Insurance Law Monthly

On 1 March 2011, in a much anticipated and expected decision, the European Court of Justice has ruled in Association Belge des Consommateurs Test-Achats ASBL v Kingdom of Belgium Case C-236/09 that, with effect from the end of 2012, it will no longer be possible for insurance companies to use actuarial and statistical data to justify charging different premiums to men and women for insurance cover. The implications will be felt particularly strongly by motor and life insurers, and much has been written about the likely outcome. The present article explains exactly how the court reached its much-criticised conclusion.

The Supreme Court has confirmed, in Sienkiewicz v Greif (UK) Ltd [2011] UKSC 10, that mesothelioma cases form an exceptional category in English tort law, and that the test for causation is far more generous to the victim than in any other situation.

In Ground Gilbey Ltd and Anr v Jardine Lloyd Thompson UK Ltd [2011] EWHC 124 (Comm) Blair J confirmed that a broker owes duties after the inception of the risk to take reasonable steps to ensure that the assured is kept aware of events that might prejudice coverage. A further important matter discussed in this case is the ability of brokers to challenge the amount of a settlement reached between the assured and the underwriters when the assured wishes to recover the shortfall from the brokers.

The assured in Sharon’s Bakery (Europe) Ltd v AXA Insurance UK plc and Anr [2011] EWHC 210 (Comm) may be thought to have been a little unfortunate. The assured created false documents for the purpose of obtaining finance from a bank and then, when the subject matter was destroyed by fire, used those same documents to press a claim against the insurers. The outcome was that the assured suffered a genuine loss but the insurers were able to deny liability both by reason of non-disclosure and by reason of the assured having made a fraudulent claim. This seems to be a case in which the fraud was not an attempt to obtain any dishonest advantage but rather to substantiate the assured’s version.

The suing and labouring clause is found in virtually all modern marine policies. The provision is of some antiquity, and its use is codified by the provisions of s78 of the Marine Insurance Act 1906. However, various aspects of its operation remain uncertain. The issues were discussed by Burton J in Melinda Holdings SA v Hellenic Mutual War Risks Association (Bermuda) Ltd [2011] EWHC 181 (Comm).

Aviva Insurance Ltd v Brown [2011] EWHC 362 (QB) is a case in which the assured was accused of using fraudulent means and devices to obtain payment for a genuine loss. The case is an important one in that there is a discussion by Eder J of the meaning of ‘fraud’ in this context, and there is a strong argument that the case shows that the law on fraudulent claims has become unfairly balanced in favour of insurers.

Documents prepared by or for a party in anticipation of litigation, and for the purpose of that litigation, are protected from disclosure by litigation privilege. In Axa Seguros SA de CV v Allianz Insurance plc [2011] EWHC 268 (Comm) the important question discussed by Christopher Clarke J was whether reports commissioned by reinsurers into the amount of loss suffered by the assured were protected by litigation privilege when those reports subsequently disclosed that the reinsured had failed to comply with policy conditions. The learned judge ruled that privilege is available only where the primary purpose of the document being prepared is anticipated litigation, so that in the present circumstances there was no litigation privilege.

In Argo Systems FZE v Liberty Insurance (Pte) and Anr [2011] EWHC 301 (Comm) HHJ Mackie QC addressed difficult and in part unresolved questions involving waiver of remedies for breach of the duty of utmost good faith, and waiver of breach of warranty. The judgment is important also in that it shows that the wording of a reservation of rights may itself preclude reliance on known defences.

Where the parties have agreed to subject their contract to English law, and an issue as to whether the English courts should assert jurisdiction over any dispute arises, the fact that English law is the applicable law will generally make it appropriate for the English courts to hear the action. However, that is not an absolute rule, and there may be cases in which the dispute is factual and the relevant evidence is outside England. In such a situation, as long as the English court is satisfied that English law will be applied by the foreign court seised of the action, there is no particular basis for an assertion of jurisdiction by the English court. Such a case was Mujur Bakat Sdn Bhd and Anr v Uni Asia General Insurance Berhad and Ors [2011] EWHC 643 (Comm).

The basis of subrogation is that the insurance position of the claimant in legal proceedings is to be disregarded. It is not, therefore, open to a defendant to assert that the claim against him should be dismissed because the claimant has not suffered any loss by reason of indemnification by his insurers. In Sousa v London Borough of Waltham Forest Council [2011] EWCA Civ 194 the Court of Appeal held that the same principle should apply to litigation funding mechanisms adopted by the insurers: the matter is to be looked at as if the insurers were not involved.

On 1 March 2011, in a much anticipated and expected decision, the European Court of Justice has ruled in Association Belge des Consommateurs Test-Achats ASBL v Kingdom of Belgium Case C-236/09 that, with effect from the end of 2012, it will no longer be possible for insurance companies to use actuarial and statistical data to justify charging different premiums to men and women for insurance cover. The implications will be felt particularly strongly by motor and life insurers, and much has been written about the likely outcome. The present article explains exactly how the court reached its much-criticised conclusion.

The Motor Insurers Bureau Untraced Drivers Agreement 2003, and its predecessors, has generated a good deal of complex litigation. The general scheme of the agreement is that the victim of an untraced driver can bring a claim for damages against the MIB, which must investigate the claim and then award damages as if the action had been brought in the courts. The administrative nature of this procedure has given rise to a series of complaints about its operation. The most recent, Carswell v Secretary of State for Transport and the Motor Insurers Bureau [2010] EWHC 3230 (QB), concerned three matters: the fact that the MIB is not independent of the insurance industry; the cap on the recovery of legal costs; and the apparent absence of any right of appeal against MIB procedural irregularities.

The Supreme Court has confirmed, in Sienkiewicz v Greif (UK) Ltd [2011] UKSC 10, that mesothelioma cases form an exceptional category in English tort law, and that the test for causation is far more generous to the victim than in any other situation.

In Garnat Trading & Shipping (Singapore) Pte Ltd v Baominh Insurance Corporation [2010] EWHC 2578 (Comm) a floating dock was seriously damaged in a tropical storm. The insurers under the policy covering the voyage alleged both that the assured had failed to disclose material facts relating to the fitness of the floating dock to make the voyage and that the floating dock was unseaworthy. Much of the decision is taken up with factual evidence, but some points of principle do emerge.