Some of Marsh’s top executives in Asia as well as members of its aviation team are the subject of a criminal complaint in the Philippines after allegedly sharing confidential client information.
The men, including Marsh Asia CEO David Jacob, stand accused of breaking Filipino law by disclosing client-sensitive information and ultimately destroying – what was suggested to be – a $2.25mn business relationship between one of its clients, an insurer, and an airline, according to a local media report.
The broker’s chief client officer for aviation and aerospace Giles Wilkinson and Ross Fairweather a senior vice president in the same London-based team have also been accused of disseminating the data without permission. Also accused is Marsh’s regional aviation head Tim Blakely, The Manila Times reported.
The news comes less than a year after Marsh entered into a multi-million dollar settlement with the same former client, local aviation insurer Prudential Guarantee and Assurance (PGA), after the broker allegedly used the carrier’s data to pitch for – and ultimately win – one of its airline accounts, re-Insurance.com understands.
In a December 2015 filing in the UK’s high court, the client, Philippines-based PGA claimed that after it replaced Marsh for rival JLT, Marsh then went direct to its client, Cebu Air.
The insurer – effectively a fronting carrier for the business – alleged that Marsh used confidential pricing data obtained while working for PGA to then win the account.
Cebu Air had bought insurance through PGA for almost two decades, while Marsh had been responsible for structuring the insurer’s reinsurance protection.
But that changed in June 2015 after PGA told Marsh it would be switching to JLT.
Just over a week after informing Marsh that PGA was moving its account, the insurer’s president and CEO Robert Cuyioto received a call from Cebu Air boss Lance Gokongwei accusing the insurance executive of overcharging for his firm’s fronting services, according to legal documents seen by re-Insurance.com.
At a meeting between the two executives, the airline boss Gokongwei said Marsh had provided details of PGA’s historic remuneration, which Marsh claims was “excessively high”. PGA said the broker’s revelation had caused its relationship with Cebu to sour before ultimately falling apart.
It claimed that as a result of Marsh’s alleged breach of confidence, it had lost an account worth $2.25mn a year.
But Marsh, which denied wrongdoing, said the figure was closer to $1.65mn and was split between PGA and Cebu Air’s placing broker Unicon.
Marsh’s brokerage was $350,000 while gross premium on the account was $11mn.
In its defence, filed in the UK in February 2016, Marsh said: “The rate being charged by PGA to Cebu [Air] was, in the context of the long-standing relationship between them, abnormal or excessively high in that PGA, which was retaining no risk, was effectively charging an excessively high fee for fronting the business, amounting to at least around 19 percent of the actual risk premium.”
“It was manifestly in Cebu’s interest to reduce the premium it paid for its insurance, if it could place equivalent insurance through some other insurance or fronting company,” the broker continued.
“Bearing in mind the high fee charged by PGA, that was not difficult.”
Marsh is understood to have settled the case for a seven-figure sum last year. But now, four of its executives are facing a criminal complaint in the Philippines over the allegations. If the case is taken up by the country’s prosecutor, a conviction could carry a maximum six year jail sentence.
In an eight page sworn affidavit obtained by The Manila Times, PGA appeared to repeat the claims made in the London civil case.
It said that London-based Wilkinson and Fairweather had access to confidential PGA information that was covered by confidentiality agreements.
But PGA alleges that the two brokers sent that information to a number of their colleagues including Blakely and ultimately Jacob who reportedly passed the information over to PGA’s client Cebu Air.
Marsh is then understood to have approached the airline directly and subsequently took the business, which was not renewed with PGA causing the fronting carrier to allege the broker had broken the law in the Philippines.
The allegations come against the backdrop of an EU investigation into practices within the aviation insurance market which is centred in London.
Marsh declined to comment.