Our Insights

This article examines the growing role of counterfactual analysis in determining remedies for breaches of the duty of fair presentation. It considers the relationship between materiality, inducement and proportionate remedies under the Insurance Act 2015, with reference to recent judicial decisions and the broader evolution of insurance law.

Unlike large parts of insurance contract law, claims conditions do not build upon the scaffolding of a statutory codification. The effect of the clauses is determined by their wording, properly interpreted. 

Despite the recent reform of insurance law, and a consistent level of litigation, very little has changed in this area. It is one of the last great areas of ‘common law’ insurance law not subject to the statutory reform.

Here are some easy questions to ask about your insurance covers. The answers to them may give you the opportunity to ask for better cover at no additional cost. 

This is because all you will be asking for is that the policy language clearly reflects what, in all fairness, ought to be the intent of the cover. There should be no additional charge for a policy wording that is fit for purpose.

Those of us who deal with insurance tend to attach undue significance to individual words or short phrases. I have lost count of the number of articles I have seen, following some court decision, trumpeting something along the lines of “now we know what an ‘event’ is?” 

Usually, a review of the judgment confirms that we already knew what an event was: the court having yet again reached for the dictionary

With policyholders still feeling the impact of the cost of living crisis and with business insolvencies running at their highest since 1993 and, by all reliable accounts likely to exceed that later this year, most insurers (and their teams of counter-fraud investigators) will be carefully scrutinising any insurance claims submitted for the possibility of fraud.

As a coverage lawyer who only acts for policyholders when they find themself with a business critical or personally vital coverage issue, I hear the tribal drums all too often: they took my premium and now they don’t want to pay my claim. Those perceptions are harmful and untrue. They cloud the special function that insurance plays in society as a private instrument for transferring risk

None of these common objections stand up to scrutiny however in my view. Insurance has a special function in society as a private instrument for transferring risk. When that risk sharing mechanism breaks down, the parties are often left in a procedural vacuum unless the policy specifies a process capable of being triggered quickly, or the insured’s complaint can be referred to the Financial Ombudsman.

Insurance disputes lawyers churn out a huge amount of comment on recent cases and other legal developments. The form and content of such pieces demonstrates considerable uniformity.  The mindsets of insurance litigators are more alike than any individual within that group might care to admit. In an effort to do something different, Wynterhill has commissioned Professor James Davey and Dr Katie Richards, leading insurance law academics from Bristol University, to produce a series of short thought pieces on insurance law in the UK, with Wynterhill’s contribution being limited to providing, if relevant, examples of our experiences in the contested claims arena. 

Every few years something comes along which is predicted to have astonishing implications for D&O cover. Quite often insurers propose a new policy extension to deal with this issue. Buyers of D&O insurance are reassured – they now have a clause of the policy with a heading that mirrors the issue about which the directors to whom they answer have been badgering them.  Everyone’s a winner! Or are they? 

The first days or weeks after a major event can be strategically critical to the insured’s business and to the outcome of an insurance claim… Insurers have the right to investigate policy coverage, but the manner of the investigation and an early reservation of rights can be the first sign that insurers have identified something that could limit coverage in part or in full…

Cyber risk is real

Cyber breaches unfold within the hyper real time of our globally networked environment.

Your entire businesses can freeze in an instant, its revenue streams stopped dead.

Hardening insurance market conditions are reinforcing the trend that led to the creation of Wynterhill LLP. It is becoming increasingly tricky for panel firms to service the insurance industry and also to represent their policyholder clients who have a coverage problem. This isn’t because the rules governing conflicts of interest have changed, it is because perceptions and mindsets about actual or potential conflicts have become more rigid.

Solicitors’ Professional Indemnity Insurance policies must comply with the Solicitors Regulation Authority’s Minimum Terms and Conditions of Professional Indemnity Insurance....Under those minimum terms, insurers can decline to cover a claim which arises from dishonesty or a fraudulent act/omission and which was either committed or condoned by all the LLP’s members or directors of the (legal) company.

The dangers of unsafe cladding and the associated issues facing the construction sector are well
known. There is a recognised need to encourage and enable the removal of unsafe cladding without further delay. It is a life and death issue. That makes it all the more frustrating that the IUA Fire Safety Clause appears so inadequate in a number of respects.

The judgment.. has provided important guidance on when multiple claims can be aggregated to form one claim under the solicitor firm’s professional indemnity insurance policy. It significantly reduces the scope for aggregation and will be a cause for concern to insurers of primary layers in the solicitors’ professional indemnity insurance market. It will, however, be welcome news to insureds facing multiple claims.

In light of the decision of the Divisional Court in the FCA Covid test case, policyholders with non-damage denial of access cover triggered by official action in the immediate environs of their premises may have given up hope of cover. They may need to think again.

Anyone interested in insurance law, property damage claims, claims advocacy and dispute resolution generally should take time to read this final award in order to better understand how the Financial Ombudsman approaches such complaints.

As a specialist coverage lawyer, the one thing I have always found odd about the PAP rules is the peculiar absence of a specific protocol for insurance coverage disputes given the scale of the market, the fundamental role which insurance plays in our society and the number of disputed claims.

Shortly after 10.30am on Tuesday 15 September 2020, victory was announced. Law firms stormed the Web to be the first to describe the policyholder triumph in the FCA’s Test Case on business interruption cover. But then odd things began to happen. By the end of the day, shares in Hiscox, one of the vanquished Insurers, were valued 15% higher than earlier that morning.

The most objectionable aspect of the previous law was the potential disparity between the harshness of the legal consequence of non-disclosure or misrepresentation, on the one hand, and, on the other, the nature of the conduct of the insured in making that misrepresentation or non-disclosure. A perfectly understandable oversight, involving no intent to mislead whatsoever, could leave an insurer with the right to treat a policy as having never existed.

The duty of fair presentation changed the existing law and introduced new concepts. If the traditional approach to construing anti-avoidance clauses continues then any such provision which has failed to adapt to the new duty may be found to be inapplicable in the new world, or to offer less than expected protection.

The Insurance Act 2015 makes a serious effort to mitigate the risk of policies being avoided by way of “technical” breaches of the insured’s obligation to give pre-contractual disclosure. But any new framework comes with a price: in this case opportunities for insurers to work within that new framework to create new arguments for avoiding policies and refusing to pay claims.

Perhaps the most important change to the law made by the Act is the reworking of the obligations of pre-contractual disclosure and of the remedies for breach of those obligations.

“Where are the 2015 Insurance Act cases?”, is something I have heard everywhere I have been (even, once, on the beach in Cyprus). The obvious, tactless answer would be to invite the questioner to look inwards for the answer, but there is a potentially serious question lurking behind the anecdotal comments of so many.

Much of the discussion of the Insurance Act 2015..might have been designed to induce complacency in policyholders. They might legitimately conclude that this piece of legislation was a gift from the gods to remedy the perfidy of insurers. This is particularly so when it comes to navigating the infamously treacherous waters of pre-contractual disclosure.