Richmond Valley Council and other NSW councils lose Supreme Court case against insurance broker Jardine Lloyd Thompson

A northern NSW council rallied about 20 local governments to take on an insurance multinational, but has now ended legal action. Nevertheless, the council is claiming a win of sorts.

The Supreme Court ruled in favour of JLT. Picture: Bianca De Marchi

A northern NSW council’s long-running class action lawsuit against a multinational insurance broker has finally come to end.

But Richmond Valley Council has claimed something of a victory, despite a loss against insurance broker Jardine Lloyd Thompson (JLT) in the NSW Supreme Court.

The council was the lead plaintiff in a lawsuit against JLT centred around claims of excessive insurance premiums.

The council has since found another insurance body which it stated has saved the organisation - and ratepayers - millions of dollars.

Richmond Valley Council lost its class action lawsuit against JLT.

JLT is a subsidiary of insurance and risk management company Marsh.

Earlier this year, a JLT spokesperson said publicly: “We are pleased that the Court has ruled in JLT’s favour.”

“JLT has always stated that it would vigorously defend its position in the class action as we strongly believed that the allegations were misconceived.”

The lawsuit was filed in 2018 and about 20 other councils statewide ended up jumping on board.

The councils alleged JLT breached obligations when it gave advice on insurance arrangements and arranged cover at less advantageous rates than were available.

However, the NSW Supreme Court ruled in favour of the insurance giant and determined JLT did not owe the councils a fiduciary duty and was not acting for the councils.

Speaking after the decision, Richmond council's general manager Vaughan Macdonald said it was a surprising outcome and the council had relied on JLT as a broker to test the market.

Richmond Valley Council general manager Vaughan Macdonald.

Mr Macdonald was disappointed, but said local government leadership on the issue was necessary and significant savings were made by going with new insurer Civic Risk Mutual.

“We remain glad we joined forces with Mid-Western Regional Council and Parkes Shire Council to lead the action and shine a light on the conduct of JLT and, from what we hear in the industry, some of its practices have now changed as a result,” he said.

“It was important to stand up for local government and we did that with 18 other NSW councils, however, the Court reached its decision and we accept it.

Richmond Valley Council oversees areas including the tourist town of Evans Head, near Ballina.

“We will not be appealing the judgment.”

The council said more than $4 million has been saved to be spent in the community.

With it’s new insurance, the council received $5m in flood coverage in 2022, while fellow northern NSW councils Tweed and Lismore received $2m

The class action came at no cost to the councils because it was funded by global litigation funders Harbour Fund III LP.

The council’s legal services were provided by Sydney-based law firm Quinn Emanuel Urquhart & Sullivan, while Herbert Smith Freehills represented JLT.

Originally published as Richmond Valley Council and other NSW councils lose Supreme Court case against insurance broker Jardine Lloyd Thompson