UK COURT OF APPEALS AFFIRMS DECISION IN FAVOR OF BROKER
In a November 7, 2006 post to this blog, we reported on a decision of the UK Commercial Court rejecting claims against a reinsurance broker. The UK Court of Appeals has affirmed the Commercial Court’s decision, based in part upon there being inadequate evidence that the losses complained of were caused by the alleged misconduct of the broker. To reach the loss causation issue, however, the Court affirmed the holding below that the broker had a continuing duty of disclosure to the cedent after the reinsurance had been issued, which is an important point. This opinion contains an interesting discussion of the role of brokers in the insurance and reinsurance markets, especially where the same broker places “back-to-back” insurance and reinsurance coverage. The Court's approach to this kind of situation is illustrated by its statement that “[t]he role of an insurance broker is notoriously anomalous for its inherent scope for engendering conflict of interest in the otherwise relatively tidy legal world of agency.” Opinion, paragraph 60. HIH Casualty & General Insurance Limited v. JLT Risk Solutions Limited, [2007] EWCA Civ. 710 (July 12, 2007).
