As the buck-passing continues – with governments blaming each other, everyone except the Government and APRA blaming APRA, APRA blaming the HIH management and board – it was inevitable that brokers would get caught up.

University of Queensland law professors Tony Tarr and Des Derrington kicked off with an article in the Insurance Law Journal claiming policyholders could sue their brokers because they should have been aware of HIH’s financial position.

“It is clear that insurance brokers should carefully consider auditors’ and annual reports and, it appears, they should have regard to rumours in the marketplace,” they said.

The comments bought a swift response from NIBA, with CEO Noel Pettersen pointing out that the HIH auditor had signed off on the books in October, when the company was claiming to have made a profit.

“Brokers rely on the same guides as everyone else in the industry – the government regulators and the ratings agencies, as well as publicly available information,” he said. “APRA showed no sign of being concerned about the company and Standard & Poor’s had given it an ‘A’ rating.”

Mr Pettersen also dismissed the concept of reacting to rumours. “Brokers have to rely on solid evidence, the same as anyone else.”

HIH was still active in the market, and was aggressively defending its financial strength against a small band of critics almost to the very end, he said. He pointed out that the Australian journalist Mark Westfield, the first to publish doubts about the company’s performance, was threatened with legal action by HIH.

“In the absence of any action or comment by the regulator until it was far too late, how could brokers know the extent of the problem?” Mr Pettersen said.

He agreed some brokers have said they refused to deal with HIH last year, but pointed out that the majority did not. “That includes some of the largest broking companies in the market – very experienced international operators.”