Section 9 plays havoc with claims-made and notified policies again

Occurrence-based policies
All liability policies were once drafted as occurrence-based policies i.e. they insured liability arising from bodily injury or property damage that occurred during the policy period.

This formula for triggering cover under a policy can create headaches for liability insurers if there is a delay between the occurrence of the bodily injury or the property damage, and the discovery of it. One of the worst examples was the discovery last century of just how harmful asbestos is to humans. Although workers’ lungs were being injured at the time of their exposure to asbestos, the first symptoms of their injuries took decades to appear. In jurisdictions like the U.S.A. where there is no ACC and where bodily injury litigation is common, employees were suing their employers decades after their lungs were first injured. Employers were then notifying their liability insurers for the first time in relation to policies that had expired decades earlier. [Read more…]

Statutory Liability Policy and the rise of pecuniary penalties

History
When the Statutory Liability Policy first appeared on the New Zealand market in the 1990s, it only covered three named Acts:

• Health and Safety in Employment Act 1992 (as it was called then),
• Fair Trading Act 1986, and
• Resource Management Act 1991.

As competition grew, one insurer reversed that formula and covered all Acts except the Acts named as excluded. That formula became the norm. [Read more…]

What degree of connection is required between a notified circumstance and a subsequently notified claim in a later policy period?

As any financial lines underwriter or claims adjuster knows, cover under a claims-made policy is not only triggered by the insured receiving actual notification from a third party alleging the insured is legally liable (Actual Claim), but also by the insured becoming aware of a circumstance that may lead to this. [Read more…]

NSW Court of Appeal clarifies the words ‘by education, training or experience’ in a TPD benefit

In a case last year, Hannover Life Re of Australasia Limited v Jones, the NSW Court of Appeal confirmed the existing law that applies when challenging an opinion that the policy allows the insurer to form subjectively. The test the court applies is:

… whether the opinion formed by the insurer was not open to an insurer acting reasonably and fairly in the consideration of the claim.

[Read more…]

Demarcation between PI and D&O Policy is a fine one

A Directors and Officers Liability Policy is a type of Professional Indemnity Policy that provides cover in different and narrower circumstances. The two policies are meant to dovetail together so that liability for a wrongful act is covered under one or the other, but not both at the same time. Drafting the two policies to create the demarcation between them involves relatively subtle changes.

Both policies share much in common:
1. They are both liability policies
2. They are both claims-made and notified policies
3. The both insure liability for wrongful acts (usually a negligent act or omission)

The only real difference between them is the capacity in which the insured is alleged to be liable. In a D&O Policy the insured must be allegedly liable in the insured’s capacity as a director or officer of the company specified in the policy. In a PI Policy there is no such constraint, although there is usually a similarly worded exclusion to the same effect. The greater the similarity between the two, the better, as this is more likely to lead a cleaner dovetailing of the two policies.
[Read more…]