Edgar Hamilton Wellard, the Lloyd's guaranteeing broker, has slapped an injunction on Highway this week following the Lloyd's syndicate's attempt to drop EHW and transfer its brokers to two other guaranteeing brokers, writes Andrew Pring.

The sensational developments came to EHW's notice when some of its brokers said that Highway had written to them saying it would be asking HSBC and Holman's to take over EHW's role from January 1, 2000. At the time the letters were sent out, it is understood that Highway had not formally terminated its guarantee agreement with EHW.

EHW has also asked for the injunction to cover HSBC and Holman's. The matter is now sub judice and none of the named parties was able to comment as Insurance Times went to press on Tuesday.

The outcome of EHW's request for a restraining order is crucially important to the broker market in the new era of a more open Lloyd's.

There are currently about 500 brokers on the EHW panel, producing nearly £24 million of premium income for Highway. EHW will argue it has invested major amounts of time and money in cultivating these contacts for Highway, and that it is therefore unethical for Highway to go direct to the brokers and tell them to place their business elsewhere.

If EHW loses its injunction request, Highway's action in reducing the number of brokers with which it does business is likely to be followed swiftly by other Lloyd's syndicates.

As the concept of the guaranteeing broker disappears next year, all syndicates are examining their cost structures. Many will conclude similarly that they must reduce the number of guaranteeing brokers they work with.