When does an exclusion for a ‘deliberate act’ apply?

Introduction

It is fundamental to all insurance that it only covers a fortuity – that is, a loss that is accidental from the insured’s point of view.  So, how are the courts to interpret a liability policy that excludes:

Liability arising out of deliberate acts …?

Deliberate acts cannot, by definition, be accidental. However, deliberate acts can still result in a loss that is accidental from the insured’s point of view; there is still a fortuity. For example, I deliberately burn some rubbish in an incinerator in my back yard, but the embers cause an accidental fire next door.

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Update on the remedies for fraudulent claims in NZ

 

Introduction

For as long as there are insurance products, there will be fraudulent claims. This seems certain.

We revisit the law relating to fraudulent claims and draw attention to one recent development in this area.

Historically, there have been three different types of fraudulent claims: [Read more…]

English Supreme Court Clarifies Causation and the Trend Clause in a Business Interruption Policy

 

Introduction

As many readers will already know, the test case brought by the Financial Conduct Authority in the English High Court challenging the declinature of many COVID – 19 claims under Business Interruption Policies in England was largely successful. Many of the insurers appealed by way of a ‘leapfrog’ provision allowing them to appeal direct to the English Supreme Court without going through the Court of Appeal first.

The Supreme Court unanimously dismissed the insurers’ appeals (The Financial Conduct Authority v Arch Insurance (UK) Limited and others [2021] UKSC 1). This is the end of the road for the insurers. According to public reports, the insurers must now pay out claims totalling approximate £1.8 billion.  The decision can be found here.

The insurers’ declinatures all related to claims under extensions in English Business Interruption Policies. Most of these extensions differ from those commonly found in New Zealand Business Interruption Policies and so the decision is of little help in this regard. [Read more…]

COVID-19 Business Interruption Test Case – English High Court

 

Introduction

Unlike New Zealand, many business interruption policies issued in England extended cover to interruption in consequence of a notifiable infectious disease.

Many of the underwriters of those policies declined their COVID-19 related claims.

The number of declinatures was sufficiently large, and the reasons for them were sufficiently contentious, that the English financial conduct regulator (The Financial Conduct Authority) brought proceedings in the English High Court on behalf of policyholders against eight underwriters to seek declarations about coverage under their policies. While this didn’t necessarily include all underwriters involved, it covered the majority of different policy wordings applicable.

The court allowed two action groups to appear at the hearing as well: the Hiscox Action Group, representing policyholders underwritten by the Hiscox Syndicate at Lloyd’s and the Hospitality Insurance Group Action, representing a large number of hospitality businesses whose claims had been declined.

The fact that 15 Queen’s Counsel appeared at the hearing, with some parties represented by two Queen’s Counsel, demonstrated the gravitas of the proceeding.

The court released its decision recently. We highlight some of the findings that give guidance to underwriters and claims adjusters alike about the correct approach to policy interpretation.
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Financial Advice Disclosure – Issues for Insurance Brokers

 

Introduction

On 22 June 2020, the Governor-General made by Order in Council the Financial Markets Conduct (Regulated Financial Advice Disclosure) Amendment Regulations 2020 found here.  They require financial advisers (including insurance brokers/advisers) to disclosure certain information when providing regulated financial advice to retail clients.

The regulations require disclosure of information in four separate circumstances:

Circumstance 1: Information disclosed on the financial advisers Internet site at all times,
Circumstance 2: Information disclosed when the financial adviser knows the nature and scope of the advice sought and reasonably expects to give the advice,
Circumstance 3: Information disclosed when the adviser gives the advice,
Circumstance 4: Information relating to a complaint received.

Note that the disclosure required at Circumstance 3 can be given earlier and at the same time as the disclosure at Circumstance 2.

All information must:

1. Be presented in a clear, concise, and effective manner, and
2. If it is presented with other information, be given prominence, and
3. If it is presented in writing, be in a format, font, and type size that is easily readable, and
4. Be made available or given free of charge.

The information to be disclosed in Circumstances 1 to 3 above includes information about the following three matters:

1. Fees, expenses, or other amounts payable,
2. Conflict of interest,
3. Commission or other incentive.

In this newsletter, we concentrate on these three matters as we expect they will be of greatest interest to the insurance industry.

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