A group of Lloyd’s syndicates has agreed to settle allegations from business owners that they conspired with brokers to rig the US commercial insurance market.
A federal judge in New Jersey granted preliminary approval on 3 May to the accord, which included syndicates managed by Hiscox, Beazley, Atrium, Omega Underwriting Holdings, Talbot Underwriting, Hardy Underwriting Group, Faraday Underwriting and Brit Syndicates. Under the deal, the entities will pay around $22mn and make changes to their business practices, according to court documents.
The long-running case, filed more than a decade ago, remains pending against 10 other syndicates including some managed by SA Meacock & Company, Chaucer Syndicates and RJ Kiln & Company, as well as legacy Ace (now Chubb) and Catlin Group (now part of Axa XL).
The settlement by the initial 13 syndicates could encourage similar claims against Lloyd’s entities.
The case, a class action, was first filed by outdoor recreation company Lincoln Ventures on behalf of other commercial insurance buyers in the US.
Plaintiffs alleged that syndicates and brokers such as Marsh, Aon and Willis “conspired to reduce or eliminate competition for insurance and participated in the affairs of a RICO enterprise”, referring to the Racketeer Influenced and Corrupt Organizations Act.
Lincoln Ventures alleged that Lloyd’s was represented to them as a “competitive” market, but that there were in fact several mechanisms in place by which syndicates collaborate rather than compete with each other to determine pricing, including open market placements, lineslips and binding authorities.
The lawsuit followed regulatory actions against brokers including Marsh, Aon and Willis over steering customers to particular insurers, which resulted in settlements totalling more than $1bn.
The settlement with the Lloyd’s syndicates is awaiting final approval by the court.
A Lloyd’s representative declined to comment.