Towergate Underwriting hit with £3.3m suit by pub over non-paying Gable policy

In documents filed with the High Court in May the hospitality provider is seeking £3.3m and has claimed that Towergate Underwriting (T/A Towergate Insurance Brokers) breached its obligations as a broker by failing in its duty on a number of counts, including:

• Did not advise the client of Gable’s true regulatory status
• Did not advise the client that, at the time, Gable had been subjected to a financial downgrade while some insureds were advised of this and encouraged to change their insurer
• That policy documents stated Gable was regulated by the Financial Conduct Authority when it actually passported in to the UK under the regulate of the Liechtenstein FMA
• Did not act as a competent insurance broker and denied Few Inns the opportunity to final alternative insurance
• Towergate “low-balled” its quote for insurance with Gable to retain Few Inns’ business “because the commission that the Defendant would earn from brokering the Policy would be substantial”; and
• the Defendant did not act in the Claimant’s best interests and, as a consequence, the Claimant suffered a substantial loss, including loss of a chance

In the particulars of claim, Few Inns stated that, in April 2015, Towergate sourced a commercial insurance policy on behalf of Few Inns via a sub-broker, SJL Insurance Services, to cover the risks allegedly including fire risks. The insurance policy sold to the pub chain was underwritten by Gable Insurance, an unrated insurer which went into liquidation in November 2016 .

Few Inns then suffered a fire at its Witney pub, The Bell Inn, on 25 September 2015, the legal team said. The pub was “severely” damaged by a fire, which was caused by a faulty laptop or similar electrical device in the chef’s bedroom.

Claim

Few Inns sought to claim on the policy the following day, the document’s timeline noted. The claimant detailed that in January 2016 Gable denied the claim and sought to avoid the policy stating it would not have provided insurance had it known:

• The Bell Inn did not have key-operated locks on its windows
• The Bell Inn’s cooker canopy was not professionally maintained or cleaned;
• The Bell Inn’s flat felt roof had not been inspected within the last two years prior to the Policy inception
• No electrical inspection certificate existed for The Bell Inn at the time the Claimant applied for insurance cover; and
• There was no maintenance agreement in respect of The Bell Inn’s intruder and fire alarm systems.

Few Inns reported in the court document: “The Claimant attempted to mitigate Gable’s refusal through a series of without prejudice meetings and correspondence with Gable and its representative, Plexus Law. However, Gable responded by stonewalling the Claimant and exploiting its dominant position to prevent a fair and reasonable outcome from being achieved.”

According to Few Inns’ lawyers, in November 2018 the insurer re-stated its rejection of the claimant’s insurance claim and that it could avoid the policy “for breach of the duty of utmost good faith, in that they (Few Inns) misrepresented the nature of the risk to underwriters” (an allegation denied by the Claimant).

The pub chain issued a complaint against Towergate to the Financial Ombudsman Service claiming the broker “did not act fairly when selling it the policy” and that “the defendant improperly handled the insurance claim”. The FOS issued a final decision which stated Towergate could not fairly be held responsible for the loss Few Inns had suffered, a decision the claimant said it disagrees with.

Defence

Towergate responded in a defence document at the end of June to deny the claims.

It highlighted that it notes in the terms and conditions that it cannot guarantee the solvency of any insurer and stated that the Gable policy was only sold with the client’s agreement.

The defence document detailed that Towergate went through the various conditions of the policy with the claimant and, at the time, the claimant admitted they had not read the policy and would do so later.

The broker also said that it had explained that Gable insisted on the annual professional cleaning of the canopy hood and gave the claimant the choice of an alternative slightly more expensive Gable policy where such professional cleaning was not required.

The claimant, Towergate alleged, elected to go with the cheaper policy and said professional cleaning would be organised and, in a later call, that all the warranties had now been checked.

On Gable’s regulatory status the defence document noted: “It is admitted that the Defendant did not advise the Claimant on Gable’s regulatory status. It is denied that the Defendant was obliged to give such advice when the Defendant had no reason to suppose that it was a matter of concern.”

The claimant stated in its own document that, were they aware of Gable’s regulatory status, that it would have requested another insurer.

Towergate also argued that previous year’s documentation made it clear Gable was regulated by the FMA.

The broker also said the allegation that other insureds had been advised to move away from Gable when the financial difficulties became known was “embarrassing”.

It noted in the document: “Paragraph 7 is embarrassing and the Defendant cannot plead to it properly as the Claimant has not provided any particulars of the alleged financial downgrade of Gable or of when other insureds were allegedly advised to consider cancelling and replacing their insurance with a more financially sound insurer or of who such insureds were.

“The Defendant will plead further once the Claimant has provided the corresponding particulars but so far as the Defendant has presently been able to discover, it is denied that any such advice was given to other insureds prior to the insured event in issue in this case.”

The broker also argued that Gable was entitled to deny or avoid the claim due to non-disclosure and/or misrepresentation.

It also stated that Gable made clear that even if the policy had not been avoided it would have declined the insurance claim due to the claimant’s non-compliance with a number of the policy conditions.

And that Gable was entitled to deny or avoid the claim for a number of reasons. For example, Towergate claimed in the defence report:

• the Bell Inn did not have key-operated locks on all its accessible windows; and
• its cooker canopy was not professionally cleaned (as the Claimant had not made the promised arrangement to institute such cleaning); and,
• there was no maintenance agreement in respect of the intruder alarm.

In its defence Towergate also said it exercised due care to keep under periodic review the financial status of Gable and did not at any material time have good reason to conclude or report to the claimant that Gable would not have the necessary financial strength to meet all legitimate claims upon it as and when they arose.

It also alleged that the claimant would probably not have sought cover elsewhere even if the defendant had had good reason to report any such concerns and identify any corresponding risks. It also claimed that other insurers would also have denied or voided the policy due to misrepresentation.

Towergate also said the claimant’s priority was “paying the lowest possible premium” and argued that it had acted in the best interests of the client.

Few Inns is seeking £3.32m plus interest at £119.79 per day until payment. Towergate’s legal team has denied that the claimant is entitled to the alleged or any relief.

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