Insurance Law Monthly

The sanctions imposed upon Iran by reason of the refusal of that country to comply with international requirements on its use of nuclear materials have now led to two cases in which insurers have sought to cancel cover for fear of infringing the sanctions. The issue in Arash Shipping Enterprises Co Ltd v Groupama Transport [2011] EWCA Civ 620 was the effect of the sanctions on a self-renewing policy.

The ambit of the post-contractual duty of utmost good faith is uncertain in its scope but, at least as far as the assured is concerned, establishing breach by the insurers is likely to be of little value after a loss has occurred because the only remedy is avoidance ab initio. In Stansfield Group Pte Ltd v Consumers’ Association of Singapore [2011] SGHC 122 various ingenious attempts to find an alternative basis for a duty whose breach would give rise to damages were waved away by Judith Prakash J.

A claimant relying on the Third Party (Rights Against Insurers) Act 1930 to enforce a judgment obtained against an insolvent insured can be in no better position against insurers than the insured would have been. In William McIlroy (Swindon) Ltd v Quinn Insurance Ltd [2011] EWCA Civ 825 the Court of Appeal reversed a first instance decision which had the result that the insured lost his rights against insurers before the third party claimants’ causes of action had even accrued. The case is analysed by Fiona Sinclair of 4 New Square.

In The Queen on the application of British Bankers Association v The Financial Services Authority and Anr (interested party Nemo Personal Finance Ltd) [2011] EWHC 999 (Admin), Ousley J batted back a rare challenge by the industry to the powers of its regulators in relation to payment protection insurance. The case is discussed by Dr Judith P Summer, non-practising solicitor and author of Insurance Law and the Financial Ombudsman Service.