Insurance Law Monthly

It is hard to think that those who discovered the ‘miraculous’ industrial properties of asbestos in the 19th century can have imagined what devastating consequences it could have for those employed to work with it. Still less, one suspects, did the draftsmen of the then-novel employers’ liability policies predict what difficulties those consequences would cause for their wordings. In the law of insurance, asbestos-related disease has created its own set of problems, and it is in this context that the so-called Employers’ Liability Policy ‘Trigger’ Litigation arose. Durham v BAI (Run Off) Ltd [2008] EWHC 2692 (QB), six lead cases heard by Mr Justice Burton over a period of two months, judgment being handed down on 21 November 2008, is discussed by Neil Hext of 4 New Square.

Re Equitas Ltd [2008] EWHC 2960 (Ch) raised a short point on the publicity requirements of Part VII of the Financial Services and Markets Act 2000 in the context of the transfer of insurance business.

The appeal to the Court of Appeal in HLB Kidsons v Lloyd’s Underwriters [2008] EWCA Civ 1206 saw that court, more or less for the first time, analyse the operation of a claims made liability policy under which – as is almost always the case – the assured is entitled to extend coverage by notifying circumstances which may give rise to a claim. As will be seen, although the Court of Appeal by a majority overturned much of the ruling of Mrs Justice Gloster and held that there had been a valid notification of circumstances, two judges constituting the majority – Rix and Toulson LJJ – disagreed on some fundamental issues. Lord Justice Buxton, who dissented on the notification issue, nevertheless agreed with Rix LJ on all other matters.

In Markel Capital Ltd v Gothaer Allgemeine Versicherung AG [2008] EWHC 2517 (Comm) the claimant reinsurers sought summary judgment for negative relief against two reinsureds in respect of the reinsureds’ claim for indemnification for payment under directors’ and officers’ cover. Because the case was concerned with an application for summary judgment, the ultimate question was whether the reinsurers had a reasonable prospect of success in defending the claim, which Mr Justice Andrew Smith thought was the case. Accordingly, the issues raised by the case, relating to a claims cooperation clause, are not analysed in the depth that will be required should the matter come to trial.

Council Regulation 44/2001 lays down jurisdictional rules for disputes where the defendant is domiciled in the European Union. Dornoch Ltd v Westminster International BV [2009] EWHC 201 (Admlty) raised the question of whether the provisions of the regulation allowed one group of underwriters with a dispute against the assured to join other underwriters to the proceedings.

On 11 March 2009, the English and Scottish Law Commissions published a Policy Statement on the vexed question of information communicated by a consumer assured to an intermediary but not accurately transmitted to the insurers. English law currently permits insurers to avoid the policy for non-disclosure in this situation, unless the agent was in some way authorised by the insurers to receive the relevant information on their behalf. The Law Commissions’ Policy Statement indicates their current intentions.

After over four years of consultation and discussion, on 28 February 2009 the long- awaited amendment to China’s Insurance Act was promulgated by the Standing Committee of the National People’s Congress of the People’s Republic of China. The amendment embraces various changes relating to both the insurance contract law and the regulation of insurance business in China. The new Act will come to force on 1 October later this year. The impacts of the amendment remain to be seen. The legislation is discussed by Wenhao Han of Barlow Lyde & Gilbert LLP.

The status of the Motor Insurers Bureau (MIB) is a matter of some significance but also of some uncertainty. As is well known, the MIB is the legal mechanism used by the UK government to provide compensation to the victims of uninsured and untraced drivers, and takes the form of private agreements between government and the motor insurance industry. The unanswered question is whether those agreements are equivalent to legislative instruments that can be overridden, directly or indirectly, by EC law insofar as they do not meet the requirements of EC law. In McCall v Poulton [2008] EWCA Civ 1263 the Court of Appeal has ruled that these matters should be resolved by the European Court of Justice.

The Court of Appeal has, in Limit No 2 Ltd v Axa Versicherung AG [2008] EWCA Civ 1231, in part allowed an appeal against the decision of Jonathan Hirst QC, sitting as a deputy High Court judge, [2008] Lloyd’s Rep IR 330. The first instance decision raised a number of important points of principle, but the only real matter of significance on appeal was the approach of the Court of Appeal to the suggestion that a representation made to the insurers could operate in subsequent years. The leading judgment was given by Lord Justice Longmore. Ward and Jackson LJJ were content to agree with that judgment.

In Aspen Insurance UK Ltd v Pectel Ltd [2008] EWHC 2804 (Comm) Mr Justice Teare was asked to construe the claims provisions of a liability policy in order to determine whether a notification provision had been converted into a condition precedent by a general clause deeming all terms and conditions to be of that nature.