Insuring developments is still a very lucrative source of income for Firstport and Proxima/Fairhold companies.
A freeholder is allowed to recover expenses for the placing of insurance, but not profit from it.
The easy way around it is to create a "buffer" company to give a degree of separation. that company makes the profit, and finds ways to pass that profit on to the freeholder.
In effect the freeholder Proxima/Fairhold appointed themselves (Firstport)to manage, who in turn appointed themselves (Kingsborough) who could then channel funds back to the freeholders ultimate holding companies connected to the Tchenguiz Family Trust in British Virgin Isles.
Now that the freeholding and managing companies have been forced to separate as a result of the administration, in increasing cases insurance is now being arranged by Estates&Management.
Of course to get around the law, the "buffer" company has to provide a service.
And that was the role created for Kingsborough.
Whilst not technically brokers, Kingsborough would place their business through Oval Brokers.
Kingsborough employed around 14 people, whilst Oval employed around 1000 people.
Yet it was Kingsborough that took commissions of between 12.8%-33.05%
Oval took commissions of between 2.31%-3.75%.
The excuse offered at several tribunals is that Kingsborough were being paid to value the risk and to handle claims.
So what we have is a large broker employing 1000 people letting a non broker handle claims despite only having 14 staff at a commission of up to 15 times what they were getting?
Oval have recently been taken over by Arthur J Gallagher and still work on behalf of Kingsborough. They deny any responsibility for any collusion between Kingsborough and Oval. A ridiculous position as simply by Kingsborough stated that they would handle claims, therefore there had to be some kind of collusion, as that alone would have played a part in setting commission rates.
Anyone having concerns about Kingsborough should email Louise Hughes at Louise_Hughes@ajg.com
