AmTrust wins right to proceed with professional negligence claim

Binding authority agreement at centre of case against MD Insurance Services

AmTrust wins right to proceed with professional negligence claim

Legal Insights

By Matthew Sellers

A High Court judge has refused to throw out a professional negligence claim brought by a leading insurer against surveying firms it says failed to flag construction defects before underwriting cover for new housing developments.

AmTrust Europe Limited, a prominent underwriter of latent defect insurance, is suing MD Insurance Services Limited (MDIS) and two of its subsidiaries over what it alleges was a “wholesale failure” to inspect and report on construction risks, resulting in the issuance of flawed policies.

Sitting in the Commercial Court, Charles Hollander KC dismissed an application by one defendant, MD Warranty Inspection Services Limited (MDWIS), to strike out the case or secure summary judgment. He also permitted certain amendments to AmTrust’s pleadings but refused others, ruling that several proposed claims were time-barred and raised new allegations not originally pleaded.

‘One stop shop’ under scrutiny

The dispute stems from a long-standing arrangement between AmTrust and MDIS, which administered warranty schemes such as Premier Guarantee and LABC Warranty under a binding authority agreement dating from 2011. Under the agreement, MDIS managed underwriting and claims handling, and was authorised to issue policies on AmTrust’s behalf.

MDIS in turn used its in-house surveying subsidiaries - MDWIS and the proposed third defendant, MD Warranty Support Services Limited (MDWSS) - to inspect new-build properties before policies were approved. These inspections culminated in the issuance of Certificates of Approval, a prerequisite to coverage.

However, AmTrust claims the surveys were carried out negligently, leading it to underwrite policies on developments later found to suffer from serious structural defects.

Arguments on Duty of Care

MDWIS had argued that it owed no duty of care to AmTrust, citing a lack of direct communication or formal contractual link. It characterised the arrangement as a “one stop shop” where the surveyors reported only to MDIS, not the insurer.

But Hollander KC rejected this, noting that surveyors were fully aware their certifications were central to whether policies would be issued. “MDWIS/MDWSS survey properties knowing that if they do so negligently … AmTrust will rely on it in issuing Policies and are likely to suffer loss,” he wrote.

The judge concluded that the evidence supported a “close relationship” between surveyors and insurer, sufficient to give rise to a duty of care, especially given MDIS’s role as AmTrust’s agent under the binding authority.

Mixed ruling on late amendments

AmTrust also sought to expand its case by adding detailed claims relating to individual properties and to join MDWSS as a defendant. While the judge allowed the joinder and certain clarifying amendments on duty of care, he ruled that many of the proposed claims introduced new causes of action well outside the limitation period.

“These are substantial claims which arose many years ago,” he noted, adding that it would now be “unfair” to require the defendants to investigate complex factual allegations not previously pleaded.

Several properties - including Norburys Yard, Whinny Brae, and Zaya House - had not originally been linked to MDWIS in the pleadings. AmTrust’s attempt to retroactively add inspection-based claims against MDWIS in respect of those sites was rebuffed on the grounds that they were too disconnected from the original claim and raised entirely new factual issues.

Transfer to construction court suggested

In closing, the judge proposed the matter might be better heard in the Technology and Construction Court (TCC), given its specialist jurisdiction.

The case highlights the increasing scrutiny of delegated underwriting arrangements and the legal exposure of third-party service providers - particularly where insurers rely on technical assessments in high-value property policies.

Case details

CaseAmTrust Europe Ltd v MD Insurance Services Ltd & Ors [2025] EWHC 1468 (Comm)
Date: June 13, 2025
Court: High Court (Commercial Court)
Judge: Charles Hollander KC

Claimant: AmTrust Europe Limited
Defendants:

  • MD Insurance Services Limited
  • MD Warranty Inspection Services Limited
  • MD Warranty Support Services Limited (Proposed)

Solicitors:

  • Reynolds Porter Chamberlain (for AmTrust)
  • Beale & Co (for MDIS)
  • Mills & Reeve (for MDWIS and MDWSS)

 

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