Insurance Law Monthly

Property and other first party covers generally exclude liability for loss caused by wear and tear. In JSM Management Pty Ltd v QBE Insurance (Australia) Ltd [2011] VSC 339 the Supreme Court of Victoria has decided that that phrase is to be given a narrow meaning, applying only to losses which are ordinarily the result of use or natural forces. Extraordinary losses are within the scope of cover.

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.

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 decision of Lang J in the High Court of New Zealand, Auckland District Registry, 15 September 2011, in Steigrad v BSFL 2007 Ltd, strikes a serious blow at the efficacy of D&O cover in New Zealand and also in New South Wales. The decision effectively means that defence costs are irrecoverable by the directors if third party claimants against the directors assert their statutory right to direct recovery from the insurers.

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.