Lloyd's attacks broker after it refuses to extend claims limitation period

Aon has rejected claims that it has breached a contract over the placement of reinsurance for the Central Fund in Lloyd's on-going dispute with Swiss Re.

With the six-year limitation period - during which a claim can be brought - due to expire this year, Lloyd's has sent letters from its lawyers to both Aon and Benfield, which broked the contract, to sign a waiver extending the limitations period.

It is understood that Benfield agreed to the extension, but Aon has refused the waiver, which has prompted Lloyd's to begin proceedings against the broker.

In a statement Aon said: "We do not accept that Lloyd's has a valid claim. We note that Lloyd's has been unable to give us any details as to what it alleges Aon did or did not do in connection with the placement of insurance of the New Central Fund that was negligent or in breach of our duty to them.

"We did not agree a request by Lloyd's to extend the limitation period as we do not believe it to be in anyone's interests for such a claim to be left unresolved.

But it added: "We are fully supportive of Lloyd's claim under the New Central Fund policy and regret that its insurers have seen fit to seek to avoid their obligations under that policy."

A Lloyd's spokeswoman said: "This is purely a technical issue. As is common in this kind of dispute we have always reserved the right to pursue others.

"Given the possible impact of the limitation period on bringing claims, this is simply an administrative procedure we have been advised to take to protect our position. We have said all along that we are confident of success at arbitration."

The £290m dispute between Lloyd's and Swiss Re and other reinsurers relating to unpaid claims on its central fund reinsurance policy went to arbitration in September 2004.

The reinsurers have questioned the validity of the Lloyd's claims, saying that the claims related to solvency requirements rather than actual losses.

The Central Fund contract was signed for six years with a £350m limit loss on any one year and an aggregate limit of £500m over the life of the policy.