Knowing the law is essential if you work in insurance, explains Graham Bartlett
Students grappling with the demands of their insurance law exams might take comfort from some recent comments
by Lord Justice Leggatt in the Court of Appeal.
In Allianz Insurance plc v Tonicstar Limited [2018] EWCA Civ 434, the Court of Appeal overturned the decision of Mr Justice Teare to remove a QC as an arbitrator on the grounds that he did not have the requisite experience of insurance or reinsurance. Under clause 15.5 of the Joint Excess Loss Committee Clauses, arbitrators had to be persons from the "trade
or business of insurance", and Mr Justice Teare held that a QC with more than 10 years' experience of acting in insurance and reinsurance disputes did not qualify for appointment.
In the High Court Mr Justice Teare felt bound by an earlier unreported decision of Mr Justice Morison in Company X v Company Y (2000), although he indicated that, uninhibited by that authority, he might have decided the case differently. Lord Justice Leggatt in the Court of Appeal was not so constrained and found that Mr Justice Morison's interpretation of the clause was indefensible and did not impose any restriction on how the 10 years' experience was to be acquired.
Interestingly, counsel for the Respondent did not attempt to support Mr Justice Morison's interpretation but instead argued that although the QC undoubtedly had considerably more than 10 years' experience of insurance and reinsurance law, there was no evidence that he had any experience of insurance or reinsurance 'itself'. He took as an example sports arbitration and suggested that having experience of sports law would not be enough to demonstrate experience of sports. Similarly, experience of engineering or telecommunications law was not the same as experience of engineering or telecommunications.
Lord Justice Leggatt rejected this argument and made some pertinent observations about insurance. Insurance and reinsurance differ from sports, engineering and telecommunications in that insurance contracts create legal rights and obligations, whereas the law regulating sports, engineering and telecommunications is clearly distinct from the activities themselves.
"Those who work in insurance, whether as brokers, underwriters or in claims, need to have some legal knowledge and understanding."
Brokers and underwriters need to understand the duty of an insured to disclose facts that are material to the risk to the insurer and the scope of that duty. Similarly, claims managers cannot in many cases properly assess whether a claim is payable without having some knowledge of insurance law.
The practical and legal aspects of insurance and reinsurance are intertwined and there is no such thing as insurance or reinsurance 'itself' that is separate and distinct from the law of insurance and reinsurance.
Graham Bartlett is a barrister at Trinity Chambers in Newcastle upon Tyne -- www.trinitychambers.co.uk