Following an investigation led by the Financial Conduct Authority in the United Kingdom, leading insurance broker Marsh recently suspended the head of its UK aviation practice, Marcel Chad. He was replaced by Mark Costin, formerly from the Marsh aerospace team.
The FCA investigation was prompted by a number of allegations that Marsh shared competitively sensitive information regarding their aviation insurance accounts. The FCA is likewise examining whether the Jardine Lloyd Thompson Group, Willis Towers Watson and UIB are guilty of the same ethical violation.
The infringement ostensibly happened in the Philippines, when Marsh UK was accused of sending representatives from its Singapore office to meet with the top executives of a local airline.
During the meeting, the Marsh executives allegedly disclosed highly confidential and proprietary information, which led to a complaint filed by one of the country’s top non-life insurers before the UK High Court. Before a final ruling could be reached, Marsh chose to settle the matter out of court.
Marsch UK, in a letter sent to the Philippine Insurance Commission regarding the incident, acknowledged that their intention was to solicit the insurance business of the airline, adding that “Marsh was now able to compete” with other local insurance companies.
Moreover, they stated that the purpose of the meeting was to “invite the airline to consider giving Marsh Philippines and Marsh UK an opportunity to tender for the account.”
Under Section 100 of the Amended Insurance Code, however, a reinsurance broker may only tender brokerage services to an insurer, and cannot tender insurance brokerage services nor insurance services directly to a client.
Consequently, the IC is now examining the manner by which Marsh uses “fronting insurers” in the country, and whether this practice allows them to bypass Philippine laws and conduct business in the Philippines without a license.