Insurance And Reinsurance - 25 September 2012

Welcome to the thirty-third edition of Clyde & Co's (Re)insurance and litigation caselaw weekly updates for 2012.

These updates are aimed at keeping you up to speed and informed of the latest developments in caselaw relevant to your practice.

This week's caselaw

Zeckler v Assigned Risk Pool Manager A case on whether a partner of a solicitor firm is liable to pay the premium for a professional indemnity policy.

Ace European v Howden Group A case on whether declaratory proceedings brought by English insurers in England served a useful purpose and whether England is the appropriate forum.

Illinois National Insurance Company v Tutor Perini & Anor Orders made pursuant to a Letter of Request from America are set aside by the English court.

Smith v St Andrew's Insurance A discussion of the burden of proof when insurers seek to rely on a policy exclusion and there are two possible causes (one criminal).

Zeckler v Assigned Risk Pool Manager

Whether partner of solicitor firm liable to pay premium for professional indemnity policy

The appellant (a limited partner in an LLP) appealed against a decision that he was liable to pay the premium for a professional indemnity insurance policy issued to the LLP by the respondent (the manager of a scheme providing PI cover for firms of solicitors which could not otherwise obtain such cover on normal terms). The appellant was not the partner who had arranged the PI cover.

Rule 10.3 of the Solicitors' Indemnity Insurance Rules 2009 provides that the firm, and any principal of the firm, shall be jointly and severally liable to pay the premium if an application for cover under the scheme is made. The appellant argued that this rule might found a disciplinary complaint against him but did not amount to a contract between himself and the insurers.

Strauss QC held that he was not satisfied that the appellant was personally liable for the premium: "What one would expect to find here is something in the contractual wording which makes it clear that the members of the LLP are parties to the contract, and are obliged to pay the premiums". In this case, though, there was no evidence of any such contractual provision (and no cover note or policy was produced in evidence). Nor was the judge convinced that there was an implied contract between the principals of the firm and the insurers. Accordingly, there was a "genuine dispute as to the existence of the debt" and a statutory demand obtained by the insurers was set aside.

Ace...

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