Insurance Law Monthly

It might ordinarily be thought (as Lord Sumner appeared to think in British and Foreign Marine Insurance Co v Gaunt [1921] 2 AC 41 at 57) that loss caused by inherent vice cannot be considered fortuitous. Mr Justice Blair’s decision in Global Process Systems Inc v Syarikat Takaful Malaysia Berhad [2009] EWHC 637 (Comm) provides a helpful reminder that fortuity and inherent vice are not always mutually exclusive. The case is discussed by David Turner QC and Clare Dixon of 4 New Square.

US Trading Ltd v Axa Insurance Co Ltd, 17 March 2008, a decision of HHJ Simon Brown QC in the Birmingham District Mercantile Court, involved allegations by the insurers that the assured had made false statements to the insurers while making claims, attempting to disguise a breach of warranty (ie, the class of fraud which consists of suppressing a known defence). As a result of the insurers’ suspicions, they refused to make payment: the assured was unable to restart its business and subsequently went into liquidation. There was also an issue as to whether the warranty, in respect of which the false statements had been allegedly made, had ever been incorporated into the policy. The editor is grateful to Ben Elkington of 4 New Square for bringing this case to his attention.

After-the-event (ATE) insurance has proved not to be a resounding success for the insurance market. In Axa Insurance Ltd v Akther & Darby Solicitors [2009] EWHC 635 (Comm) ATE insurers sought to recover from solicitors entrusted with the selection, and then conduct, of claims protected by ATE insurance damages for negligence. The substantive issues were not, however, considered. The case was concerned only with the threshold preliminary issue of limitation, and proceeded on the basis of assumed facts.

In the October 2008 issue of Insurance Law Monthly there was discussion of a decision of Mr Justice Beatson on the question of whether an underwriting agent appointed to accept risks on behalf of insurers had also been given the authority to conduct the insurers’ run-off. Beatson J, [2008] EWHC 843 (Comm), ruled that on the proper construction of the documents no authority had been conferred. That ruling has been upheld by the Court of Appeal: Temple Legal Protection Ltd v QBE Insurance (Europe) Ltd [2009] EWCA Civ 453.

Hamishmar Insurance Agency Ltd v FirstCity Partnership Ltd [2009] EWHC 256 (Comm) is a decision on the scope of the authority of an expert appointed to determine an accounting dispute between the parties, a coverholder under a binding authority and brokers acting as intermediaries between the coverholder and the underwriters. The only real point to arise from the case is confirmation that a contract is not to be construed by reference to the negotiations leading up to it, although there is a good description of the role played by brokers in the funding of premiums and claims.