Insurance Law Monthly

Section 51 of the Senior Courts Act 1981 gives the court a discretion as to the award of costs, and also permits the court to make a costs order against a non-party. The usual scenario is that the assured has become insolvent and the insurers have defended the claim in their own interests. In XYZ v Travelers Insurance Co Ltd [2017] EWHC 287 (QB) the facts were somewhat different.

In Dalecroft Properties Ltd v Underwriters [2017] EWHC 1263 (Comm) the insurers of a building sought to avoid the policy for non-disclosure and misrepresentation. There were also allegations of breach of warranty. The issues were largely factual. Although the case was decided on the law as it was before the passing of the Insurance Act 2015, it was expressly stated by Richard Salter QC, sitting as a Deputy High Court Judge, that the outcome would have been no different under the new regime.

In Simmonds v Gammell [2016] EWHC 2515 (Comm), Sir Jeremy Cooke had to consider an appeal from the finding of an arbitral tribunal that the reinsured’s liability to indemnify the Port of New York against claims by employees following the WTC attacks arose from one event. The case is discussed by David Turner QC of 4 New Square.

It is often said that there is a presumption that a reinsurance contract is to be construed back to back with the underlying reinsurance. The cases have demonstrated a number of important limitations on that principle: it is confined to facultative and proportional reinsurance; it cannot contradict clear wording to the contrary; and it is less likely to operate where coverage issues are at stake.