Hanover Group's lawsuit against former insurance broker set for court

Mark Hotchin and five others associated with Hanover companies are being sued by the FMA. Photo / Brett Phibbs

Hanover Group's lawsuit against its former insurance broker for failing to get it full cover hasn't settled and is now expected to be argued almost a year and a half after it was originally due in the High Court.

The stoush was called off last February after an interim settlement was reached, in the hope a deal could also be cut over the Financial Markets Authority's action against Mark Hotchin, Eric Watson and four other Hanover directors or promoters.

However, neither case has settled.

In the insurance stoush, Hanover is suing its former broker Apex General for breach of contract.

The failed finance group alleges the broker received clear instructions but failed to obtain full prospectus cover from insurer AIG.

As a result of this alleged breach, Hanover claims, it has already lost more than $2 million it could have claimed under insurance policies. That includes the $600,000 it spent in a failed bid to get cover from AIG under a $20 million policy.

Because of Apex's alleged breach, Hanover claims it will also be unable to rely on payments from AIG for its upcoming case with the FMA. It wants an inquiry into losses, judgment for this amount and interest and costs. Although the interim settlement was reached last February, the litigation still hasn't been resolved and Hanover and Apex are due back in the High Court in July.

The FMA's civil action against six former Hanover directors or promoters is due in court in September.

The FMA seeks compensation for investors who put $35 million into Hanover Finance, Hanover Capital and United Finance between December 2007 and July 2008.