The recent Commercial Court decision of Ocean Finance & Mortgages Limited and others v Oval Insurance Broking Limited [2016] EWHC 160, which concerned the block notification of circumstances giving rise to a potential claim under a professional indemnity policy, is another example of the Court apportioning liability to placing brokers when they are found to have assumed certain responsibilities.


The Claimants were companies that sold secured loans and Payment Protection Insurance (PPI). They retained the services of the Defendant, Oval Insurance Broking Limited (Oval), who had experience in professional indemnity insurance. Oval acted as the producing broker who, in turn, retained the services of a third party placing broker, Senior Wright Limited (Senior Wright), a Lloyd’s broker with similar experience in placing professional indemnity insurance.

The case concerned the Claimants’ professional indemnity insurance arrangements between October 2008 to October 2009 and, in particular, a number of adjudications handed down by the Financial Ombudsman Service (FOS) in 2009 concerning the mis-selling of PPI, which suggested systemic failures in the Claimants’ adopted practices.

As a result of the views indicated by the FOS, and presumably given that PPI was a hot topic at the time, a limited notification of circumstance was made to insurers in October 2009, under the 2008/2009 policy, in respect of existing customer complaints already rejected by the Claimants, and which were to be subject to a further review by the Claimants. This limited notification was made by Senior Wright without prior discussion with the Claimants and/or Oval.

However, the parties failed to make a block notification of circumstance to insurers, concerning the entirety of the Claimants’ 18,000 sales of PPI policies. When the parties eventually took the decision to do so, under the 2009/2010 policy, the policy terms had changed and the claim was refused.

Claims Arising

The Claimants brought a claim against Oval for failing to advise them to make a block notification under the 2008/2009 policy. Oval settled the claim in late 2015, accepting that it did not advise the Claimants to make a block notification of all sales of PPI under the 2008/2009 policy.

Oval brought in Senior Wright as a Part 20 Defendant, asserting that, as the placing broker, Senior Wright had negligently and/or in breach of contract caused Oval to incur such a liability. It was argued that Senior Wright was in direct contact with insurers, and failed to recognise and recommend that a block notification of sales should have been made. Senior Wright disputed this, asserting that Oval did not request advice on a block notification in 2008/2009, and did not pass on key information to Senior Wright that would have alerted it to the need for any such advice to have been given.


The court noted that the concept of block notification was familiar to brokers, as a result of the previous pension mis-selling scandals. Senior Wright had, in taking it upon itself to make the limited notification in 2009, clearly assumed a duty both in contract and in tort to Oval (and potentially a duty in tort to the Claimants) in relation to making the appropriate notification under the 2008/2009 policy. It was under a duty to review the information received by it from Oval in the context of the presentation for renewal, and to consider any notification of circumstances which was required in the current year, and so that any renewed cover was effective.

As a result, Mr Justice Cooke concluded that both Oval and Senior Wright were at fault for failing to grapple with the question of block notification and, accordingly, the global settlement sum fell to be apportioned between the brokers.

Adopting a fairly broad brush approach to assessing Oval’s claim against Senior Wright, it was concluded that 30% of the liability rested with Senior Wright (and was therefore recoverable by Oval from Senior Wright), with the remaining 70% resting with Oval. The apportionment was based on the fact that Oval had a superior knowledge of the severity of the risk, and a more in-depth knowledge of the facts concerning the insured and the nature of the failures.


Accordingly, and in addition to demonstrating the need to carefully consider whether or not to make a block notification in circumstances where widespread issues arise, this decision also serves to highlight dangers to sub-brokers in circumstances where they may be found to have assumed certain duties, thereby rendering themselves liable for any such losses that flow from a breach of those duties.

If you would like more information, please contact Roger Franklin – Partner, Grace Harrison – Associate, or any member of our Insurance Litigation Team.

Please note that this blog is provided for general information only. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content of this blog.

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