investor daily logo

QBE refuses to pay Westpoint claims

By Madeleine Collins
2 minute read

A battle is raging between a defunct dealer group and QBE.

The administrators of Deakin Financial Services are trying to force QBE to pay professional indemnity (PI) claims arising from the Westpoint collapse.

A pre-trial hearing began in the Federal Court in Melbourne on Wednesday between insolvency firm Ferrier Hodgson and the insurance giant to do with claims against Deakin's financial planning advice.

Up to 66 former Deakin clients are seeking to recover millions in lost retirement savings by saying they received bad advice from the group when advised to invest in Westpoint's failed mezzanine products.

QBE is refusing to cover Deakin for claims arising from a number of Westpoint investments because they were not on the dealer group's approved product list (APL) and not covered under its policy.

Most PI insurers exclude non-APL products from cover because of the high risk.

In documents filed to the court on May 18, Ferrier Hodgson's lawyers Middletons argued that the APL exclusion in Deakin's policy does not prevent QBE from liability.

Deakin's PI policy is capped at $10 million. QBE has argued that each individual claim carries an excess of $100,000.

However, Middletons has argued for a smaller excess on the basis that the claims should be grouped together by product.

Deakin's parent company DKN Financial Group shut down the licensee 12 months ago in the wake of Westpoint.

At the time DKN said claims will be funded from a pool of $1 million set aside to cover costs.
A trial date is yet to be announced.