On 18 October 2001 the House of Lords handed down an important decision for reinsurance brokers in the Aneco case 1 . The case concerned the circumstances when a reinsurance broker will be held liable for negligent advice and the measure of damages payable by the reinsurance broker in such circumstances. The decision has potentially serious ramifications for reinsurance brokers and the reinsurance industry as a whole.
The factual background to the case concerned a claim by the liquidators of a Bermudian reinsurance company, Aneco Reinsurance Underwriting Limited ("Aneco") against the reinsurance brokers, Johnson & Higgins Limited ("J&H").
In 1988, an underwriter who wrote marine excess of loss business on behalf of four Lloyd’s syndicates, Mr Bullen, requested J&H to obtain a proportional reinsurance of his excess of loss account. To facilitate such placement J&H drafted a "fac/oblig" treaty (known as the Bullen Treaty), under which the Bullen syndicates could decide which
