Insurance Law Monthly

In R & B Directional Drilling Pty Ltd and Another v CGU Insurance Ltd (No 2) [2019] FCA 458 Allsop CJ sitting in the Federal Court of Australia considered the liability of insurers for the defective installation of a sleeve to contain cabling. The decision confirms established principles relating to the meaning of physical damage and relating to exclusions for property in the assured’s control, faulty workmanship and assumed liability.

In Munich Re Capital Ltd v Ascot Corporate Name Ltd [2019] EWHC 2768 (Comm) the question was how a reinsurance contract, written on back-to-back terms with the insurance, was to be construed in the light of changed circumstances leading to an extension of the insurance but no corresponding extension of the reinsurance. Carr J held that the parties could not have intended that the reinsurance would operate in such circumstances.

The Court of Appeal in Equitas Insurance Ltd v Municipal Mutual Insurance Ltd [2019] EWCA Civ 718 has refused to allow a reinsured with the right to claim in any one of a number of years of coverage an unfettered discretion as to how its losses are to be allocated. In so deciding, the Court of Appeal has refused to extend the ruling of the Supreme Court in International Energy Group Ltd v Zurich Insurance plc UK Branch [2015] Lloyd’s Rep IR 598 to the reinsurance level. It is inevitable that permission will be sought from the Court of Appeal to appeal the matter to the Supreme Court.