Brokers PI: Administration Of Run Off Business

A recent case provides useful guidance on brokers’ obligations to clients in run off.

Equitas brought proceedings to establish sums due under reinsurance protections that the brokers had placed for Lloyd’s syndicates for the 1992 and earlier years of account. The court commented on brokers’ duties in the context of dealing with the run off of discontinued business:

• The court approved the brokers’ concession that they owed a duty to maintain proper and reasonable records so that the amounts due to the syndicates or Equitas at any stage could be ascertained.

• The court also found that the brokers owed a duty to provide Equitas with records (or copies of records) relating to transactions where the brokers acted as the agent of Equitas or the syndicates. This included documents prepared for the brokers’ own purposes, such as their IBA ledgers, cash books and nominal ledgers.