Hamsard One Thousand and Forty-Three Limited v AE Insurance Brokers Limited
[2024] EWHC 262 (Comm)
Norman Hay PLC (in Members’ Voluntary Liquidation) v Marsh Limited
8 May 2024
[2024] EWHC 1039 (Comm)
High Court
A company sued its insurance broker for not getting enough insurance. The company had to pay a big settlement after an accident. The judge said the company doesn't have to prove it was legally responsible for the accident to win; it just has to show the broker's mistake cost them a chance at getting the money back from an insurer. The lawsuit will continue.
Key Facts
- •Norman Hay PLC (in liquidation) sued Marsh Limited for allegedly failing to arrange adequate non-owned auto cover under a group travel insurance policy.
- •The claim arose from a road accident in the US involving an employee of a Norman Hay subsidiary, resulting in a $5.5 million settlement with the injured party.
- •Norman Hay argues Marsh negligently failed to identify the need for worldwide non-owned auto cover and failed to properly advise on existing subsidiary insurance policies.
- •Marsh argues Norman Hay cannot establish legal liability to the injured party, has not suffered a direct loss, and hasn't sufficiently proven the reasonableness of the settlement.
- •The case hinges on whether Norman Hay needs to prove legal liability to the injured party to succeed in its professional negligence claim against Marsh.
Legal Principles
Particulars of Claim may be struck out if they disclose no reasonable grounds for bringing the claim (CPR r. 3.4(2)(a)).
CPR r. 3.4(2)(a)
In liability insurance, the insured must demonstrate legal liability to a third party to recover indemnity, even if a settlement was reached.
Enterprise Oil Ltd v Strand Insurance Co Ltd [2006] 1 Lloyd’s Rep 500
In professional negligence claims against insurance brokers, the claimant must plead and prove that the hypothetical insurance would have indemnified them.
Dalamd Ltd v Butterworth Spengler Commercial Ltd [2018] EWHC 2558 (Comm)
In broker negligence cases, the court assesses the chance that the insurer would have paid, even if not legally liable, considering commercial factors (loss of chance).
Fraser v Furman [1967] 1 WLR 898
Outcomes
Marsh's application to strike out the claim or grant summary judgment was dismissed.
The court found that Norman Hay did not need to prove legal liability to the injured party to succeed in its claim against Marsh for professional negligence; a lost chance approach was applicable, considering whether Marsh's negligence deprived Norman Hay of the opportunity to receive an indemnity.