JLT Risk Solutions Limited ("JLT") placed insurance in relation to film finance with HIH Casualty & General Insurance Limited ("HIH") ("the Insurance Policy") and arranged HIH’s outwards reinsurance of the risk ("the Reinsurance Contract"). The Reinsurance Contract was back to back with the Insurance Policy.

HIH paid a claim under the Insurance Policy and then sought to recover under the Reinsurance Contract. HIH’s reinsurers refused to indemnify HIH and claimed that there was a breach of warranty, as fewer films were produced than was warranted in the Insurance Policy.

HIH sought to recover those sums in negligence from JLT based upon JLT’s alleged failure in its duties post placement. JLT had known the number of films was to be reduced through risk management reports that had been provided via JLT to HIH. At first instance (reported in Reinsurance Brief Cases January – April 2006) HIH argued that JLT’s duty post placement was to "alert" HIH to any matters of potential concern on coverage. The number of films to be produced fell within that category. Mr Justice Langley agreed. He held that JLT’s duty went beyond acting as a mere postbox, but ultimately HIH was unsuccessful because, on the facts, HIH was unable to show that JLT’s breach of duty had caused any loss.

On appeal, the Court of Appeal largely upheld the findings of Mr Justice Langley. 

  • It held that on the specific facts of the case, JLT owed a post-placement duty to HIH. "Where a broker has been at the centre of devising and structuring a risky scheme of that sort for insurers and reinsurers, as JLT was, it is plainly a strong candidate for post-placement monitoring obligations of the sort alleged here."
  • The Court of Appeal acknowledged that "there was undoubtedly a fine margin of decision" and "somewhat meagre primary evidence" as to whether JLT was in breach of its post-placement duty. However, it felt that Mr Justice Langley’s findings were open to him on the evidence, so should not be disturbed. The Court of Appeal decided that JLT should have specifically drawn HIH’s attention to the film reductions indicated in the risk management reports. 
  • The Court of Appeal also upheld the finding that HIH had not proved that its loss was caused by JLT’s breach of duty. HIH was not alive to the potential risk from the film reductions. Had it been, it would have instructed JLT to alert reinsurers and take their views. However, the cause of the loss was said to be in HIH paying the insured’s claims when it had no legal liability to do so and when it was aware that reinsurers had not agreed to the reduction in the number of films.


The Court of Appeal have confirmed that brokers can owe a duty to monitor events and draw their clients’ attention to potential coverage issues post-placement. However, brokers will take comfort from the fact it appears that it is only in exceptional circumstances that such a duty will be owed.