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Judge Upholds Jury Award in United National-Aon E&O Dispute

Source: Business Insurance

Posted on 28 Jul 2009

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A federal judge in Philadelphia has upheld a nearly $24 million jury award to United National Group in an errors and omissions reinsurance dispute with London-based broker Aon Ltd.

In his ruling last Friday, Judge Louis H. Pollak of the U.S. District Court for the Eastern District of Pennsylvania also increased the award Aon must pay United National to $32.2 million reflecting prejudgment interest.

Bala Cynyd, Pa.-based United National sued the London-based arm of Chicago-based Aon Corp. in 2004 alleging the broker committed numerous misrepresentations in the mid-1990s while obtaining reinsurance for United National from Italian reinsurer Riunione Adriatica di Sicurta, S.p.A.

In the mid-1990s, United National was the policy-issuing company for Aon Ltd.'s Alexander Howden Contractors and Allied Trades Insurance Program, which provided insurance to U.S. commercial and residential construction contractors.

RAS participated as one of United National's reinsurers on the Howden Contractors Program. But after claims exceeded premiums, RAS sought to rescind its coverage on the grounds that it had been misled by United National, Aon or both.

In 2002, an arbitration panel awarded RAS partial rescission. United National then sued Aon to recoup its losses and a jury last December ordered Aon to pay the insurer $24 million—all the reinsurance that it lost and the expenses it incurred as a result of the arbitration.

Last Friday, Judge Pollak denied Aon's motion for a new trial and granted United National's motion to add $8.3 million in interest.

A spokesman for Chicago-based Aon was not immediately available for comment, but the brokerage said in December that it planned to appeal the verdict.