Key insurance cases of 2021

The key insurance case from 2021 was the Supreme Court’s decision in the Covid-19 business interruption test case, which paved the way for thousands of policyholders to claim against their insurers under particular non-damage business interruption (NDBI) extensions. We expect there to be more scrutiny of NDBI wordings in 2022 on issues not considered by the Supreme Court, including aggregation.

The scrutiny of policy wordings kept the courts occupied in 2021, with general issues of policy construction, as well as aggregation and jurisdiction clauses, in the spotlight. These cases are a helpful reminder of the importance of conducting regular policy reviews.

One example is Axis Corporate Capital UK II Ltd v ABSA Group Ltd [2021], where the court had to construe inconsistent jurisdiction clauses across different layers of a policy. The decision meant that two sets of proceedings in different jurisdictions (South Africa and England) would continue against reinsurers on different layers, which is far from ideal.

This case highlights the importance of reviewing dispute resolution clauses, to ensure that disputes that may involve multiple insurers on different layers are handled as efficiently as possible.

On aggregation, the familiar phrase “series of related acts or omissions” was considered in Baines v Dixon Coles & Gill (a firm) [2021], and the wording “one source or original cause” was examined in the recent judgment of Spire Healthcare v RSA [2022]. Both cases are reminders that applying aggregation language is fact-sensitive, but policyholders can assist themselves by thinking about the frequency and severity of claims they are likely to face under any policy when considering the aggregation provisions.

Non-disclosure is always an area ripe for disputes in an insurance context, and 2021 was no exception. The court in Ristorante Limited T/A Bar Massimo v Zurich Insurance Plc [2021] looked at the adequacy of disclosure of previous matters connected to insolvency, an issue that comes up fairly regularly in insurance disputes.

A novel feature in 2021 was that some decisions examined non-disclosure in the context of the Insurance Act 2015, and there was one of the first avoidance judgments for breach of the duty of presentation: Berkshire Assets (West London) Ltd v AXA [2021]. It has taken some time for this (new) legislation to reach the courts, and it is likely we will see more cases in 2022 and coming years examining different aspects of the Act.

The key message for policyholders is to be diligent and accurate in the collation and provision of information to insurers before inception. Having an audit trail of how you complied with the duty of fair presentation will undoubtedly assist in any dispute.

Herbert Smith Freehills presents its Insurance Disputes Annual Review of 2021 webinar on 3 February 2022. It will look at these and other key cases of interest from 2021 in more detail and look ahead to 2022. For more information or to register, contact insurance@hsf.com.