Lloyd’s of London managing agency Brockbank had the good fortune to sail through the Lloyd’s disaster relatively unscathed.
The agency, a subsidiary of Bermuda-based XL Capital, includes three syndicates, 588, 861 and 1209, which insure a wide range of marine, aviation and property/casualty business. All three are ranked by Standard and Poor’s top 10 Lloyd’s syndicates as having “well above market level performance”.
Brockbank says that this year, the combined syndicates will write more than £500m worth of premium, counting among its clients 68 of the FTSE 100 companies, 79 of the top 100 Fortune Global companies and 83 of the top 100 US Fortune companies.
In September last year, the agency sold its two motor insurance businesses, Admiral Insurance Services and Zenith Insurance, to management buy-outs. Admiral sells car insurance direct to the public while Zenith sells policies through the broker channel.
Brockbank’s head of projects Paul Jaffe is cagey about which outside law firms handled the work. “We decided to send the work outside as the deals were complex corporate disposals which require the kind of corporate lawyer that we do not have,” he says.
Generally, both Jaffe and colleague Rhic Webb, who is legal team manager, are reluctant to talk about which law firms they use.
This is because the pair are in the middle of honing down their list of preferred law firms from 250 to 50 (The Lawyer, 25 September). Jaffe is overseeing the project, which will see the firms split between US and UK practices. This is being done in conjunction with fellow syndicate manager Hiscox, which manages Syndicate 33, and Jaffe is overseeing that project too.
As he explains: “We have ended up with so many law firms because that’s really the way the market in Lloyd’s works. There can be a lot of people in the chain between insured and underwriter looking at risk and the chain of claims, so some people along the way in the chain suggest using particular lawyers and that is what we are trying to rationalise.”
The reasoning behind the rationalisation is that Jaffe wants to build closer relations with the law firms they do use and so ensure that the legal spend, which is around £20m a year, is used more effectively.
However, he does not want to be tied down to firms with a rigid panel. “Lloyd’s has been a very flexible place,” says Jaffe. “We don’t want to lose the fact that people can come to Lloyd’s and say, “We have a claim against us and would like to use such and such lawyers to defend us.'” Jaffe adds that Brockbank has the final say on whether law firms can be used in a defence. “Whether [the client] uses them depends on whether we are happy with their choice of lawyer.”
The in-house department is four-strong and made up of barristers and solicitors. “When we talk about our in-house department, we are talking about all insurance lawyers,” says Jaffe. The compliance department does corporate and compliance work.
Webb says: “The four in-house insurance lawyers cover all the specialisms – marine, non-marine, reinsurance, and we will also soon have a recovery specialist. Between all the lawyers we cover all the classes of business underwritten by the business, which is split between marine and non-marine. Marine work probably accounts for 25 per cent of our work.”
Both Webb and Jaffe are keen to emphasise that their in-house department is different to the majority. “A lot of work that we would do in-house is pre-empting problems, policy drafting, developing products with underwriters and working with the claims department and recovery work,” says Webb. “Recovery will be increasing with a new recruit arriving.”
The team works side by side with the underwriters to help draft policy documents.
Webb says that the department does not have a separate office, so it is not just that the team has an open-door policy, it has a “tap on the shoulder” policy. “We are very involved in new products,” Webb says. “We want to get it right at the start. Even outside brokers come to Brockbank with new ideas because they know they will have our help.”
As for the types of work that are handled in-house rather than farmed out to external firms, Jaffe explains that there is no strict delineation. “Generally, the in-house department would tend to concentrate a lot more on work that happens in the UK. The claims adjusters would outsource certain things and then, when the work goes outside, we would work in certain circumstances with the outside lawyers very closely.”
Webb adds that part of the in-house function is overseeing work done outside. “In our external law firms we are looking for more of a partnering role with them understanding our business. We want them to get involved in things like internal training.”
All Webb must do is decide which law firm will make the best choice for marriage.
Head of legal
|Sector||Lloyd’s managing agency|
|Legal capability||Four (soon to be five)|
|Head of legal||Rhic Webb|
|Reporting to||Chief executive officer Nicholas Metcalf|
|Main location for lawyers||The City|
|Main law firms||Unwilling to disclose but include Clifford Chance, Clyde & Co, CMS Cameron McKenna, Ince & Co and Norton Rose.|