Insurers prepare action to retain control over HHH business

Norwich Union (NU) is facing a £100m legal battle over the ownership of half of Hill House Hammond's (HHH) personal lines portfolio.

Insurers, including Churchill, Fortis and AXA, are thought to be considering a challenge to NU's right to cherry pick from their HHH portfolios before turning the rest over to BDML.

An industry insider said: "It is hardly surprising that insurers from the HHH panel are talking to their lawyers. What NU is doing amounts to hijacking business our insurers have spent years building up."

The dispute centres on a standard clause in HHH's agency agreement, stipulating that customer ownership switches from the broker to the underwriter if the broker "ceases trading".

Insurers see the current situation, in which NU decided to close down HHH and transfer the business, as falling squarely into the "ceases trading" clause.

The industry source said: "Insurers are pretty bullish about this.

"They see the clause giving them a fairly cast iron right to retain the business."

HHH's £200m personal lines book is thought to be evenly split between NU and the other 15 insurers on the HHH panel. While there is no dispute about the NU business being funnelled into NU Direct, the panel insurers are keen to retain the other half of the business in the broker channel.

One insurer, NIG, is reported to be planning to contact the nearest broker to all its HHH policyholders offering them a lead to the business.

An NIG spokesman said: "We believe the HHH business is best served in the broker channel and are disappointed that NU is looking to move this across to NU Direct.

"We are disappointed that we have lost the ability to work with HHH, but cannot comment on the discussions we are having with it following its announcement."

NU acknowledged that some insurers were looking at mounting a legal challenge in defence of their business, but it rejected its validity.

A spokesman said: "This is a business decision. What we have done is effectively to acquire the HHH portfolio, just as we would acquire any other personal lines book."