Councils’ underdog fight against insurance broker
A GROUP of rural councils is launching a major class action against a UK-based insurance broker that allegedly stole millions of dollars from ratepayers through inflated premiums.
Quinn Emanuel Urquhart & Sullivan filed the suit against multinational broker Jardine Lloyd Thompson (JLT) in the NSW Supreme Court yesterday on behalf of Richmond Valley Council, with six other regional local governments expected to join the action.
Court documents will allege the firm had a financial interest in insurance schemes it brokered on behalf of more than 500 councils across the nation, including 128 in NSW.
The broker then allegedly gave poor financial advice costing councils millions of dollars.
Six other councils, including Parkes in the NSW Central West and the Mid-Western Regional Council - which takes in Bathurst and the Dubbo - have registered to join the class action.
Richmond Valley Council general manager Vaughan Macdonald said JLT had inflated insurance premiums by 50 per cent, costing them $300,000 a year.
"We trusted that JLT were giving us the right advice regarding our insurance with Statewide Mutual, and making sure we paid the right amount for our insurance," he said.
"In 2017, Richmond Valley put its insurance out to tender, and obtained a saving of 53 per cent on the premium we were previously paying.
"For that year alone, the saving was $300,000, and this has been going on for many years."
He encouraged other affected councils to sign up to the class action.
"Richmond Valley Council has not taken this action lightly," Mr Macdonald said.
"We simply want JLT's millions of dollars of super-profits that have been generated over at least a 10-year period, to be returned to NSW ratepayers, so that it can be rightly invested into much-needed local infrastructure across NSW."
Quinn Emanuel Urquhart & Sullivan managing partner Michael Mills claimed JLT had ripped off its clients.
"The fact that many local councils have, since leaving JLT, made substantial savings on their premiums, often in the vicinity of 30 to 50 per cent, indicates JLT may not have acted in the best interests of local councils or their ratepayers," he said.
"A vast majority of NSW councils have used JLT's services and, as a result, may have overpaid on their insurance premiums.
The class action alleges JLT breached general law and contractual obligations, as well as its fiduciary duties.
JLT declined to comment.