Insurance Law Monthly

The question in Pine v DAS Legal Expenses Insurance Co Ltd [2011] EWHC 658 (QB) was whether the assured, under a legal expenses policy, was entitled to exercise her right to choose a lawyer by instructing a barrister directly rather than proceeding through solicitors. The outcome, in favour of the assured, turned upon the proper construction of the policy, and there was no need for the court to deal with difficult issues as to the meaning of the EU legislation and the UK implementing legislation on the freedom of a policyholder to choose her own lawyer.

The Insurance Conduct of Business Rules in the Financial Services Authority Handbook, issued under the Financial Services and Markets Act 2000, regulate the conduct of insurance intermediaries. However, the Rules fall short of requiring commission disclosure in consumer cases. In Harrison and Anr v Black Horse Ltd [2011] EWCA Civ 1128 the Court of Appeal rejected various arguments to the effect that non-disclosure of commission and the very size of the commission were matters which infringed the FSA Handbook. The case rose in the very specific context of payment protection insurance taken out to support a credit agreement, so that the provisions of the Consumer Credit Act 1974 on unfair credit agreements were also attracted.

The providers of package tours and holidays are required by English law, implementing an EU Directive, to provide security in the event that a package is cancelled. Such security may be in the form of insurance. The decision of Teare J in All Leisure Holidays Ltd v Europaische Reiseversicherung AG and Ors [2011] EWHC 2629 (Comm) is the first reported case on a policy of this type, and raises wider issues of the meaning of loss and the scope of claims obligations.

The Damages (Asbestos-related Conditions) (Scotland) Act 2009, a measure of the Scottish Parliament not replicated by the UK Parliament, reverses the common law rule established in Rothwell v Chemical & Insulating Co Ltd [2008] AC 281 and provides that pleural plaques and related conditions are, with retrospective effect, deemed to constitute actionable harm. In AXA General Insurance Ltd and Ors v The Lord Advocate (Scotland) and Ors [2011] UKSC 46 certain insurers who had issued insurance policies complying with the Employers’ Liability (Compulsory Insurance) Act 1969 challenged the validity of the legislation on the basis that it imposed retrospective liabilities upon them. The Supreme Court unanimously rejected the insurers’ arguments.

In Westport Insurance Corporation and Ors v Gordian Runoff Ltd [2011] HCA 37 arbitrators ruled that reinsurers were liable to the reinsured in that the losses fell within the scope of a reinsurance treaty. An appeal from that decision has, over a period of years, filtered up to the High Court of Australia, which has by a majority overturned the original award on a number of grounds, including error of law and failure by the arbitrators to give adequate reasons.

In PT Buana Samudra Pratama v Maritime Mutual Insurance Association (NZ) Ltd (The ‘Buana Dua’) [2011] EWHC 2413 (Comm) the court had to consider whether it was open to a following market underwriter to advance defences alleging that the assured had been in breach of warranty or had used fraudulent devices after the claim had been settled by the lead underwriter. The decision is discussed by David Turner QC of 4 New Square.

Insurance and reinsurance disputes are often preceded by jurisdictional battles. This is unsurprising, because the place in which a case is heard will be significant for a determination of the law applicable to the contract in question and the application of the rules of construction under that law. In Faraday Reinsurance Co Ltd v Howden North America Inc and Anr [2011] EWHC 2837 (Comm) London market insurers were keen to keep a dispute concerning asbestos coverage out of the US courts, fearing far wider liability under the policy than they would face in England. The issue in the case was whether insurers were entitled bring proceedings in England for a declaration as to the law applicable to the policy.

The decision of the Victoria Supreme Court in Leading Synthetics Pty Ltd v Adroit Insurance Group Pty Ltd [2011] VSC 467 deals with a number of points of interest both generally and in relation to credit policies. The general issues are whether a contract existed and whether it had been brought about by non-disclosure; the specific point was whether a policy came into effect where the customer whose account was protected was in debt at that stage.

A policy of insurance is renewed from year to year. In the first year broker A negligently includes an inappropriate term, which significantly reduces the protection given to the insured. That term is reproduced in later years without any further thought being given to it, either by broker A or by his successor, broker B, who has replaced broker A by the time of the placing of the policy which is in force when the problem comes to light. Is broker A, the original source of the problem, liable for the loss? This was the main question which Christopher Clarke J had to answer in Beazley Underwriting Ltd and Ors v The Travelers Companies Inc [2011] EWHC 1520 (Comm). The case is discussed by Mark Cannon of 4 New Square.

The question in Pine v DAS Legal Expenses Insurance Co Ltd [2011] EWHC 658 (QB) was whether the assured, under a legal expenses policy, was entitled to exercise her right to choose a lawyer by instructing a barrister directly rather than proceeding through solicitors. The outcome, in favour of the assured, turned upon the proper construction of the policy, and there was no need for the court to deal with difficult issues as to the meaning of the EU legislation and the UK implementing legislation on the freedom of a policyholder to choose her own lawyer.

In PT Buana Samudra Pratama v Maritime Mutual Insurance Association (NZ) Ltd (The ‘Buana Dua’) [2011] EWHC 2413 (Comm) the court had to consider whether it was open to a following market underwriter to advance defences alleging that the assured had been in breach of warranty or had used fraudulent devices after the claim had been settled by the lead underwriter. The decision is discussed by David Turner QC of 4 New Square.

The providers of package tours and holidays are required by English law, implementing an EU Directive, to provide security in the event of cancellation, which may be in the form of insurance. The decision of Teare J in All Leisure Holidays Ltd v Europaische Reiseversicherung AG and Ors [2011] EWHC 2629 (Comm) is the first reported case on a policy of this type, and raises wider issues of the meaning of loss and the scope of claims obligations.