Underwriter 'ignored fundamental principles'
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Your support makes all the difference.THE GOODA Walker insurance underwriter whose Lloyd's syndicate cost investors nearly pounds 400m failed for more than a year to appreciate the scale of the losses caused by the Piper Alpha oil rig disaster, the High Court was told yesterday.
Stan Andrews initially thought it would take eight or 10 years for all the claims to come through, said Geoffrey Vos QC on the second day of the Gooda Walker action. And for months after the July 1988 explosion he continued to express confidence that his syndicate had adequate reinsurance protection.
Latest figures show the syndicate lost pounds 70.2m for 1988.
Mr Vos is representing 3,095 Lloyd's investors who are suing their agents to recover the pounds 629m they lost from participating in insurance syndicates managed by Gooda Walker. The underwriters are accused of negligence in failing to monitor their exposure to insurance catastrophes.
Mr Vos described how Mr Andrews eventually lost the confidence of both his Gooda Walker colleagues and members' agents. Derek Walker, the underwriter on the firm's largest syndicate, had said the records of Mr Andrews' syndicate were a 'shambles'.
At a Gooda Walker meeting in November 1989, shortly before Mr Andrews was asked to resign, Mr Walker said: 'Andrews was a lone underwriter. Nobody knew what he was doing, not even his own staff.'
One members' agent had reported that Mr Andrews 'inspired little confidence', Mr Vos said. By August 1989 another agent had expressed 'continuing unease about Andrews and the entirely undemonstrable feeling that something sinister lies behind his 'keep smiling' appearance'.
Mr Vos said Mr Andrews had ignored fundamental principles of reinsurance. The cover he bought for his syndicate had been based on premium income, rather than on its exposure to risk.
The case continues today.
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