Europe update: UK

2014 Highlights, 2015 Horizons

In this article we give a brief overview of the major cases and themes of 2014, together with a forecast for 2015.

Although a direct insurance case, the decision in Ted Baker Plc v Axa Insurance UK Plci, which considered a Claims Cooperation Clause, will be of interest to reinsurers too. Eder J approved textbook commentary to the effect that "full particulars" in such a clause means "the best particulars the assured can reasonably give" and further particulars can be supplied later on.

The judge also touched on the difficult issue of whether a (re)insured must comply with claims conditions if a (re)insurer wrongly rejects a claim (amounting to a repudiation of the policy). The clause in this case referred to information which was "reasonably required" but the insurer. It was held that the insurer could not reasonably require documents which would be costly and timely to produce if liability had been wrongly denied. By focusing attention on the policy wording, the judge therefore implied that a (re)insured is still bound to comply with a claims provision even though a claim has been rejected.

There were a number of cases concerning fraudulent claims in 2014. Most noteworthy amongst them was the Court of Appeal decision in Versloot Dredging v HDI Gerlingii, in which it was confirmed (despite some doubt expressed at first instance) that the correct test is whether the fraudulent devices are related to a claim and intended to promote it and that, if believed, they will yield a significant improvement in the insured's prospects.

There were two interesting reinsurance cases in 2014:

In Federal Mogul Asbestos Personal Injury Trust v Federal- Mogul Ltdiii, a claims control clause contained an express obligation that the reinsurer should act in a businesslike manner and in good faith. Eder J described this as a "very loose constraint", excluding only courses of conduct which no similar reinsurer could take. Thus it did not matter if the reinsurers' decisions end up increasing costs in the long run and that "best practice" had not been followed.

In Tokio Marine Europe Insurance v Novae Corporateiv, a retrocession contract contained an unqualified "follow the settlements" clause and the issue was whether the reinsured had taken all proper and businesslike steps in reaching a settlement. Field J found that there was no prospect of success in arguing that the reinsured had not, even though it had not fully investigated the issue of aggregation under the local policy. That was because the settlement in question had been "undoubtedly a good settlement".

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Footnotes

i [2014] EWHC 3548 (Comm)

ii [2014] EWCA Civ 1349

iii [2014] EWHC 2002 (Comm)

iv [2014] EWHC 2105 (Comm)

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.