Insurance, Herbert Smith Freehills LLP updates

United Kingdom

Contributed by Herbert Smith Freehills LLP
Indemnity to be awarded on reinstatement basis for damaged property which had not been reinstated
  • United Kingdom
  • 09 June 2020

The Court of Appeal recently confirmed that the reinstatement basis was the appropriate measure of indemnity for property severely damaged by fire which had not been reinstated. The court held that an insured need not show that it had a genuine, fixed and settled intention to reinstate in order to recover for damaged property on a reinstatement basis of indemnity.

Brexit – PRA issues guidance to insurers with legacy business
  • United Kingdom
  • 17 March 2020

​The Prudential Regulation Authority recently published guidance for UK insurers on their ability to service EEA liabilities once the Brexit transition period comes to an end on 31 December 2020. Arguably, the guidance is consistent with the view that 'expat business' (ie, where policies were written in the United Kingdom but the policyholder subsequently moved to the European Economic Area) can continue to be serviced from the United Kingdom without an EEA authorisation.

High Court grants anti-suit injunction after finding that parties to insurance policy had agreed to arbitration
  • United Kingdom
  • 04 February 2020

The High Court has continued an anti-suit injunction against a defendant, having been satisfied to a high degree of probability that the parties had agreed to submit their dispute to London arbitration. The central question was one of contractual interpretation: whether, on a true interpretation of the relevant excess insurance policy, the 'service of suit' clause entitled the insured to pursue its substantive claim against its insurers before a US court or whether it had to arbitrate.

W&I insurance: courts confirm approach for assessing damages for breach of warranty
  • United Kingdom
  • 24 September 2019

​Warranty and indemnity (W&I) insurance is widely used across the breadth of global M&A activity to provide protection to buyers for breaches of warranty. While W&I insurance policies govern how and what claims can be made by buyers, there is considerable case law relating to the measure of damages for breach of warranty. In particular, recent case law confirms that the normal measure for damages is the difference between the value of the shares 'as warranted' and the value of the shares 'as is'.

Another non-party costs order against a liability insurer
  • United Kingdom
  • 02 April 2019

The High Court recently awarded a non-party costs order against a law firm's professional indemnity insurer under Section 51 of the Senior Courts Act in circumstances where the insurer had effectively relinquished control of the litigation's defence. This decision clarifies that the court's discretion under Section 51 is broad and that an insurer need not exert any active control over an insured's conduct of the proceedings in order to be the subject of an adverse costs order.

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