Geoff Barrett and Martin Finigan highlight the dangers of relying on composite insurance
Many large multi-national accountancy firms have attempted to protect themselves from claims by creating umbrella-like organisations. This involves each member firm in their worldwide network being a separate entity—in an attempt to compartmentalise the risk. Each member firm is part of an umbrella operation that manages and maintains the worldwide organisation of member firms that practice under the accountant’s name. The insurance obtained by such firms has been of a composite nature, where the rights of each co-assured under a policy are separate.
In Brit Syndicates Ltd (for and on behalf of Brit Syndicate 2987) v Grant Thornton International [2006] EWCA Civ 1661, [2006] All ER (D) 68 (Dec) last month, the Court of Appeal clarified the extent to which the ultimate umbrella organisation is entitled to be indemnified following misrepresentation/non-disclosure.
Background
Mills & Reeve acted for the insurers who insured Grant Thornton’s member firms around the world under a composite policy. In addition the US umbrella organisation
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