March 2008

THREE LITTLE WORDS - £50M LOST 

In Standard Life Assurance Limited v. Oak Dedicated Limited and others, the Commercial Court has sounded a warning to those responsible for preparing wordings, highlighting the danger of using anything other than the clearest language where aggregation is concerned.

Facts

The case arose as a result of Standard Life seeking indemnity in respect of mortgage endowment misselling claims. Standard Life faced approximately 97,000 individual claims, most for under £10,000, but a total liability in excess of £100m. Standard Life sought indemnity from its professional indemnity underwriters pursuant to a professional indemnity and crime insurance placed by its brokers Aon. The policy provided cover of £75m excess of £25m in respect of claims made during a three year period between May 1998 and May 2001. Claims were defined under the policy as:

Download (pdf)

March 2008 

Reinsurance Group E-Alert

Insurer can take over the conduct of a claim, and repudiate liability

Kosmar Villa Holiday Plc v Trustees of Syndicate 1243 (2008)

In a positive move for insurers, the Court of Appeal ("CA") has overturned a first instance decision which suggested that, in the context of a liability policy, once insurers have taken over the conduct of a claim, they may well find themselves bound to indemnify the insured even though there was a clear breach of a condition precedent which insurers were still investigating.

March 2008

A summary of recent developments in insurance, reinsurance and litigation law

• Follow the settlements and back to back reinsurance. A summary of the Court of Appeal's decision in Wasa v Lexington.
  
• Waiver of breach of conditions precedent and whether a Reservation of Rights is needed. A summary of the Court of Appeal's decision in Kosmar Villa Holidays v Trustees of Syndicate 1243.
• Service of claim form out of the jurisdiction and effect of defective service under local law. A summary of the Court of Appeal's decision in Olafsson v Gissurarson.
  
• Professional negligence claims and time bar arguments. A summary of the Court of Appeal's decision in Watkins v Jones Maidment Wilson.
• Whether "take or pay" clauses amount to penalty clauses. A summary of M&J Polymers v Imerys Minerals.
• Bringing different proceedings in different EU courts - are the proceedings "related actions". A summary of Research in Motion UK v Visto Corp.
  

In-sure

This month's edition sees HMRC publishing the Insurance Business Transfer Scheme Order, HM Treasury extending the Regulated Activities Order, the Treasury Committee calling for evidence on inherited estates and the ABI and NAPF updating their executive contracts and severance guidelines. Also in this issue, research suggests that corporate governance pays off and steady progress on customer satisfaction...

Download (doc)

March 2008

Connecticut Supreme Court rules that common cause provision of reinsurance treaty is ambiguous with respect to the aggregation of claims 

In a recent decision, Hartford Accident and Indemnity Co. v Ace American Reinsurance Co., 266 Conn. 744, 934 A.2d 224 (Conn. 2007), the Connecticut Supreme Court considered the proper construction of the phrase “any one accident” as used reinsurance contracts between the plaintiffs, Hartford Accident and Indemnity Company and several of its affiliates (the Hartford), and the defendants, various reinsurers (the Reinsurers). The Supreme Court found a common cause provision in the contracts to be ambiguous for purposes of whether multiple asbestos claims could be aggregated as a single occurrence, and reversed the lower court’s decision granting summary judgment to Reinsurers.

Download (pdf)

March 2008

Implementation of the Reinsurance Directive in the UK 

This is the latest in a series of consultation papers on the issue (see the September 2006 and March 2007 issues of the Kendall Freeman Insurance Review). The document focuses on the remaining changes to UK legislation which will be necessary to complete the implementation of the Directive. Most of these changes will be made to the Financial Services and Markets Act 2000 (FSMA) and related secondary legislation. The changes will impact on two key areas: passporting and portfolio transfers of reinsurance contracts under Part VII of FSMA.

Download (pdf)