Revealed: Why Brightside is suing Howden and three PI insurers after fallout with Arron Banks

Brightside is suing Howden and insurers AIG, QBE and CNA claiming they failed to pay a professional indemnity policy following the costly fallout with founder Arron Banks.

The Bristol-based broking group demands the insurers pay out £2.2m for motor claims and legal costs it had to fork out for after the acrimonious split with Banks and his company, Southern Rock.

Brightside has accused Howden, its professional indemnity broker during the Banks fallout, of being ‘negligent’.

If there are any shortfall in payments from the insurers, Brightside says Howden should cover them.

Brightside and Arron Banks legal battles

The claim form reveals the details of the Banks fallout and the drama leading up the £2.2m claim.

Brightside, under its E Insurance brand, had a limited binding authority agreement with Bank’s Gibraltar-based insurer Southern Rock, the documents say.

It placed more than half of its private and commercial motor business with Southern Rock.

But relationship fell apart after Banks quit as Brightside chief executive in 2012, leading to Southern Rock and Brightside launching legal action against each other.

In the motor book, Southern Rock accused Brightside of breaches in policy validation, wrongful reissuing of cancelled cover and placement failure.

Among the settlements between the two firms, Brightside agreed to pay £1.5m to Southern Rock for two motor claims.

Insurers reject Brightside PI claim

However, when it turned to its Howden-broked professional indemnity insurance cover to recoup the £1.5m and the £522,222 legal costs fighting Southern Rock, the insurers rejected the claim.

Brightside failed to declare to insurers its binding authority arrangements with Southern Rock, it is claimed.

Furthermore, the insurers say they didn’t receive notification for one of the motor claims during the relevant policy period.

Brightside is batting away these arguments, stressing in the claim form that it didn’t have to declare its binding authority arrangements.

It would only have to declare binding authority under the Howden policy if it set the rates, terms, conditions and handle claims without referral – something it never did.

Brightside also says it declared all its business arrangements with Southern Rock when it notified the insurers about the claims – and they never objected.

Finally, Brightside stresses it correctly notified insurers about the large motor claim Southern Rock had disputed. 

Spokespeople for AIG, QBE, CNA and Howden declined to comment.