London Market - December 2009

Conspiracy to defraud, mental illness

In QBE Insurance Europe Ltd & Amalfi Underwriting Limited v Timothy Higgins (23 July 2009) the Court of Appeal found that mental illness is not an adequate defence in all cases.  In the instant case there was overwhelming evidence of dishonesty on the part of the defendant, despite a defence based on Alzheimer’s. 

The defendant was found guilty of insurance fraud after two previous rulings in the case in June and December 2008.  London Market insurers QBE, Amalfi Underwriting Ltd and Markel International Insurance Company Ltd had brought a joint action against Surety Guarantee Consultants Ltd, whose former directors and managers/associates had made secret profits by writing surety bonds above agreed limits.

Held
The Court of Appeal held that the High Court Judge was correct in his finding that the defendant, Mr Higgins, an underwriting agent who suffered from Alzheimer's disease, had either conspired with others to defraud Markel and QBE (his principals) or that he had given dishonest assistance to others in breach of his fiduciary duty to Markel/QBE. 

The Court found that the components of the fraud/dishonest assistance case brought against Mr Higgins were overwhelming.  Central to this was the fact that excess premiums should have been paid to Markel and QBE or, if there had been a silent co-surety arrangement, to Templeton.  Instead, the unaccounted premiums were paid to a company effectively owned by the three co-conspirators in the case.  There was a powerful inference that Higgins had acted dishonestly.  Alleging intermittent forgetfulness caused by Alzheimer's was inadequate as he appeared to have known what he was doing.  One transgression included writing bonds over the prescribed limits set by Markel and QBE on numerous occasions.