Multiple losses and multiple policies: who pays?
The question of how to allocate multiple losses has recently come before the Supreme Court in Teal Assurance Co Ltd v WR Berkley Insurance (Europe) Ltd and another  UKSC 57. The decision confirms (absent clear express wording in the contracts) that losses should be allocated in the order that the insured’s liability is established. It also highlights one of the potential problems that policyholders can face when different policies within their programmes of insurance (or re-insurance) contain different wordings.
In the case of reinsurance, it is already well established that losses are to be allocated in accordance with the order that the reinsured’s liability in respect of each relevant loss is established (notwithstanding the principle that reinsurance is [re]insurance of the underlying risk and not a contract to indemnify the reinsured).
Under Black & Veatch Corp’s (B&V’s) professional liability insurance programme for 2007-08, B&V had $5m (£3.2m) of primary layer coverage with Lexington, above a self-insured retention of $10m per occurrence. Above this, B&V had three successive excess layers underwritten by Teal, a captive of B&V (the PI Tower). The top layer was a ‘top and drop’ policy for $10m, also underwritten by Teal…
If you are registered and logged in to the site, click on the link below to read the rest of the Addleshaw Goddard briefing. If not, please register or sign in with your details below.
News from Addleshaw Goddard
News from The Lawyer
Briefings from Addleshaw Goddard
Addleshaw Goddard has released the November 2013 edition of InVest. This section focuses on enforcement and financial crime.
Addleshaw Goddard has released the November 2013 edition of InSure. This section is a general update.
Analysis from The Lawyer
Could Slater & Gordon achieve its stated aim of becoming a top consumer brand by acquiring Pannone?
The past five years have not been easy for Addleshaw Goddard. The firm’s revenue fell 7 per cent from £173.1m to £161.9m between 2008/09 and 2010/11 and despite finances looking up in 2011/12, when Addleshaws reported a 30 per cent increase in net profit, it has shown no notable compound growth in turnover since 2007/08.