Insurance Law Monthly

Where a fraudulent claim is made against the reinsured, and is paid by the reinsured with knowledge of the fraud, plainly the reinsurers cannot be liable to provide any indemnity to the reinsured. The payment is more or less ex gratia. The position in Korea National Insurance Co v Allianz Global Corporate & Specialty AG [2008] EWHC 2829 (Comm) was more complex, because the allegation was that the fraud was the result of complicity between the parties to the underlying contract and also on the part of the North Korean government and courts. Mr Justice Field held that he had no jurisdiction, on the basis of the principle of nonjusticiability, to determine the allegations made against the Korean government itself. The ruling on non-justiciability was, however, overturned on appeal, [2008] EWCA Civ 1355.

Jones v Environcom Ltd [2009] EWHC 16 (Comm) raised an important point of principle, albeit one to be resolved by the facts of each case. If insurers seek negative declaratory relief, eg, as to their right to avoid, and the assured counterclaims for the amount allegedly due under the policy in respect of a loss, are insurers entitled to seek an order for security for their costs in defending the counterclaim? Mrs Justice Gloster, on the facts before her, held that this was the case.

It is settled law that the presentation of a slip amounts to an offer to the underwriters, and that their scratching of the slip constitutes an acceptance. But what is the position if the slip omits a term that the parties had agreed upon before the slip was presented? The traditional view would be that the contract takes effect according to the terms of the slip, but that there may be a subsequent application to the court for rectification of the policy to match the earlier agreement. In Allianz Insurance Company-Egypt v Aigaion Insurance Co SA (No 2) [2008] EWCA Civ 1455 the Court of Appeal has confirmed that there is a binding contract on the terms of the slip: issues of rectification did not arise. There had been earlier proceedings between the parties involving the effect of a deferred premium clause, but that matter was not at stake in the present appeal.

In the October 2008 issue of Insurance Law Monthly there was discussion of the decision of Mr Justice Burton in Reilly v National Insurance & Guarantee Corporation Ltd [2008] EWHC 722 (Comm), a case on preliminary issues on the construction of a product liability policy. The learned judge ruled that an exclusion in the policy relating to failure of machinery precluded any claim. That ruling has been reversed in part by the Court of Appeal, [2008] EWCA Civ 1460. The leading judgment in the Court of Appeal was given by Lord Justice Moore-Bick.

The decision of Mr Justice Walker in Crane v Hannover Ruckversicherungs-Aktiengesellschaft [2008] EWHC 3165 (Comm) is one that turns largely on its own special facts, all questions of law having been agreed by the parties. The judgment is nevertheless an interesting one, because it involves questions of post-contractual disclosure, the materiality to the placement of a retrocession of the reinsurers’ own concerns as to the underlying insurance program, and the role of materiality and inducement.

In Greene Wood & McLean LLP v Templeton Insurance Ltd [2009] EWCA Civ 65 the Court of Appeal considered the operation of after-the-event (ATE) insurance, and in particular whether solicitors who obtained such policies for their clients and then paid the costs for the clients had any form of action based on breach of contract. The issue arose in the context of an application for permission to serve proceedings outside the jurisdiction.