A class action against two insurance giants could potentially be the costliest case ever heard before the Manx courts.

Some 1,600 claimants have lodged claims totalling more than £270m against Utmost International Isle of Man Ltd and Friends Provident International Ltd.

The case dwarfs another class action against the same two companies for which judgment is still awaited. That earlier lawsuit involved 739 investors seeking compensation totalling £100m.

Deemster Alan Gough said in a judgment relating to the £270m class action: ‘Undoubtedly this case is going to be one of the most costly ever before the Isle of Man courts, if not the most costly.

‘I have seen mentioned a global figure of £11m. That is a staggering amount for costs.’

The case against Utmost, Quilter International Ireland/Utmost PanEurope and Friends Provident International, has been brought by Alexander Francis Morrison and hundreds of other claimants who invested in portfolio bonds sold by the defendants.

Many of the claimants allege that their adviser-brokers who arranged the investments received commissions from the defendants which were either undisclosed secret commissions or commissions that were not fully disclosed as to their size of how they were calculated.

It is also alleged that undisclosed commissions were received from third party funds associated with the portfolio bonds.

The claimants say the non-disclosure of these commissions violated fiduciary duties owed to them by their agents, the adviser-brokers, and were facilitated by the defendants, amounting to ‘dishonest assistance and unlawful means conspiracy’.

Utmost and FPI are alleged to have knowingly assisted in these breaches and engaged in unlawful means conspiracy to profit from the claimants’ investments.

Many of the investments failed and the claimants suffered losses. They are seeking cancellation of the contracts, compensation and damages.

The claim form was filed in March 2023. Around 300 of the 1,600 claims are being made against Friends Provident International.

Deemster Gough noted that there are two further claims running in parallel to these proceedings.

He said the claimants say they have been ‘stonewalled’ throughout the litigation process, but the defendants deny this.

The case management hearing focused on how the matter should proceed to trial.

Deemster Gough said that some of the investments were made over 26 years ago and the claimants and the adviser-brokers are located in many different jurisdictions across the world.

The claimants proposed that all the claims be tried together, or test claims selected and taken to trial, with the outcome binding on them all.

But Deemster Gough ruled that such an approach risked unfairness to the defendants in relation to the non-test claimants who he said could receive an ‘undeserved windfall’.

He proposed the selection of a limited number of test claimants and a trial on a pre-agreed list of common issues, with the outcome binding on the remaining claims.

The Deemster ordered that the parties agreed an appropriate questionnaire with the aim of identifying suitable test claimants.

He suggested the claimants, Utmost and FPI each nominate 15 test claimants and said he would hope to end up with a pool of 20 taking part in the test trial.

A spokesman for Utmost International said: ‘The provision of good customer outcomes is central to Utmost Group’s strategy, and we take our obligations to clients seriously. Utmost International does not consider the claims to have any merit and is robustly defending the cases.’