Claims - Interest On Claims

(Adcock v Co-operative Insurance Society Ltd (Court of Appeal, 7 April 2000); Kuwait Airways Corporation v Kuwait Insurance Co SAK (No 3) (Mr Justice Langley, 19 April 2000))

Under s 35A of the Supreme Court Act 1981, a court may award simple interest on a sum awarded in a judgment in any sum for which judgment is given, “at such rate as the court thinks fit … for all or any part of the period between the date when the cause of action arose and … the date of the judgment” (s 35A(1)). The court may also award interest at different rates for different periods (s 35A(6)). The application of this provision to insurance claims has not, until recently, been the subject of authoritative decision. There was a widely held view in the insurance industry that a court would not award interest from the date of the assured’s loss itself, but rather would postpone the running of interest until the date at which the insurer had been given a reasonable opportunity to consider the claim. This view was, in essence, based on the idea that interest was intended to punish insurers for dilatory conduct. However, two recent decisions, Adcock v Co-operative Insurance Society Ltd (Court of Appeal, 7 April 2000) and Kuwait Airways Corporation v Kuwait Insurance Co SAK (No 3) (Mr Justice Langley, 19 April 2000) independently reached the conclusion that the purpose of interest is to indemnify the assured for being kept out of his money rather than to punish the insurers, and accordingly that interest will normally run from the date of the loss. Insurance Law Monthly is grateful to Andrew Pincott of Elborne Mitchell for the transcript of the Kuwait decision. Both cases will be reported in [2000] Lloyd’s Rep IR.