Our client is a world leading manufacturer of industrial thread and consumer textiles.
Our client was sued in Israel for having sold allegedly contaminated thread for use in feminine hygiene products. Although our client did not consider itself to have been at fault, the claim was settled for c.$3m after their insurer assumed conduct of the defence.
Our client was insured under a global programme which, so far as is relevant, consisted of a local policy placed in Israel, and a master policy placed in the UK.
Following settlement of the underlying claim a dispute arose in relation to a number of questions, including: (i) how much of the claim against our clients fell within the scope of its Product Liability cover, and how much fell within the scope of its Financial Loss cover; (ii) whether the interrelationship between the local and master policies should be governed by “difference in limits” provisions, or “difference in conditions” provisions; and, on the basis of the answer to the first two questions (iii) what was the value of the excess payable by our client.
Although the sums at issue were not significant for either our client or the insurer, there was a point of principle at stake that both parties felt strongly about. When we became involved the matter was at an impasse. Initially we were asked to provide an advice to our client’s insurance broker, who we work with regularly. Our client is an important client for the insurance broker, and so maintaining a positive commercial relationship was a high priority for them.
On the basis of our advice to the broker, we were then retained directly by our client to correspond with insurer’s solicitors.
After setting out our client’s position in detail we recommended a strategy involving commercial discussions between the broker and the insurer, to proceed alongside our correspondence.
The result was that the insurer agreed to accept our clients’ position in full.