October 13, 2016
The ordinary measure of indemnity: Great Lakes Reinsurance (UK) SE v Western Trading Limited
In the latest in a series of pro-policyholder decisions by the courts, the Court of Appeal yesterday handed down a judgment upholding the trial judge’s ruling that a policyholder was entitled to be reimbursed by its insurers as and when it reinstated its premises (the historic Boak Building in Walsall) which had been destroyed by fire.
The Insuring Clause in the policy merely stated that insurers agreed “to the extent and in the manner provided herein to indemnify the Assured against loss of or damage to the property specified in the Schedule.” However, there was a separate reinstatement clause (“the Memorandum”) which stated that, in the event of damage or destruction, the indemnity was to be calculated by reference to the reinstatement of the property destroyed or damaged but only if the reinstatement was carried out “with reasonable despatch”, failing which only the amount which would have been payable under the policy, absent the Memorandum, would be due.
No reinstatement had occurred by the time of the trial, for the simple reason that the insurers had denied all liability under the policy, relying on various defences in relation to misrepresentation, breach of warranty and insurable interest. These were all rejected by the Judge, and there was no appeal on that score, the Insurers’ appeal being confined to the correct measure of indemnity.
There was disagreement between the parties as to whether the Memorandum could be relied on, and thus the Court of Appeal considered what would be the correct measure of indemnity assuming it were indeed inapplicable.
Insurers argued that, on the facts of this case, the relevant measure of indemnity was the reduction in the building’s value. Its market value just before the fire had been a mere £75,000. That reflected the fact that it was virtually derelict but, since it was Grade II Listed, it was not capable of being economically converted into (say) a block of flats. Ironically, its value had increased after the fire, since it lost its listed status and thus could now be redeveloped. Insurers thus argued that there was no loss, and nothing for them to indemnify.
The Court of Appeal disagreed. It held that, where the policyholder was the owner of the property or, if not, where it was obliged to replace the property (here the policyholder was the lessee of the building and owed the owner an obligation to repair it), the indemnity under the policy was ordinarily to be assessed as the cost of reinstatement. The Court of Appeal recognised that the position would be different if, at the time of the loss, the policyholder was trying to sell the property or intended to demolish it anyway.
The Court of Appeal also recognised, as had the trial judge, that an insurer who paid out the cost of reinstatement would have no redress if the policyholder then decided simply to keep the insurance proceeds. It held that the insurers could be protected if, rather than their being ordered to pay an immediate sum of money, the court instead made a declaration requiring insurers to reimburse the policyholder for the actual reinstatement costs as and when incurred.
Finally, it should be noted that the Court of Appeal held that, where a reinstatement clause required the policyholder to undertake the works of reinstatement “with all reasonable despatch”, it would not be in breach of that requirement unless and until insurers had confirmed indemnity under the policy. That is an obvious victory for common sense, even if it might be thought depressing that the Insurers would really have wished to argue that a policyholder could legitimately be prejudiced by a combination of its own impecuniosity and insurers’ unlawful refusal to affirm cover.
See: Great Lakes Reinsurance (UK) SE v Western Trading Limited  EWCA Civ 1003.
Jonathan Corman is a Partner at Fenchurch Law.
September 27, 2016
“When the lie is dishonest but the claim is not” – collateral lies and dishonest exaggerations
Two recent Supreme Court judgments have considered the impact of dishonesty – on an insurance claim and on a settlement agreement.
In one, where ship owners sought to embellish their insurance claim through the inclusion of a false, but irrelevant, statement, the court held that the owners were nevertheless able to recover under their insurance policy.
In the other, evidence that an employee had dishonestly exaggerated the extent of injuries sustained in the work place entitled his employer’s insurers to set aside a settlement entered into with him before that evidence was available.
Through their differing outcomes, these cases serve to illustrate that, while the courts remain as ready as ever to take a strong stance whenever there is evidence of fraud, nevertheless and in line with the current trend towards a more level playing field for policyholders, where “the lie is dishonest but the claim is not”, for an insurer to avoid all liability for the claim will not be an appropriate sanction.
Versloot Dredging BV v HDI Gerling Industrie Versicherung AG
In Versloot Dredging BV v HDI Gerling Industrie Versicherung AG, the owners of a ship damaged by a flood in the engine room made a false statement that the bilge alarm had sounded. The Supreme Court found that this did not prevent the ship owners from being able to recover under their insurance policy. This was because, although the lie was dishonest, the claim was genuine. On the facts, the policy would have responded in the same way and for the same amount whether or not the statement was true. The dishonest statement did not therefore go to the recoverability of the claim, and was not material. The insurer was required to meet the liability, which was a liability that it had always had.
This type of dishonest statement was previously known as a “fraudulent device” and is now termed a “collateral lie”. The question for the court was whether collateral lies, statements that dishonestly strengthen what would otherwise be entirely genuine claims, constitute “fraudulent claims”. Fraudulent claims entitle the insurer to avoid liability. They encompass both claims that have been fabricated in their entirety and claims that have been dishonestly exaggerated as to their amount. Following the judgment in Versloot Dredging it is now clear that collateral lies no longer fall to be considered as a further category of fraudulent claim and will not entitle an insurer to reject the claim.
The scope of ‘fraudulent claims’, and in particular whether it extends to collateral lies, was an issue that had been left open by the wording of the Insurance Act 2015 (the Act). The Act, which applies to policies entered into after 12 August 2016, sets out an insurer’s remedies for fraudulent claims. These include the right not to pay the claim and the right to recover from the insured any sums paid by the insurer. The decision in Versloot Dredging has resolved the uncertainty as to whether a collateral lie would be caught by the Act. It is now clear it is not. Where a policyholder seeks to strengthen a genuine claim with a collateral lie, if that collateral lie is immaterial to the insured’s right of recovery, the insurer is not entitled to avoid the claim.
Hayward v Zurich Insurance Company plc
By contrast, Hayward v Zurich Insurance Company plc demonstrates that, in line with the usual maxim, fraud will still unravel all. In this case, by dishonestly exaggerating his injuries, an employee had obtained a settlement from his employer’s insurer that was significantly higher in value than what he would otherwise have recovered. When conclusive evidence proving the dishonesty later emerged, the insurer sought to set aside the settlement. To do so, it was necessary for the insurer to show that it had been induced by the misrepresentation as to the extent of the injuries to enter into the settlement. The issue for the Supreme Court was whether the insurer could still be said to have been induced by the misrepresentation in circumstances where, at the time of entering into the settlement, the insurer suspected that the employee was dishonestly exaggerating his injuries. The court found that it was sufficient that the misrepresentations were a material cause of the insurer entering into the settlement. There was no requirement for the insurer to have believed the misrepresentations to be true and the settlement could consequently be set aside.
Significantly, in Hayward, where the Supreme Court was considering the impact of the fraud on a settlement agreement not an insurance policy, the employee remained entitled to damages for his actual, albeit modest, injury. Were the same type of dishonest exaggeration to occur in the context of a claim made under an insurance policy, it would constitute a fraudulent claim for which a policyholder could not recover anything at all, whether at common law or under the new statutory regime.
See Versloot Dredging BV v HDI Gerling Industrie Versicherung AG  UKSC 45; Hayward v Zurich Insurance Company plc  UKSC 48.
Joanna Grant is a Partner at Fenchurch Law.
September 13, 2016
Fenchurch Law boosts insurance disputes team with three new appointments
Fenchurch Law, the UK’s leading firm working exclusively for policyholders and brokers on complex insurance disputes, announces the expansion of its team with three new appointments.
Joanna Grant joins as a partner in the firm’s financial and commercial practice. She was previously senior associate at Allen & Overy. Her broad experience in complex multi-jurisdictional proceedings and arbitrations includes acting for financial institutions and global corporates in high-value commercial coverage disputes. A particular focus of her insurance practice is advising on political risk, crime, and D&O policies. She also has considerable experience of Bermuda Form arbitration.
Pauline Rozario will be a consultant to the firm specialising in professional indemnity insurance disputes, with a particular focus on disputes involving solicitors. She has over 20 years’ experience in handling such claims, initially at the Solicitors Indemnity Fund and latterly at a leading professional indemnity insurer.
Sara-Jane Reilly joins as trainee solicitor from a large insurer where she specialised in construction claims and later moving on to handling professional indemnity claims. Prior to this, she worked for the Financial Ombudsman Service as part of their insurance division, arbitrating disputes between policyholders and insurers. Sara-Jane is due to qualify as a solicitor in March 2017.
Commenting on the appointments, David Pryce, managing partner at Fenchurch Law, said: “We are delighted that Joanna, Pauline and Sara-Jane have agreed to join the firm. We are committed to investing in the growth of our business and this continued investment in the expansion of capabilities is part of our wider objective of improving outcomes for policyholders.”
The new appointments brings the total number of partners at the firm to seven.
July 28, 2016
Fenchurch Law launches combined legal service and costs cover for policyholders with insurance claims disputes
Fenchurch Law, the UK’s leading firm working exclusively for policyholders and brokers on complex insurance disputes, has launched Fenchurch Law Unlimited (Unlimited) with the goal of protecting policyholders and levelling the playing-field with insurers.
Most policyholders are unable to match the financial resources or the specialist professional support networks that their insurers can call upon. This means that if insurers refuse to pay a claim, very few policyholders are able to challenge the decision on a commercially level playing-field.
As part of the package, policyholders also have access to unlimited legal advice in relation to their rights and obligations under their insurance policies and cover for the cost of pursing a claim against the insurer. Costs such as counsels’ fees, experts’ and court fees, and the risk of having to pay insurer’s costs are also covered, for claims with good prospects of success. It will be sold through brokers on a delegated authority basis, alongside the policyholder’s existing commercial or personal lines insurance.
How does it work?
The policyholder buys the service at the same time as they take out their insurance policy, for a single up-front fee calculated as 1% of the premium of the policyholders’ insurance policies.
Commenting on Unlimited David Pryce, managing partner at Fenchurch Law, said: “When an insurer refuses to pay a claim very few policyholders are able to challenge them on a commercially level playing-field. Unlimited is all about improving outcomes for policyholders, and addresses a risk faced by all policyholders but for which there was no protection available, until now”.
“Working in conjunction with a group of like-minded providers we have been able to produce a package of services offering the same high quality representation insurers already receive in dealing with disputes. We will now be working to introduce the benefits of Unlimited across the UK insurance broking sector as a key part of their client support offering.”
For further details about Unlimited and how it could benefit you or your clients please contact us either by email at address firstname.lastname@example.org or call our dedicated Unlimited phone number 020 3058 3088.
June 3, 2016
Fenchurch Law: Insurance Law Firm of the Year
Fenchurch Law won the award for Insurance Law Firm of the Year at the 6th Post Magazine Claims Awards held in London last night.
The awards celebrate excellence and innovation in the general insurance claims sector, and the Insurance Law Firm of the Year Award recognises technical ability and the application of innovative ideas and customer service within legal services.
David Pryce, Managing Partner of Fenchurch Law said: “We were honoured to be shortlisted and are absolutely delighted to have won. It is a real credit to the insurance market to consider us for this award, given our sole focus on representing policyholders. However, we’ve always believed that all good insurers share the same goal as we do: to improve outcomes for policyholders. I’d like to thank the team at Fenchurch Law for all their hard work over the last six years, as well as our many valued supporters within the broker community.”
The Claims Awards were announced at the Royal Garden Hotel in London on the 2nd June.
June 2, 2016
Fenchurch Law trainee to qualify
Fenchurch Law, one of the UK’s leading firms working exclusively for policyholders and brokers on complex insurance disputes are delighted to announce that Marie van Ingelghem will be admitted as a Solicitor on 14th June 2016.
Marie started her training contract with Fenchurch law in 2014 and qualifies in to the Financial & Commercial team, which is led by John Curran.
Before joining Fenchurch Law in 2014, Marie worked as a Claims Advocate in the City office of a leading global insurance broker.
Marie is a member of the Chartered Insurance Institute Claims Faculty and holds a Certificate in Insurance (CII Claims) qualification.
John Curran, FinCom team leader, said: “We are delighted that Marie will qualify this month. Fenchurch Law has grown considerably over the last 12 months, and retaining Marie with her first rate claims broking experience, and her commitment to putting policyholders first, allows us to continue strengthening our team.”
May 3, 2016
Fenchurch Law boosts professions practice with associate appointment
Fenchurch Law, one of the UK’s leading firms working exclusively for policyholders and brokers on complex insurance disputes, has expanded its professions practice with the appointment of associate Cécile Lonjarret.
Cécile has expertise in professional indemnity claims representing a variety of professionals including architects, solicitors, barristers, financial advisers and accountants. She joins Fenchurch Law from Baker & McKenzie.
Commenting on the appointment, David Pryce, managing partner at Fenchurch Law, said: “Cécile is the 4th new joiner to Fenchurch Law in the last 6 months which is testament to our commitment to attracting high-calibre individuals. We are committed to investing in the growth of our business and this continued investment in the expansion of capabilities is part of our wider objective of improving outcomes for policyholders.”
Comprising very experienced practitioners Jonathan Corman and Rob Fink the professions team represent professionals of all types, including accountants, insolvency practitioners, solicitors, IFA’s and surveyors.
April 12, 2016
Shock horror: “Innocent Non-Disclosure” clause applies to innocent non-disclosure
A case reported on 23 March involved a provision which one might ordinarily have described as an “Innocent Non-Disclosure” clause (albeit it was not entitled that): it protected the policyholder against the consequences of any material non-disclosure unless it had been “deliberate or fraudulent”. The Insurers had nevertheless attempted to argue that the clause did not apply where the policyholder had failed to disclose information as a result of an honest but mistaken belief that the information had not needed to be disclosed.
Predictably enough(?), the court (Coulson J) rejected the Insurers’ arguments, holding that they would lead to an “absurd [and] wholly unbusiness-like result”.
Why did Insurers even take the point? Surely it wasn’t simply because there was almost £18m at stake?
See Mutual Energy Ltd v Starr Underwriting & Travellers
The full judgment is here: http://www.bailii.org/ew/cases/EWHC/TCC/2016/590.html
Jonathan Corman is a Partner at Fenchurch Law.
Fenchurch Law Ltd shortlisted for Insurance Law Firm of the Year Award
Fenchurch Law Ltd has been shortlisted for the second time for the Insurance Law Firm of the Year in the prestigious Claims Awards 2016, which celebrate excellence and innovation in the general insurance claims sector.
The Insurance Law Firm of the Year Award recognises technical ability and the application of innovative ideas and customer service within legal services.
Managing Partner David Pryce commented: “We are very pleased to have been shortlisted for this award again. Since founding Fenchurch Law in 2010, our aim has not only been to lead the market for complex policyholder coverage disputes in the UK but also to innovate in the interests of the policyholder and broker. Putting policyholders first is at the heart of everything we do and over the last 12 months we have continued to put in place a number of unique funding arrangements for policyholders across the UK and secured over £9 million in payments from insurers.”
Final winners will be announced at The Claims Awards evening at the Royal Garden Hotel in London on the 2nd June.
March 7, 2016
Construction and Professional Indemnity expert Amy Lacey joins Fenchurch Law
Insurance coverage specialists, Fenchurch Law, have announced that Amy Lacey has joined as a partner from Rosling King. Amy will concentrate on insurance disputes with a particular focus on construction and professional indemnity
Acting for brokers and policyholders across a variety of industry sectors, she has considerable experience of complex international litigation and arbitration and regularly advises on coverage issues and policy drafting.
Amy is a member of the British Insurance Law Association and the Society of Construction Law.
In her spare time Amy is a keen equestrian and enjoys sailing with Lloyd‘s Yacht Club.
“We are delighted that Amy has agreed to join our growing team at Fenchurch Law. We welcome the rich mix of new skills and expertise she brings and this is part of a wider objective of improving outcomes for policyholders, and putting policyholders first in everything we do,” said David Pryce Managing Partner.
Founded in 2010 Fenchurch Law is a specialist firm of City solicitors providing insurance advice and handling insurance disputes. Based in the heart of the London Insurance Market at 40 Lime Street, they represent policyholders in complex and high value coverage disputes with their insurers.