Endsleigh pocketed referral fees, claims Southern Rock

Gibraltar-based insurer Southern Rock Insurance Company Ltd (SRICL) is accusing Endsleigh of secretly pocketing referral fee income in the latest twist to their £15.5m court battle.

SRICL alleges that Endsleigh passed on referrals to credit hire operator Drive Assist and unknown third parties while it was contracted as a claims handler between 2004 and 2008.

Lawyers for SRICL have amended the original High Court writ to demand an inquiry into the lost referral fee income.

The referral fee allegation is an extension on the original claim, which demands a £15.5m payment for inadequate claims handling.

The amended writ includes alleged emails, letters and documents. The writ says that Endsleigh unit manager Russell Pollard sent an email to national claims manager Len Hope on 2 June 2006, briefing him that SRICL might not be aware of the referral fee income.

According to the writ, the email said: “As I recall when the agreement was set up, Michael Lee never specifically asked that Drive Assist did not take credit hire claims. This is a sensitive area for us because we take an income from this and I’m not sure SRICL are aware of this.”

Michael Lee was managing director of SRICL at the time of the email.

In another piece of evidence from SRICL, the writ says that an entry in “The Claims Service Financial Plan for 2008”, prepared in November 2007 by Endsleigh, “indicates that it was expecting to earn an income of £243,075 in 2007 and £265,647 in 2008 from ‘hire referral’ earned in respect of its clients’ businesses, including that of SRICL”.

The writ adds: “A letter dated 28 June 2011 from solicitors acting for Endsleigh … put SRICL on notice that they did ‘not think that the referral fee [claim] will be resisted’ and that ‘the sums in question amount to £200,000’. This amounted to an admission of the validity of SRICL’s claim.”

An Endsleigh spokesman said: “This is a trade dispute currently subject to legal proceedings. It would be inappropriate to comment on the detail of these proceedings at this stage.” Drive Assist declined to comment.

Elsewhere, Gibraltar-based insurer Markerstudy, which also used Zurich subsidiary Endsleigh as a third-party claims handler, is involved in legal action against the company relating to an alleged breach of contract.

Endsleigh is defending both cases.