Danish insurer alleges Irish underwriter withheld premiums

An Irish insurance underwriter is being sued by a Danish insurer that went into bankruptcy in 2018 with some 500,000 policyholders in nine European countries, including 53,000 in Ireland.

Copenhagen-based Qudos Insurance A/S (in bankruptcy) is suing Wexford-based Ornella Underwriting Ltd, formerly Patrona Underwriting, over what it says were payments due of certain premiums from Irish policyholders to Qudos. It claims Ornella has failed to pass on some €2.1 million in premiums and is also claiming €1.5 million over unearned commission payments.

The claims are denied.

In High Court proceedings, which have been transferred to the fast-track commercial division, Qudos is seeking a declaration that Ornella held and continues to hold all premium payments, less contractual commissions, under agreements between the firms in 2013 and 2014.

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Under those agreements, Qudos authorised Ornella to write certain insurance policies between Qudos and Irish customers in motor and home policies. Premium payments were to be transferred to Qudos minus commission.

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In October 2018, Qudos said it terminated those agreements, and the following month Qudos went into voluntary liquidation in Denmark.

In December, Ornella filed a bankruptcy petition against Qudos as did the Danish Financial Supervisory Authority.

Assets and liabilities

Following the appointment of a trustee in bankruptcy, a review of the entire business was undertaken to assess Qudos’s assets and liabilities with a view to gathering all available money to the bankrupt estate.

The bankruptcy trustee initially focused on the continuance of claims-handling in all jurisdictions as this would be a prerequisite for payments under the Danish Guarantee Fund (DGF) for non-life insurers, Qudos said. Ornella filed a claim against the DGF which Qudos believes was later settled.

Mathias Juul Holter, a Danish lawyer acting for Qudos, said in an affidavit seeking entry of the action to the Commercial Court, that he believed Ornella paid premiums retained on Qudos’s behalf to other parties without the approval of Qudos and wrongfully failed to pass the premiums on to Qudos.

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Mr Holter said Qudos is claiming some €2.1 million (comprising €2 million and some £103,465 (€117,652)) in unpaid premiums and that a claim for unearned commissions required to be recalculated to reflect the fact that on the last day of coverage in December 2018, when Ornella allegedly appeared to have place policies with other insurers, notwithstanding that coverage was available to policyholders until March 2019.

Qudos recalculated the figure for unearned commission at €1.5 million in November 2021 and demanded payment, Mr Holter also said.

After Qudos issued proceedings in June 2022, mediation talks followed but were ultimately unsuccessful.

The case comes back before the Commercial Court in February when Ornella may make an application for security of costs which, if successful, means Qudos would have to lodge a cash sum to cover legal costs should it lose the case.