Giles Insurance Brokers has agreed a deal with insurers to stop them pursuing policyholders for cash lost by Ward Evans.
Giles snapped up Ward Evans’ book of business at the end of December in a surprise raid.
Now, brothers Nick and Chris Giles have sent insurers a message: “Cut us some slack now and we will give you plenty of future business.”
But Lloyd’s operation Amlin has demanded some policyholders pay their premiums again or lose cover.
One commercial policyholder received a letter asking for a further £20,000 to avoid a 30-day cancellation.
It is understood that Zurich and Groupama have lost about £750,000 each and Allianz £30,000 when Ward Evans failed to transfer premiums before it collapsed.
Losses at Norwich Union (NU) and Amlin have not been disclosed.
Chris Giles said most insurers would waive their debt in return for continued support from the expanded Giles group.
“If an insurer writes to a client direct and cancels the policy, they’ll lose the business going forward,” he said.
“As a double whammy, they’ll lose the goodwill of Giles as a group and we’re in a position to provide insurers with a lot of good business going forward.”
Zurich stated emphatically it would not solicit extra payments and Groupama said it had agreed a “very satisfactory outcome” with Giles.
NU said it would not pursue policyholders nor Giles for its lost premiums, while Allianz said its small loss would not be pursued aggressively.
But an Amlin spokesman said the company was “fully within its rights to cancel a policy if the premium is not paid”.
“I don’t think this is being vindictive,” he said.
“We’re reviewing it on a case-by-case basis.”
He said the deciding factors included whether the premium was paid by premium finance, the amount outstanding and the length of the relationship.”
Steve Reading of Read Hunt, whose client received the £20,000 demand from Amlin, said he would probably foot the bill.
“The client is still paying the instalments to Prompt so it looks like we’re going to have to pay this,” he said.
“It’s a small area and if it got around that we’d had to go back and ask them for another £20,000, word of mouth would affect our business.”
How Giles pounced and cleaned up the business
Ward Evans’ debts could have reached £5m at the time of its collapse in December 2002.
It is understood at least £3.5m was owed to insurers, with a further £1.5m in bank loans and a £2.2m annual directors’ wage and pension bill.
Giles Insurance Brokers, with 13 branches, is said to have paid about £800,000 for the collapsed business after five days of negotiations.
The purchase, Giles’ seventeenth since 1995, has pushed forward its planned stock market flotation from 2006 to 2005.
Chairman Nick Giles, chief executive Chris Giles and new chief operating officer Paul Thomson have set up two new companies in London and Leeds, both called Giles Corporate, to handle the Ward Evans business.
Senior Ward Evans employees Mike Mortimer, Julian Connor, Paul Dempsey, Darren Rigg, Richard Evans, Sandeep Sharma and Philip and Andrew Lamb will own shares in the new companies and remain as directors.
Giles retained 30 jobs at Ward Evans and paid all staff salaries from
1 December 2002. It plans to take on a further 30 sales staff in 2003.
Giles will send legal letters to all former Ward Evans sales staff, enforcing their restrictive covenants, after some started poaching business.
“We’ve bought the goodwill and will stop at nothing to protect it,” Thomson said.
“There’ll be no easy wins at our expense.”