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Victorian councils mount another JLT class action

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JLT is facing a second class action brought by local councils, with law firm Quinn Emanuel Urquhart & Sullivan filing a writ in the Victorian Supreme Court after already launching a similar case in NSW.

The Victorian action is led by Moira Shire Council in the state’s north, with Hobsons Bay City Council another of at least seven local governments participating.

Moira Shire GM Simon Rennie says the council believes it paid excessive premiums while part of the mutual insurer the JLT Municipal Asset Protection Plan (JMAPP), and the class action seeks damages going back to 2009

“We also believe that JLT, by prioritising its interests over ours, earned fees and commissions from JMAPP at our expense,” he said.

“We estimate that the funds which Moira stands to recover through this action are substantial.”

The council says the evidence suggests local councils overpaid premiums by 30-50% when compared to what would have been available in the open market.

“If the matter is successful, which we anticipate it will be, councils will receive the benefit of the return of funds, where it can be used to benefit ratepayers,” Mr Rennie said.

JLT, which was acquired by Marsh & McLennan this year, provides insurance services to more than 500 councils across Australia and has repeatedly highlighted the benefits of its mutual schemes.

The company says its mutual insurance arrangements – under which the councils own the insurer – provide stability and confidence for local government, regardless of the volatility in insurance markets, with their value demonstrated after the collapse of HIH and following the US September 11 attacks.

No further comment was immediately available today after the firm was contacted by insuranceNEWS.com.au.

Quinn Emanuel last year filed a class action against JLT in the NSW Supreme Court, led by Richmond Valley Council. Financial support for the actions in both states is provided by litigation funder Harbour.

Michael Mills, a partner in the law firm, says evidence supporting the action includes a Victorian Auditor-General’s report which last year found that councils could have made significant savings if they had put their business out to tender in the private market.

The class action also alleges there is a lack of transparency around commissions, fees and other forms of remuneration received by JLT.

“As an insurance broker you are a professional and you owe your clients a fiduciary duty, and as such clients are entitled to have JLT account for any other profits, commissions and remuneration which it has received without the consent or knowledge of those clients,” Mr Mills told insuranceNEWS.com.au.

Mr Mills says additional local government class actions are still possible against the broker. “Other concerned councils in other states have similarly approached us to bring recovery actions.”