A broker ("K"), has recently been censured by Lloyd's Disciplinary Tribunal and ordered to pay costs of £5,000 to Lloyd's for misconduct as a result of signing a cover note which did not correctly reflect the slip. K was found guilty of serious negligence in failing to note a small difference between the slip and the cover note. The implications for the Lloyd's community are wider than may initially be obvious.
Background
In following the company's internal procedures, K jointly signed with another director a cover note for issue to a client. The note incorrectly stated the package credit granted by underwriters to the insured as 5%; in fact it was 7.5%. Although the error amounted to a difference of two characters in two documents (slip and cover note) of over 20,000 characters each, as a result of the difference, the company fraudulently retained a hidden commission amounting to 2.5% of the gross premium for that policy year. This fraud, perpetrated by another director, had been
