Brokers' PI insurers face multi-million pound pay-outs following landmark case
Professional indemnity (PI) insurers are set for a multi-million pound pay-out after an appeal involving the Laing & Co sub-broking chain was rejected.
A judge rejected the appeal of broker Willis & Co (not Willis Group) in Northern Ireland against a ruling that it was liable to reimburse a client who paid premiums but was never on cover. The case will inform a further 559 cases.
The case involved Hi-Tec Roofing, which used Willis & Co to place liability cover. The risk became lost in a sub-broking chain involving Laing & Co and Preston Whiteside. The judge confirmed that cover had never been incepted.
Clare Nevin, a partner of law firm Wilson Nesbitt, said that her client, Hi-Tec, had paid £4,500 in premiums to Willis and then had to find alternative cover at £12,000. Willis was ordered to repay Hi-Tec £9,500.
Nevin said that the case served to warn brokers that they needed to confirm the integrity of their sub-broking chain, and insure that cover was placed, or face the consequences.
A broking source added that in most such cases a brokers' PI insurer would pick up the bill.
The case will inform new rules from PI insurers, which will require brokers to thoroughly check their wholesalers.
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