Insurance Law Monthly

When the UK passed its first Workmens Compensation Act in 1897, the legislation contained a short provision conferring on an injured worker a statutory charge against the proceeds of any insurance policy taken out by the employer to cover its liability for personal injury. That provision proved to be unsatisfactory, and was replaced in 1906 by a transfer to the employee of a right to claim against the insurers in the event of the employer’s insolvency.

Some buildings policies confer upon the assured a range of options in the event of damage to the property. Where the property is damaged beyond repair, the assured may have the right to a cash settlement or the right to purchase an equivalent building.

One of the features of a natural catastrophe is that any property which has to be repaired or rebuilt may have to be so to higher safety standards than those originally applicable. There is no clear authority in England as to whether insurers are required to incur those additional costs, at least up to the limits of indemnity in the policy.

The Court of Appeal in AstraZeneca Insurance Co Ltd v XL Insurance (Bermuda) Ltd and Another [2013] EWCA Civ 1660 has upheld the first instance decision of Flaux J [2013] Lloyd’s Rep IR 290. The case was primarily about the recovery from reinsurers of defence costs paid by the reinsured, but it raised important issues of principle as regards the trigger of coverage under a liability policy (and, by analogy, a reinsurance contract).