claimants with a settlement offer of between just 30% and 50% of their claim.

Businesses with claims of below £1,000 were advised they will receive nothing.