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Trial under way in NSW councilsí class action against JLT

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A trial that could last more than three weeks is under way in the NSW Supreme Court as a class action over local government insurance mutuals comes to a head.

The Richmond Valley Council began the action on behalf of 12 NSW councils in 2018, alleging JLT breached its broker duties and arranged cover “at less advantageous rates than were available”, and that group members suffered loss and damage.

JLT says it didn’t act as an insurance broker for the group as its role and obligations were determined by the Deed under which the Statewide NSW local government liability scheme was established in 1994.

“When fairly looked at” cover arranged was not less advantageous and councils suffered no loss or damage, it says in court documents filed before the trial.

Justice Kate Williams this week heard opening submissions from the plaintiff and JLT. The trial has been allocated 25 days, but there is still the possibility that the matter will settle.

Law firm Quinn Emanuel Urquhart & Sullivan, which is acting for the municipalities, says a similar class action on behalf of Victorian councils is set to proceed to trial following the conclusion of the NSW case.

The Victorian matter had been listed for trial in August, but was delayed. A spokeswoman for the Supreme Court of Victoria says no new dates have yet been listed.

JLT is now part of Marsh & McLennan. A spokeswoman told insuranceNEWS.com.au today it believes the NSW plaintiff’s allegations are “unfounded”.

“JLT will be putting to the court that councils decide to become members of JLT-supported mutuals because of the many benefits these mutuals provide.

“JLT is putting a strong defence to the claims being made by Richmond Valley Council and expects to be successful in defending the claim. However, as the issue is before the court, it is not appropriate to make any further comment.”

A spokeswoman for the plaintiff told insuranceNEWS.com.au that as the matter is before the court, a detailed comment could not be provided.

“As the plaintiff understands it, JLT’s defence is that it was not acting as the retail broker to local councils in relation to their two largest lines of insurance, which for NSW councils cost millions of dollars each year,” the spokeswoman said today.

“That is, JLT contends that councils have been spending significant public funds without the benefit of appropriate broking advice about the best insurance arrangements for it.

“The plaintiff maintains that JLT was its trusted retail broker and gave it yearly recommendations to remain a member of Statewide, when the plaintiff says there were cheaper insurance options that were available.

“Rather than providing a broking service, the plaintiff says that JLT sought to dissuade alternative insurers from competing with Statewide. The plaintiff remains confident in its case.”

A live stream of the NSW proceedings and court documents can be accessed here.