Why the insurers of the NZ International Convention Centre that recently caught fire should be ‘happy’ about the claim

Insurance as a product transfers the risk of loss from the insured to the insurer.  However, insurance as a business is about much more than that; it is primarily about balancing a key ratio. It must be, otherwise for the reasons set out below the business would no longer exist.

The balancing act

The risks that insurers take on must be risks that consumers and businesses feel a real exposure to.  If the chance of a loss resulting from an insured risk is too remote, no one will want to pay money to transfer it.  Every time a loss occurs as a result of an insured risk, the insurance product is validated.  The need for it is reinforced.  Sales are encouraged. [Read more…]

NSW Court of Appeal resolves a long-standing debate about the interpretation of a business interruption policy

Loss of Gross Profit

To those inexperienced in business interruption claims, the formulae stated in the policy to calculate the different types of financial losses insured under the policy may appear daunting.  However, once explained, the principles behind the calculations are logical and mostly straightforward.

The most common claim is for loss of gross profit.  If the turnover of my business reduces because my machinery is damaged, broadly three calculations determine how much gross profit I have lost: [Read more…]

How using the word ‘defective’ in an exclusion when insuring ‘damage’ can lead to an unintended outcome

In a lesson in the importance of drafting insurance policies carefully, the Auckland High Court recently held that an exclusion in a construction policy did not apply in circumstances where the insurer thought it should have applied. [Read more…]

English Court of Appeal says a ‘hornets’ nest’ or ‘can of worms’ is a valid circumstance notified under a claims-made policy

The English Court of Appeal recently overturned the High Court’s decision in Euro Pools Plc v Royal and Sun Alliance Insurance Plc [2018] EWHC 46. We discussed the English High Court decision in our Insurance Newsletter 2018 – 4. The Court of Appeal allowed the appeal in Euro Pools Plc v Royal and Sun Alliance Insurance Plc [2019] EWCA 808.

Refresher

Euro Pools specialised in the installation of swimming pools.
The moveable partitions in one of its installed pools would not rise and fall correctly as designed. The partitions allowed the pool to be divided into smaller pools. The partitions were hollow, allowing air to be pumped into them to force them to rise. Leaks developed in the partitions. [Read more…]

Have your once-in-a-lifetime say on the reform of New Zealand’s insurance law before it is too late

 

Background

Approximately 20 years ago, the New Zealand Law Commission recommended significant changes to New Zealand’s insurance law. Subsequently, the Commission recommended a wholesale repeal and re-write of the Life Insurance Act 1908. To date, neither has occurred. That is about to change.

In 2010, Parliament comprehensively addressed the regulation of insurers in New Zealand for the first time, by passing the Insurance (Prudential Supervision) Act 2010. Although Parliament has tinkered with insurance law several times during the last century, passing the Insurance Law Reform Acts 1977 and 1985, and the Insurance Intermediaries Act 1994, the English common-law has remained the bedrock of New Zealand’s insurance law up until now. [Read more…]