Insured Entitled To Indemnity Under Insurance Policy As And When Settlement Monies Were Drawn Down From Escrow Account
A loss was suffered for the purpose of entitlement to indemnity under a Top and Drop insurance policy when settlement monies were drawn down from (rather than paid into) an escrow account.
Teal Assurance Co Ltd v (1) W R Berkley Insurance Europe Ltd (2) Aspen Insurance UK Ltd [2015] EWHC 1000 (Comm) Mr Justice Eder, 25 April 2015
Summary
The court was asked to decide a preliminary issue as to whether liability to pay settlement monies arose when monies were paid into an escrow account, or when those monies were to be drawn down.
Background
Teal is a captive insurance company, incorporated in the Cayman Islands. It insured Black and Veatch Corporation ("BVC") and the wider BVC group which operates a global engineering and construction business.
During the period 1 November 2007 to 1 November 2008 (the "Policy Period"), BVC's professional indemnity insurance programme comprised the 'Lexington Policy', three Tower policies and a final "Top and Drop" policy. W R Berkley Insurance Europe Ltd and Aspen Insurance UK Ltd ("Defendant Reinsurers") agreed to reinsure Teal in respect of the Top and Drop policy (the "Reinsurance Contract"), subject to a per claim limit of £10 million or its equivalent in other currencies.
Teal faced a number of claims brought by BVC during the Policy Period and in 2010 Teal commenced proceedings against Defendant Reinsurers in relation to their liability under the Reinsurance Contract. Following a first round of preliminary issues before Mr Justice Andrew in 20111, the court found in favour of the Defendant Reinsurers, finding that the insurance policy responded to claims "by reference to the order and timing of the establishment and ascertainment of BVC's liability" and not when the claims were paid.
Preliminary issue
Teal revised its case in light of Andrew J's ruling. A second round of preliminary issues subsequently flowed...
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