UK insurer in £1m legal battle against Lloyd’s broker

Following a default judgement by the High Court, UK insurer Guarantee Protection Insurance (GPI) is seeking almost £1m from Lloyd’s broker Arx and has filed a winding-up petition against it.

GPI alleges that a rogue Arx employee issued policies that they had not agreed to cover, leading the insurer into difficulty when it was forced to settle a €600,000 (£550,368 at the time) claim against it.

It claims that Arx acted either “in breach of contract” or “negligently”.

Policies bound in breach of contract

Problems began when GPI agreed with Arx employee, Christophe van Gool to underwrite a set of “specifically identified” policies for a portfolio of solar panel installations in late 2012 or early 2013, court documents show.

When GPI received no bordereaux from Arx, it assumed that no policies had been bound on its behalf.

In Autumn 2013, Arx director Ronald van de Laar got in touch with then-GPI chief executive Andrew Willoughby, to reveal that van Gool had been fired from Arx under a cloud of suspicion.

According to court documents, “efforts were being made to discover what business he had conducted since a number of claims had been received in respect of policies for which no premium could be traced.”

Willoughby responded that “so far as he was concerned”, Arx had bound no policies with GPI.

However, the insurer found itself in hot water when in January 2014 it was slammed with a claim for a fire at a Belgian tyre retailing company.

Despite allegedly having no knowledge of the policy or policyholder, and having only agreed to underwrite for solar panels, following proceedings in Belgium GPI was ordered to pay damages of around €1.8m plus interest and costs. Arx did nothing to dispute the legal proceedings.

GPI appealed but was still forced to pay up €600,000 (equivalent to £550,368).

GPI takes the case to Arx

When GPI filed a case against Arx in London, seeking almost £1m in damages due to negligence and breach of contract, Arx failed to respond and a default judgement was ruled in GPI’s favour.

The Lloyd’s broker, currently owned by van de Laar, who is 205^th in the Dutch rich list and has an estimated capital of €130m, has still not paid up.

Arx’s failure to honour the default judgement led the insurer to file a winding-up petition against it in December. The hearing is scheduled for 5 February 2018.

Current GPI chief executive Alastair Wilson commented: “This case stems from someone either at Arx Insurance or a Belgian placing broker who, for reasons only they will know, allowed products to be sold to Arx customers that were well outside the terms of our agreement. Not only this, they never provided any paperwork nor provided us with any payment, so the first we knew about it was when a claim landed on our desk which cost us £1m to settle.”

Wilson continued: “The High Court entered judgment against Arx and as a result, we are entitled to the damages and costs we requested, about £1million, from Arx. I imagine that unless its owner provides an injection of funds to settle this, we will have no option to finalise the immediate winding-up of Arx to recover as much of this as possible and to try to prevent such behaviour in the future.”

Arx could not be contacted for comment.