Lloyds’ names sought damages from their underwriting agents for negligence. The court had to decide as a preliminary issue whether any duty of care arose to the names.
Held: Until 1990, names signed an agreement with a member’s agent who in turn arranged for them to be served by an underwriting agency, who, and again in turn, wrote insurance business on their behalf. Some members combined these two functions and were known as ‘direct’ names, and others were known as ‘indirect’ names. The underwriting agents had absolute discretion as to what business was to be written, and could appoint sub-agents. This very wide discretion and the unlimited liability of names and payments made to underwriters, required the underwriters to exercise a duty to exercise reasonable care and skill. That could only be excluded by the clearest of contracts. Contractual obligations might replace common law duties of care, but in this case these obligations for direct names were identical. For indirect names, the obligation existed in negligence only. This case did not require any extension of the law of negligence. Any delegation to managing agents did not alter the implicit promise to members.
Judges:
Saville J
Citations:
Independent 01-Oct-1993, Times 20-Oct-1993
Jurisdiction:
England and Wales
Cited by:
Appeal from – Arbuthnott v Feltrim; Deeny v Gooda Walker; Henderson v Merrett CA 14-Dec-1993
Underwriters owe a professional duty of care to Lloyds names in underwriting, even though they were acting as agents. . .
Lists of cited by and citing cases may be incomplete.
Contract, Insurance, Professional Negligence
Updated: 08 April 2022; Ref: scu.77854