Advertise
Resources
Member, Beacon International Group, Ltd.
LONDON-A landmark Nov. 8 ruling in London's Court of Appeal allowing claims for pension plan misselling to be aggregated could cost professional indemnity insurers hundreds of millions of pounds.
In Lloyd's TSB General Insurance Holdings Ltd. & Others vs. Lloyds Bank Group Insurance Co. Ltd. and
Lloyds Bank and Abbey National argued that the pension misselling claims are the result of a related series of acts and omissions and can be aggregated. The insurers argued that the pensions were sold by different agents and should be treated as individual claims. The pension companies' insurance policies have a deductible of £1 million ($1.5 million) for each loss. Claims received by the two companies total more than £100 million.
The Financial Services Authority estimates that the total bill for personal pensions wrongly sold to members of employer-sponsored plans in the wake of the Financial Services Act 1986 could reach £13.5 billion ($19.73 billion) but an FSA spokeswoman could not estimate how much of that total would be covered by insurance.
However, lawyers estimate that insurance claims totaling several hundreds of millions of pounds are awaiting the outcome of these cases. The Court of Appeal refused the insurers leave to appeal the case to the House of Lords.