Insurance Law Monthly

In Anders & Kern Ltd v CGU Insurance plc [2007] EWCA Civ 1481 the Court of Appeal has upheld the first instance judgment of His Honour Justice Mackie QC, [2007] Lloyd’s Rep IR 555, discussed in the August 2007 issue of Insurance Law Monthly. The case largely concerned the proper interpretation of policy exclusions, but from a wider point of view there was some discussion in the lower court as to how the duty of utmost good faith might restrict the insurers’ right to rely upon policy defences. The appeal to the Court of Appeal focused on the policy terms themselves.

In Zeller v British Caymanian Insurance Co Ltd [2008] UKPC 4 the Privy Council, in dealing with what was more or less a factual dispute, confirmed that if the assured is required to answer questions to the best of his knowledge and belief, he cannot be guilty of misrepresentation if his answers are, unknown to him, untrue.

Claims made professional indemnity policies confer upon the assured the right (and sometimes the obligation) to notify to the insurers circumstances that may give rise to a claim, in which case a post-policy claim relating to those circumstances is covered by the policy. In Kajima UK Engineering Ltd v Underwriter Insurance Co Ltd [2008] EWHC 83 (TCC), Mr Justice Akenhead considered the vexed and common problem of determining whether the claim actually made against the assured arose from the earlier notified circumstances.

In the light of the Law Commissions’ recent proposals on insurable interest, and in particular their recommendation that it should remain necessary for a person taking out a policy to possess an insurable interest in the life assured, the facts of Patel v Windsor Life Assurance Co Ltd [2008] EWHC 76 (Comm) must raise serious doubts as to whether the insurable interest requirement is really any protection against fraud on behalf of the beneficiary of the policy. The circumstances of the fraud may be extreme, but it seems that a number of reputable insurers were taken in by it.

Three recent and short statutory instruments came into force on 30 June 2008. The measures, all of which have been under discussion for some months, modify the transfer of insurance business rules in Part VII of the Financial Services and Markets Act 2000. The relevant measures are: the Financial Services and Markets Act 2000 (Control of Business Transfers) (Requirements on Applicants) (Amendment) Regulations 2008, SI 2008 No 1467, the Financial Services and Markets Act 2000 (Amendments to Part VII) Regulations 2008, SI 2008 No 1468, and the Financial Services and Markets Act 2000 (Amendment of Section 323) Regulations 2008, SI 2008 No 1469. All came into force on 30 June 2008.