Insurance Law Monthly

Young v Royal and Sun Alliance plc [2019] CSOH 32 is the first decided case on the duty of fair presentation under the Insurance Act 2015. It raised an issue of waiver familiar to the old law, and indeed it was common ground that the law in this respect had not changed. The question was whether insurers had, by asking questions that were strictly limited in their ambit, waived disclosure of facts that would have been material but outside the scope of the questions.

Cut-through clauses have been used in reinsurance contracts for many years. Their effect is to give the assured a direct claim against reinsurers. Traditionally the clauses have been confined to the situation where the reinsured had become insolvent, and there are unresolved issues as to whether the clause can be enforced as against the reinsured’s liquidator in that it favours the assured as an unsecured creditor.

It has been recognised for nearly a century that where an insurer under a liability policy has the duty or right to defend claims against an assured, the insurer must take into account the interests of the assured as well as its own interests in deciding how the claim should be defended.

The marathon judgment of Teare J in Suez Fortune Investments Ltd and Another v Talbot Underwriting Ltd and Others (The Brillante Virtuoso) [2019] EWHC 2599 (Comm) largely turns upon matters of fact, but there are important issues relating to the definition of war risk perils.