A Year In Insurance Law 2025

The English courts will construe both reinsurance and insurance policies by reference to what are, by now, well-established principles of contractual interpretation.

The courts will first seek to ascertain the objective meaning of the policy language (the textual interpretation). Then, as necessary, they will consider the factual background and the rest of the contract (the contextual approach). Where there are two possible constructions, the court is “entitled to prefer the construction which is consistent with business common sense and to reject the other.” (Rainy Sky SA v Kookmin Bank).

What news from 2025?

We focus here on two decisions where the court construed reinsurance contracts, given the relative rarity of court judgments in reinsurance matters. We note though that many of the decisions considered elsewhere in this round-up also involved questions of policy interpretation to resolve the specific coverage point in issue.

In Royal & Sun Alliance Insurance Ltd (formerly Royal & Sun Alliance Insurance Plc) v Equitas Insurance Ltd the court construed facultative, excess of loss reinsurance policies (the RI Policies) to ascertain the extent to which they responded to underlying (and significant) settlement and defence costs payments made by insurers (the reinsured) under liability insurance policies in the US.

The RI Policies were back-to-back (“follow original terms”) with a global Master Policy, and their back-to-back nature informed the court’s “natural reading” of the terms of the RI Policies. A financial limit of indemnity of £20m under the Master Policy correlated to the £4 million excess applicable under the RI Policies before accessing £16m of cover. The Master Policy also provided cover for defence costs which sat alongside and in addition to the main indemnity cover, subject to a temporal rather than financial limit.

The court considered four issues: (a) whether defence costs were reinsured; (b) whether a claims control clause modified the follow the settlements clause in the reinsurances; (c) whether the settlements reached by the cedant were “proper and businesslike” for the purposes of the follow the settlements clause; and (d) whether compound interest was payable on any sum due from reinsurers to the cedant.

• The court regarded the provisions of the RI Policies to be “fairly clear”, and rejected arguments that the excess in the RI Policies was eroded both by indemnity payments and defence costs. The underlying Master Policy indemnified the underlying insured “against Liability arising from any Occurrence” during the underlying insurance policy period. Costs were in addition. The reinsurances duplicated the indemnity but not the additional cover for defence costs. The court therefore concluded that the “natural understanding” of the “Limit” provisions in the RI policies was that the excess only refers to indemnity payments.
• A Claims Co-operation Clause required notification of losses that had the potential to exceed £4m. However, whilst it precluded the cedant from litigating without the consent of reinsurers, it did not refer to settlement. The court concluded that prior approval wasn’t required for settlement, so that the follow the settlements clause would apply, even without prior consent having been sought or given. This distinguished the present case from ICA v Scor (the authoritative starting point for analysis of follow the settlements provisions), in which the court concluded that breach of that claims co-operation clause neutralised the follow the settlements provision.
• The court found that settlements were concluded in a “proper and businesslike” fashion. Alleging that they weren’t was “tantamount to an allegation of professional negligence”. The settlements reached were reasonable in the circumstances, and the court acknowledged that the level of appropriate settlement of underlying disputes was a “difficult matter of judgment or feel”. Reinsurers were bound by the follow the settlements clause to its full extent.
• Interest on each amount due was calculated to run from the date of each respective loss on a simple, not compound, basis.

We consider the implications of Tyson International Co Ltd v GIC Re, India, Corporate Member Ltd in more detail here. The Court of Appeal has since upheld this decision. In this case, an English jurisdiction clause in the market reform contract (MRC) conflicted with a New York arbitration provision in the facultative certificates on the market uniform reinsurance (MUR) agreement form. Referring to a previous decision on similar facts (in Tyson International Company Limited v Partner Reinsurance Europe SE ), the court noted that absent a hierarchy clause facultative certificates are ordinarily intended to have contractual effect; and to supersede or replace the terms of the earlier slip agreement in the MRCs. Here, however, a “Confusion Clause” in the facultative certificate stated that where there was confusion between the terms of the MRC and the terms of the facultative certificate, the terms of the MRC prevailed; the Confusion Clause was, effectively, a hierarchy clause. The Court of Appeal agreed; the natural reading of the Confusion Clause was that it was intended to take effect when there was a conflict between the MRC and the certificates. In that event, the MRC was to prevail.

What does this mean for you?

As is clear from both RSA and Tyson, reinsurance wordings will be construed by reference to well-established principles of policy construction. In ascertaining the objective meaning of the words, however, the court’s view of the natural and ordinary meaning may be informed by the nature and structure of the agreement in question, and its context.

In RSA, the back-to-back nature of the cover was integral to the process of construction. Both parties referred to Lord Griffiths’ statement in Forsikringsaktieselskapet Vesta v Butcher [1989] AC 852: in the ordinary course back-to-back reinsurance means “that the reinsurer agrees that if the insurer is liable under the policy the reinsurer will accept liability to pay whatever percentage of the claim he has agreed to reinsure”. Any agreement only to reinsure some of the risks covered by the underlying insurance would be “wholly exceptional” and need to be spelt out in clear terms. It should be noted that the courts have confirmed this may apply as a presumption in the case of proportional reinsurance (such as quota share treaties). There is no presumption of back-to-back cover in non-proportional cover (such as excess of loss reinsurance). Ultimately, in any event, the construction of each type of contract will depend on the wording of the policies themselves.

This judgment also highlights the care that is needed when drafting following the settlements and claims controls provisions to ensure that they dovetail as intended. A precedent judgment (such as in ICA v Scor) on one clause will not necessarily apply to determine the interpretation of a differently worded set of clauses.

Meanwhile, the judgment in Tyson has also highlighted the risks of disputes where there are inconsistent policy documents issued and no clear hierarchy clause agreed to determine how those documents should be read together. Again, the court took great care to distinguish precedent decisions on differently worded clauses, such as the line of authority that states that the courts will strive to give effect to an arbitration clause over a competing jurisdiction clause. This case is also interesting in that the court gained little help from the expert evidence adduced as to London Market practice. It is, not surprisingly, tricky to allege a sufficiently notorious London market practice if two acknowledged market experts differ on what that practice is or means.

The majority of policies include terms obliging an insured to provide insurers with notice of loss within a particular timescale. These may be conditions precedent to insurers’ liability to indemnify.

What news from 2025?

Several disputes over the effectiveness and scope of insurance policy claim notifications came before the courts during 2025. The claims in Makin v Protec Security Group Ltd and QBE, Archer v R 'N' F Catering Ltd First & Anr and Ahmed & Ors v White & Company (UK) Ltd & Anr, were all pursued by third parties against insolvent insureds (see below on the operation of the Third Party (Rights Against Insurers) Act 2010) where the original insured had not notified a claim(s) in line with the policy terms.

In Makin v Protec & QBE the court arrived at a “sensible construction” of Claims Conditions within a public liability policy. Our fuller summary of the decision can be found here. On their true construction, the notification requirements were held to be conditions precedent to insurers’ liability; breach of the notification requirements within the Claims Conditions was expressly stated to “entitle us to refuse to deal with the relevant claim”. In general terms, the notification provisions required the insured to notify insurers of any matters which may give rise to claims “immediately you have knowledge” (or “as soon as practical” but in any event within 30 days). The court held that the material available within 30 days of the incident was clearly likely to lead a reasonable insured to think that there may be a claim that was covered by the policy. On the facts, the original insured had failed to comply, and this failure meant that the third party was unable to call upon the policy in respect of its claim against the insured.

In Archer, the policy’s Claims Conditions required notification to insurers as soon as reasonably possible of “any event or circumstance which could give rise to a claim” or on receiving oral or written notice of a claim. The claimant conceded that these policy conditions were properly construed as conditions precedent. As the original insured had breached them, insurers were not liable to indemnify the third party claimant. There had been a number of communications with the insured which “would plainly put a reasonable man with the knowledge of the [insured] on notice that there was a real as opposed to fanciful risk that [insurers] may have to indemnify the [insured]”. There had also been a breach of a requirement to supply information, and of mitigation and claims cooperation requirements in the policy. The court commented that “ the taking of all reasonable precautions in the context of an insurance contract encompasses the engagement by an insured with its insurer, including in the ways provided for in other express conditions of the Policy”.

In Ahmed, our fuller analysis of which can be found here, the court considered whether a number of documents (collectively or individually) constituted notification of claims, and, if so, the scope of those notifications. The PII policy in question required the insured to give notice (including prescribed details) in writing “as soon as reasonably practicable…of any circumstance of which any Insured becomes aware … which is reasonably expected to give rise to a Claim.” The court considered the effect and scope of purported notifications through several different categories of documents. A series of letters relating to claims by named investors and in relation to specific investments notified insurers only of specific claims; they did not indicate broader potential claims or systemic issues so that there was no broader notification of circumstances. A law firm engaged by insurers on a joint retainer to defend particular claims against the insured had received documents and sent them on to insurers pursuant to its joint defence retainer, and not as agent of the insured. These communications were not a valid notification of other circumstances or claims.

What does this mean for you?

Claim notification requirements are a clear pitfall for insureds and a clear protection for insurers, especially where they are drafted as a condition precedent to liability under a policy. Notifications should be made in accordance with the requirements in the policy; breach can have serious consequences.

In particular, the timeliness of notification, the state of the insured’s knowledge when a purported notification is made and the scope of notifications are areas that are frequently the source of dispute.

Insureds (or their brokers) should therefore carefully craft any purported notifications both to comply with policy terms and to avoid disputes down the line as to their scope. Communications will be construed objectively, subject to the insured’s knowledge at the relevant time. An insured cannot, absent clear wording to the contrary, notify that which it does not know. Furthermore, and of particular importance where new claims / circumstances arise out of an existing claim where a law firm has been instructed to defend it under a joint retainer, insureds should ensure that they make their own notifications in relation to these new claims/circumstances. As per Ahmed, if this information is provided by the law firm, it will not constitute a valid notification.

A particularly problematic area can be the point at which notification of individual claims tips into a broader notification of circumstances that may give rise to further claims. It should not be assumed that a notification of a set of individual claims will automatically be deemed to cover a broad circumstance and therefore bring into the scope of any deeming provision in the policy, all claims that subsequently arise. The straightforward answer is to notify exactly what the insured knows, although it should be noted that the question of whether a known circumstance is likely, or may, give rise to claims is an objective question.

Equally, however, the thorny issue of block notifications of circumstances adds an additional layer of complexity. The principles remain those set out by Gloster LJ in the Euro Pools decision, including that a notification need not be limited to particular events but can be a "hornet's nest" notification, namely the “notification of a problem, the exact scale and consequences of which are not known”. For a later claim to be considered to arise out of the notified circumstances there must be a causal (rather than coincidental) link between the notified circumstances and the later claim.

Finally, the court’s observations in Makin relating to insurer’s obligations in the exercise of any contractual discretion are also worth noting. Although obiter, the court accepted submissions that the exercise of any discretion is to be judged in accordance with the Braganza duty (from Braganza v BP Shipping Ltd). This duty requires an insurer to ensure that any decisions in the exercise of a contractual discretion are lawful and rational, as well as made in good faith and consistent with its contractual purpose. An insurer exercising any discretion – and this is a particular consideration for claims handlers – must evaluate all of the material and come to a rational conclusion on the issue. This should be carefully documented, albeit that concerns around disclosure cannot be completely ignored. Insurers need to ensure that a proper procedure to reach a decision is followed and can be evidenced, taking all relevant factors into account and demonstrating that the claims adjuster has not acted on the basis of irrelevant factors or ulterior motives.

Many insurance policies contain wording that groups claims by reference to a unifying factor (such as causes or events). This allows more than one loss covered by the same policy to be treated as a single loss, for example when considering notification or applying policy deductibles or limits.

Aggregation may be defined using words like “same”, “similar” or “related”. For multiple losses to constitute one “event” or “occurrence” the courts will look at the connecting factors, using the well-known “unities” framework adopted in Kuwait Airways Corp v Kuwait Insurance Co SAK (No. 1) and Scott v Copenhagen Re for guidance; are there unities of cause, locality, time and the intention or motive of any human agents?

What news from 2025?

When considering the 2025 judgments set out below, the following distinctions should be borne in mind:

(a) aggregation language may be used to attach subsequent losses back to an expired policy period;

(b) losses may be aggregated by reference to a unifying factor that can mean that either a retention or limit is eroded; and

(c) a policy may contain an overall aggregate limit of liability irrespective of whether or not there is a unifying factor between the losses.

In the Ahmed decision (see our article here), the policy provided that later claims arising out of a notified circumstance "and any Related Claims" were deemed to have been made when the circumstance was first notified. "Related Claims" were defined as those "alleging, arising out of, based upon or attributable to the same facts or alleged facts, or circumstances or the same Wrongful Act, or a continuous repeated or related Wrongful Act." It was held that the word “same” in the definition requires identity, not mere similarity, of facts or circumstances. Here, the use of “same” prevents aggregation where claims relate to advice given to different investors or to the same investor in different tax years. If considering the concept of a “related” Wrongful Act though, absolute identity is not required. This decision serves as a useful reminder that aggregating language can allow claims made outside a claims-made policy’s period to attach back to a circumstance notified within the policy period.

We considered several decisions looking at aggregation in the context of Covid BI coverage disputes in our Year In Insurance Law 2024 review of insurance law. Many of these disputes continue to make their way through the English courts, and we look more fully here at some of 2025’s Covid BI decisions.

In Liberty Mutual Insurance Europe SE v Bath Racecourse Co Ltd, amongst other things, the Court of Appeal considered questions of aggregation of Covid-19 BI losses. It was held that in composite policies, absent aggregate liability language, the limits are applicable to each insured separately. The policy was subject to a series of limits “any one loss”. Applying those limits in Bath Racecourse Company Ltd & Ors v Liberty Mutual Insurance Europe SE & Ors, the court held that this did not mean a limit per cancelled event (in this case each race meet) but that various references to “Premises” in the policy indicated that the limits apply per premises.

In Unipolsai Assicuriazioni SPA v Covea Insurance Plc; Markel International Insurance Co Ltd v General Reinsurance AG the court looked at Covid BI claims under property catastrophe excess of loss reinsurance, agreeing that losses arose out of and were directly occasioned by one “catastrophe”. While not prepared to define precisely what a catastrophe is, in the context of these reinsurances the court drew out several key features: the catastrophe must: (i) be capable of causing direct individual losses itself; (ii) be a coherent, particular and readily identifiable happening; (iii) must involve an adverse change on a significant scale from that which preceded it; and (iv) and it must be broadly possible to identify when the catastrophe comes into existence. In the Covea decision, the court appeared to agree with the arbitral panel that the outbreak of Covid-19 in the UK represented a catastrophe. The Markel panel had instead concluded that the Government’s order to close schools and nurseries on 18 March was the catastrophe, but that was inextricably linked to the pandemic - the court felt that this conclusion had been open to the panel.

What does this mean for you?

The extent to which particular types or groups of claims may be consolidated for the purposes of applying a particular policy term will of course turn on the policy wording, construed in the orthodox way.

Under a composite policy, each insured will be insured to the extent of its own interests. In the decisions above, the court considered that as a matter of construction the policy limits applied to each insured, and were not aggregate limits. Where the intention is to apply an aggregate limit across all insureds, this would have to be made very clear.

It will be interesting to see how the Covid-19 decisions, including those above and Stonegate and Various Eateries (both of which were covered in our review of 2024) amongst others, will be extrapolated to other, non-Covid-19 situations. Of course, the wording of the relevant clauses and the policies overall will be crucial. Aggregation cannot be considered as an abstract question. It involves considering the language in the policy as it applies to the scenario(s) in question. The court will ask from the perspective of the reasonably informed observer:

1. is there a unifying factor;
2. that has a sufficient causal link to the individual losses; and
3. that is not too remote?

This will be fact, and wording, specific.

The Third Party (Rights Against Insurers) Act 2010 (the 2010 Act) allows third parties to step into the shoes of an insolvent insured to claim against the would-be defendant’s insurer.

The third party will only be placed in the position that the insured would have been in had it made a claim against its own insurance policy; only insured rights are transferred and the insurer may rely on any defence that would have been available to the insured against the third party.

Section 9 of the 2010 Act directly addresses transferred rights that are subject to conditions "that the insured has to fulfil". Where the policy requires an insured to fulfil a policy condition, the third party can take steps to fulfil the condition instead, and those steps will be treated as if done by the insured (s.9(2) the 2010 Act).

What news from 2025?

The liability of the insured to the third party, and/or of insurers to the third party, can be established for the purposes of the 2010 Act by a judgment, or by means of declarations in proceedings against the insurer. In Makin v Protec & QBE the court held that a previous judgment of HHJ Sephton KC, in which he had made findings as to breach of duty, vicarious liability and causation in the underlying personal injury claim, was binding upon the question of the insured’s liability.

The Ahmed, Archer and Makin decisions which we consider above in the context of notification and aggregation all arose from claims brought by third parties under the 2010 Act. The court concluded that, where the original insured had breached policy conditions which set out requirements for the notification of claims or circumstances in each case, insurers were relieved of their liability to indemnify the third party. In Archer v R 'N' F Catering Ltd the court rejected arguments by the third party claimant that she shouldn’t be held to the notification conditions in the policy where it had been impossible for her to comply earlier. Where an insured has lost the right to indemnity through its own breach of the conditions precedent, section 9(2) of the 2010 Act cannot come to the aid of the third party and resurrect it. Although s.9(2) allows a third party to comply with the policy terms in lieu of the insured, it does not obviate the need for notification completely. The court noted that while s.9(3) of the 2010 Act disapplies policy conditions that require the provision of information or cooperation by an insured but cannot now be fulfilled by the third party, s.9(4) expressly carves out claim notification conditions from this exception. The court surmised that this “no doubt reflects the importance attached to notification provisions, which enable an insurer to manage the risk they have insured”.

In MS Amlin Marine NV v King Trader Ltd the Court of Appeal again considered the application of the s.9 exceptions in the 2010 Act, this time in the context of a “pay first” clause in a marine insurance policy. “Pay first” or "pay to be paid" clauses are a recognised feature of marine insurance, and require an insured to pay any third party claims before seeking indemnity under the policy. The Court of Appeal upheld a 2024 decision which held that a pay first clause was incorporated into a marine insurance policy and no indemnity was payable by the insurer in respect of any liability that the insured charterer had not previously discharged. Although Section 9(5) of the 2010 Act effectively outlawed pay first clauses, by providing that the transferred rights "are not subject to a condition requiring the prior discharge by the insured of the insured's liability", Section 9(6) added an important qualification for marine insurance. It was accepted that this policy was marine insurance, so that the s9(6) carve-out applied. As the insured had failed to pay out first, the third party was precluded from making a claim.

What does this mean for you?

The 2010 Act allows a third party claimant to take steps to fulfil a policy condition on behalf of the insured. It also disapplies policy conditions that require the provision of information or cooperation by an insured but cannot now be fulfilled by the third party. However, the third party cannot retrospectively remedy a breach where the insured itself could not have done so.

The 2010 Act directly addresses the difficulties for third parties in complying with notification terms, but expressly excludes notification clauses from the ambit of the statutory override, recognising their importance for insurers in managing risks.

The 2010 Act also addresses the mischief created by pay first clauses. However, as is clear from the Law Commission report that lead to the 2010 Act, the marine market (lead by the P&I clubs) were able to persuade Parliament to carve out pay first clauses in marine insurance policies (other than in relation to death and bodily injury claims) from the 2010 Act. This therefore remains a key factor for marine insurers in determining whether their obligation to indemnify has been triggered. Has the insured paid first? If not, this judgment recognises that where there is a pay-first clause, as is commonly the case, the policy does not respond.

Insureds must make a fair presentation of the risk to their insurer before the policy incepts. As set out in IA 2015:

• The insured must disclose “every material circumstance which the insured knows or ought to know.” (section 3(4)).
• A circumstance is material “if it would influence the judgment of a prudent insurer in determining whether to take the risk and, if so, on what terms.” (section 7(3)).
• For the purposes of attributing knowledge of material circumstances to an insured:
  • knowledge for a corporate insured is attributed to those in senior management roles or responsible for the insured’s insurance (section 4(3)); and
  • an insured “ought to know what should reasonably have been revealed by a reasonable search of information available to the insured ...” (section 4(6)).
• An insured is not required to disclose circumstances where insurers can be taken to have (expressly or impliedly) waived information (section 3(5)).

An insurer only has a remedy for breach of the duty of fair presentation if it can show inducement; that, but for the breach, it would either not have entered into the policy at all, or would only have done so on different terms (section 8(1) of IA 2015).

The authorities indicate that allegations and criminal charges (see for example the Brotherton decision), are likely to be material.

What news from 2025?

In the ten years since the Insurance Act 2015 (IA 2015) was passed we have seen a relatively slow stream of judgments as to its application and interpretation. Two judgments handed down in 2025 looked at the duty of fair presentation under IA 2015. We consider the duty of fair presentation by reference to recent decisions in our article here.

In Clarendon Dental Spa LLP and another company v Aviva Insurance Ltd Anr, the court rejected insurers’ arguments that there had been misrepresentation or material non-disclosure by an insured in its response to an insolvency question in a proposal form. The insured had answered “no” to a question asking whether the insured entity “or any partners, directors or family members involved in the business” had been declared bankrupt or insolvent. The court considered that this question was naturally read as referring to current partners or directors, not to former partners or directors. By asking the question in the form that they did, insurers had waived disclosure of the fact of the insolvency of any persons other than the subjects of the question. If, therefore, insurers had intended to ask about a person's former involvement in a business, then they could and should have asked that expressly. The court rejected insurers’ arguments that the insolvency history of others who had previously been involved in the business now operated by the policyholder was material.

We considered the question of attribution of knowledge to corporate insureds and the first instance decision of Delos Shipholding S.A & Ors v Allianz & Ors in our insurance law review of 2024. The insured was held not to have breached the duty of fair presentation in having failed to disclose criminal charges brought against the insured’s sole nominee director. The director was the only person with actual knowledge of the charges, but he did not form part of the company’s senior management under s. 4 of IA 2015 for the purposes of knowledge of the insured company. This decision has since been upheld by the Court of Appeal: Delos Shipholding S.A. and other companies v Allianz Global Corporate and Specialty S.E. & Ors. Identifying who forms part of “senior management” for s.4 IA 2015 requires an evaluation of the insured's activities, to identify the individuals who make decisions about how those activities are to be managed and organised, and to consider the significance of each individual's role in such decision-making. The Court of Appeal found no basis for thinking that the judge’s evaluative assessment had gone wrong. The director had no role, let alone a significant role, in the making of decisions about the insured’s activities. Therefore, even though, the company (an SPV) only had one director, that director’s knowledge was not considered relevant for the purposes of the insured’s duty of disclosure.

What does this mean for you?

Questions relating to the duty of fair presentation will turn on the facts. Whilst the decision in Delos looks odd on its face, it turned on the nature of the director’s role in fact. We suggest a number of practical pointers for insurers in our article here. Underwriters should be mindful that there may be corporate structures (like SPVs) where the insured’s decision-makers and those with relevant IA 2015 knowledge are not the same people as those with management and insurance responsibilities. Insurers may want to consider how to minimise the risk that there is a gap between the people with knowledge but who are not part of the insured’s senior management or responsible for the insurance, and those who are senior management but do now have the requisite knowledge. One option is to ensure that there are positive representations of relevant matters, where knowledge is (largely) irrelevant.

On waiver, Clarendon serves as a reminder that insurers need to consider carefully the nature of any questions asked pre-inception, and whether they properly address all scenarios that insurers consider might impact on the risk. The courts have frequently been required to decide on the scope of questions regarding previous insolvencies, where the history may be considered material by the insurer but the question asked (and answered) in the proposal form may not be sufficiently broadly or carefully drafted. We note that in Clarendon the court’s decision was in part based on the fact that the proposal form was a standard form document, such that the phrasing of the question could be explained by its potential application to various possible types of insured.

Under the Insurance Act 2015 (IA 2015), in the event of a breach of warranty cover is suspended until the breach is remedied.

What news from 2025

In Lonham Group Ltd v Scotbeef Ltd & Anor, at first instance and on appeal, the court was asked to determine the nature and scope of a Duty of Assured clause in a policy (again, considering whether insurers were liable to indemnify a third party bringing a claim under the Third Parties (Rights Against Insurers) Act 2010). The Duty of Assured clause set out requirements as to the use by the insured of standard industry trading conditions in its business dealings. The central dispute was whether or not the Duty of Assured clause contained representations or warranties, and therefore which parts of IA 2015 applied. An earlier finding of fact - that the relevant trading conditions were not, and never were, incorporated into the contractual relationship between the original insured and the claimant - was binding.

At first instance (a decision which we considered here) the court found that the various conditions within the Duty of Assured clause were to be read together as representations, and that they fell foul of the "transparency requirements" set out in Sections 16 and 17 of IA 2015 and were of no effect, such that insurers were liable to indemnify the third party claimant.

As we expected, however, the Court of Appeal came to a different view; our fuller analysis of that appeal decision is here. On appeal, the court held that insurers were not liable to indemnify the third party where the original insured had breached warranties in the policy.

In broad terms, the Court of Appeal held that each of three sub-clauses within the Duty of Assured clause were to be considered separately; these dealt with “all of the different permutations upon which [the insured] has traded and will trade in the future”. Sub-clause (i) was properly construed as a representation, to be viewed in the context of the duty of fair presentation under IA 2015, but sub-clauses (ii) and (iii), requiring the insured to trade continuously under trading conditions approved by insurers, and to take reasonable steps to ensure incorporation of such terms into any new contracts, were warranties and conditions precedent to indemnity under the policy. They were future warranties, and did not contain any pre-policy representations or seek to regulate pre-policy disclosure by the insured.

The policy expressly stated that if there was a breach of a condition precedent the insurers were entitled to avoid the whole claim. Sub-section 10(2) of IA 2015 expressly states that the insurer has no liability for any loss after a warranty has been breached but before it has been remedied. The court held that the exceptions in IA 2015 Act for avoidance of liability in the event of breach of warranty did not apply; section 16(1) of IA 2015 didn't apply, and the transparency requirements in s. 17 did not arise.

What does this mean for you?

Lonham is the first appellate judgment applying the relevant provisions of IA 2015. Whilst determining which provisions of the Act apply will always be a question first of construction of the policy terms, IA 2015 will then be applied to determine the extent and effect of any breach.

Insurers and insureds should be mindful of the different remedies available under IA 2015 depending on the classification of the particular policy term, and ensure that drafting is very clear to ensure clarity and certainty on their rights and remedies in the event of breach.

Where a party holds insurance with two (or more) insurers which covers the same subject matter against the same risks, this is known as double insurance. Insurance policies commonly contain some form of wording to provide that where another insurance policy will respond to a particular insured loss, either that first policy will fall away, or it will only apply in excess of the second cover. Inevitably, where multiple insurance policies all contain conflicting “other insurance” clauses, the arguments can get complex and somewhat circular.

What news from 2025

In Watford Community Housing Trust v Arthur J. Gallagher Insurance Brokers Ltd, which we considered more fully here, the court construed three policies each containing “other insurance” clauses (Cyber, Commercial Combined and PI), which on their face would respond to losses from a data breach in a broker’s negligence claim. It was held that the other insurance clauses cancel one another out, so that, but for the defendant broker’s breach of duty, the claimant would have had the benefit of triple insurance against its losses under a horizontal layer of primary insurance.

None of the three policies in issue contained a rateable proportion clause (by which each insurer’s share of the loss would be pro-rated), so that each insurer was liable to the claimant for the whole of its loss up to the limit of their policy. The court rejected contentions for a general principle of rateable proportion in cases of double insurance. Where a policyholder has paid separate premia for separate policies, each of which provides coverage, it would have been surprising, and likely contrary to the public interest, to find that the policyholder only had coverage up to the value of the highest limit of those policies, or limited by rateable proportion.

On the contrary, subject to the indemnity principle, it was held that the claimant could exhaust its competing policies in whichever order it chooses. Absent an express contractual provision that provides otherwise, as a matter of general principle the insured should be able to recover the whole of its loss under one or more of the policies up to a maximum of the respective and combined limits. Contribution, if it arises, is then a matter for the insurers inter se.

What does this mean for you?

Although, where multiple policies might respond to a loss, most competing “other insurance” clauses are likely to cancel one another out, insurers still need to include and carefully draft such provisions. Their effect will be a question of construction; in the event of other insurance, does the clause exclude an indemnity altogether, limit the insurer's liability to a rateable proportion of the loss or convert the policy to excess cover, responding only if and when the insured loss exceeds the cover under the other policy?

Where two competing clauses each seek to avoid liability, so that the “other insurance” clauses all seek to deprive the claimant of any primary cover on account of their co-existence, authority makes clear that the two clauses cancel each other out. In Watford, the court observed that it would have been “absurd or repugnant to the commercial purpose of the contracts” to leave the insured with no primary insurance at all; considered objectively, a reasonable person would expect that the more insurance coverage they had purchased, the more they would be entitled to recover from their insurers. It is clear that if insurers want to limit their liability proportionately in the event of double insurance, or for their cover to operate excess of others, this must be clearly expressed in the policy. Whether this is effective will depend on interpreting each double insurance clause alongside the others – this cannot be determined by construing a single policy in isolation from the other insurances.

Insurers should also be alive to the fact that there are contribution options, and risks (which applies is a matter of perspective) when losses arise. In particular, whilst there may be a policy that is geared specifically towards a loss, there may be additional cover in policies that are considered “secondary”. This is a particular risk in classes such as cyber, where non-cyber insurance may contain silent cyber cover alongside a specific cyber policy.

The Insurance Act 2015 (IA 2015) sets out remedies where the insured makes a fraudulent claim, including a right to avoid the policy from the time of the fraudulent act. Equally, many policies contain express terms limiting or excluding cover in the event of a fraudulent or exaggerated claim.

What news from 2025?

In Malhotra Leisure Ltd v Aviva Insurance Ltd the court rejected insurers’ purported avoidance of a Commercial Combined Policy for alleged breach of its express Fraud Conditions.

Insurers had alleged that the insured had deliberately and dishonestly caused a water leak that then led to a claim for property damage and business interruption losses under the policy. The Policy Conditions included the right for insurers to refuse to pay claims or cancel the Policy “If a claim made…is fraudulent or fraudulently exaggerated or supported by a false statement or fraudulent means or fraudulent evidence is provided to support the claim”.

It was common ground that, while the insured bore the burden of proving that on the balance of probability the leak (and thereby the damage) had occurred fortuitously, the burden of proving an intentional act was on insurers. The court outlined the legal principles and authorities in play, weighing the fact that the owners of property do not generally resort to destroying their property and that dishonesty is inherently improbable, so that this is a grave charge to make. Viewing evidence of the claimant’s motive as a “crucial probative tool”, and while accepting that the timing of the leak was highly coincidental given the insured’s financial position, the court held that the leak was most likely caused by a “combination of events occurring as a fortuity” rather than as the result of deliberate acts by the insured.

What does this mean for you?

The court in Malhotra made clear that very clear words are required for a fraud condition to deprive the insured of an indemnity on the basis of a false statement to insurers regardless of its significance for the insured's claim (referring to the decision of the Supreme Court in Versloot Dredging BV v HDI Gerling Industrie Versicherung.

There is a high evidential bar when alleging fraud. While the standard of proof is always the balance of probabilities, the Supreme Court made clear in Birmingham City Council v Jones that the inherent improbability of dishonesty may be a relevant factor: "…, proof of an improbable event may require more cogent evidence than might otherwise be required. The authorities indicate that the evidence must exclude a "substantial" rather than "fanciful or remote" possibility that the loss was accidental (cf. The Ikarian Reefer). In The Brillante Virtuoso it was said that the evidence "must eliminate any other plausible explanation based on the innocence of the person alleged to have been fraudulent so that the only conclusion or inference remaining is one of guilt.".

The court in Malhotra subsequently awarded the insured indemnity costs. The court acknowledged the difficulties that insurers face with fraudulent claims, but this must be balanced by the financial and reputational risks to an insured if allegations of dishonesty are made which later prove to be unfounded. This brings into focus the risks of raising allegations of fraud unless there are strong grounds for doing so.

Russia’s invasion of Ukraine in 2022 has led to a number of insurance coverage disputes. 2025 brought Butcher J’s decision in Aercap Ireland Ltd v AIG Europe S.A. & Others. This covers key issues around war risk and all risks insurance which are specifically of interest in relation to this set of losses and of general application to aviation, marine, PV and PR insurers and reinsurers.

What news from 2025?

The retention within Russia of aircraft and/or engines owned by non-Russian entities and leased to Russian entities has given rise to some complex policy coverage disputes.

In 2025 the Commercial Court managed and heard six such coverage disputes together, and gave judgment on a number of issues, in Aercap Ireland Limited v AIG Europe S.A. & Others. In AerCap the aircraft lessors claimed under policies which provide them with “Contingent” and “Possessed” cover in respect of hull all risks and war risks. In very broad terms, the Possessed cover would indemnify against physical loss or damage while the insured property was in the care, custody or control of the insured. The Contingent cover then, in essence, steps in to cover physical loss or damage when the insured property is not in the insured’s control, and the primary cover taken out by the operator/lessee does not respond.

Applying well-established rules of construction, and having considered both the text and the context of the policies, the court held that:

• all but one of the lessors may recover in respect of its lost aircraft and engines under the Contingent cover, but none has a valid claim under the Possessed cover. The aircraft were not in the insured lessors’ care or control when lost;

• the aircraft have been lost, and that that loss occurred on 10 March 2022, when Russian legislation (Decree GR 311) banned the export of aircraft and aircraft equipment from Russia. It was not in dispute that a permanent loss of possession would constitute ‘physical loss’. Here, the insureds have no physical use of the aircraft. The court preferred Aercap’s formulation of the test to be applied, namely that one should ask whether the deprivation of possession is, on a balance of probabilities, permanent. In the context of insurance of aircraft, permanence naturally means for the commercial life of the aircraft;

• The proper test for causation is, as a matter of interpretation of the policies, the usual test of proximate causation. The proximate cause of the loss was the coming into force of Decree GR 311. GR 311 was a ‘restraint’ or ‘detention’ within the Government Perils of the War Risks cover of each of the claimants;

• the permanent deprivation in this case occurred when Decree GR 311 was issued. This presented a challenge for the Insureds, as in many cases, notices of review had been issued which either restricted cover by time or geography such that by the time the Decree was issued, the policies had been amended. As amended, the losses might not be covered. The court concluded that the losses were nonetheless covered because the Insureds could rely on the principle of the “grip of the peril”. This is traditionally a marine concept under which if a vessel was a partial loss prior to expiry of the policy period but became a total loss after the end of the policy period was nonetheless covered because the loss had already sufficiently triggered the policy even if it had not become a total loss in time. The vessel is treated as being in “the grip of the peril”; this was applied to the war risks policies to cover this situation.

• Whilst only permanent deprivation (and not temporary deprivation) triggered cover, the Ukraine situation was such that the insureds were temporarily deprived of cover during the policy period, which became a permanent deprivation thereafter. They were therefore in the grip of the peril when the notices of review took effect:

  “Instead, I consider that the relevant ‘grip of the peril’ principle is that, if an insured is, within the policy period, deprived of possession of the relevant property by the operation of a peril insured against and, in circumstances which the insured cannot reasonably prevent, that deprivation of possession develops after the end of the policy period into a permanent deprivation by way of a sequence of events following in the ordinary course from the peril insured against which has operated during the policy period, then the insured is entitled to an indemnity under the policy…”

• Given that conclusion as to the timing and cause of the loss, it is from their war risks insurers, not their all risks insurers, that each of the claimants can recover;

• Neither EU nor US sanctions prevented the insurers from indemnifying the claimants for the loss of aircraft which had been leased to Russian airlines. General Prohibition 10 (US sanctions) does not apply to the provision of insurance, and, having regard to the purpose and the wording of EU Regulation No. 833/2014, insurance of the type with which this case is concerned and which is provided to non-Russian lessors is not caught by EU sanctions as it is not insurance (or other financing or financial assistance) provided ‘to any person, entity or body in Russia or for use in Russia’.

What does this mean for you?

This judgment has far reaching consequences in the context of aviation losses in Ukraine following Russia’s invasion. It sits alongside the operator policy litigation that is ongoing in the High Court. It has also given rise to reinsurance issues which are being disputed or resolved. Leave to appeal was refused on all counts by Butcher J. The Court of Appeal has not, at the time of writing, decided whether it will grant leave on any of the points raised.

However, the judgment also has potentially wide reaching consequences beyond its specific facts, in the same way that Covid-19 judgments are being used as authority for propositions (especially relating to causation) beyond the pandemic itself.

In particular, we wait to see how far the grip of the peril argument is used in very different scenarios. It is very easy to see how this argument could be made (whether or not successful) to attempt to expand cover to losses or claims that arise after expiry of relevant policy periods and which, in truth, would not be considered as covered by insurers.

It also raises interesting questions about the interaction with other classes of business and previous decisions on those. For example, in Hamilton Corporate Member Ltd v Afghan Global, the court considered that (a) loss by seizure of property was excluded under the AFB PV wording; and (b) physical damage did not cover loss by seizure or deprivation. In contrast, in Aercap, there was no suggestion that deprivation loss was not covered under the aviation war risks cover. Whilst perhaps not surprising, given the differences in the wordings in the two cases, we can foresee arguments about the breadth of cover provided under PV policies following this more recent judgment.

Finally, we would flag that there remain numerous live reinsurance issues relating to aviation losses following the Russian invasion. As an example, there are interesting aggregation questions where reinsurance policies contain event- or occurrence- based aggregation language. We expect these will remain live issues in 2026 and beyond.

The UK’s insurance regulatory landscape underwent a conscious shift in 2025, moving away from the post-Brexit transition phase toward a more bespoke, data-driven, and "outcomes-based" regime. On its face, the theme of the year was "streamlining", with the FCA and PRA working to strip away redundant prescriptive rules. There was a sting in the tail, however, as the FCA in particular focuses on corporate culture and consumer harm, with a particular emphasis on whether products – and particularly insurance products – offer consumers "fair value".

What news from 2025?

The most significant structural change arrived via the FCA’s project to simplify insurance rules. We saw the introduction of a new "SME watershed," which effectively redefined the boundary between retail and commercial customers. By moving away from the "contracts of large risks" definition and aligning it more closely with DISP / Financial Ombudsman Service (FOS) thresholds, the regulator has lightened the compliance load for many specialty lines. This was accompanied by a move to risk-based product reviews in PROD 4, replacing the rigid 12-month product review cycle with a requirement that scales with the complexity of the product.

In relation to Non-Financial Misconduct (NFM), the regulatory net was spread more widely. Following the consultations of late 2024, 2025 saw the formal integration of serious non-financial failings such as bullying, harassment, and discrimination directly into the Fitness and Propriety (FIT) assessments and the Conduct Rules (COCON). The regulator made it clear that "culture" is no longer a soft metric but a measurable regulatory standard that extends to behaviour outside the office if it impacts the firm's reputation or the individual's integrity.

On the prudential side of the equation, the PRA finalised the transition to Solvency UK. The final rules on the Matching Adjustment came into effect, granting insurers greater flexibility to invest in a wider range of assets, including those with "highly predictable" rather than "fixed" cash flows. Meanwhile, Lloyd’s of London completed its significant Byelaw Consolidation project, revoking dozens of obsolete requirements and modernizing its governance framework into a single, more navigable Rulebook.

Finally, the Consumer Duty moved into its "supervisory" phase. The FCA’s focus sharpened on Fair Value, particularly for "add-on" insurance products and GAP insurance, where low claims-payout ratios triggered a wave of "Dear CEO" letters and, in some cases, temporary product withdrawals. We expect to see a continued focus on fair value and the insurance sector as the primary sector of focus.

Procedurally, the FCA implemented its new Enforcement Policy which included a watered down version of its controversial ‘name and shame’ proposals which enables the FCA to name firms under investigation in ‘exceptional circumstances’. This policy was tested in (R (CIT) v Financial Conduct Authority (No 1) [2025] EWHC 2614 (Admin)) where the High Court dismissed a judicial review claim challenging the FCA's decision to publicly name a firm as the subject of an FCA investigation. The firm had argued that, while an anonymised announcement could be lawful, naming it was unlawful and unreasonable. This case is interesting because although the FCA’s Enforcement Guide states that the FCA will only name firms in "exceptional circumstances", the Court held that a desire to proactively protect consumers met this threshold.

What does this mean for you?

The FCA remains active in its focus areas, in particular misconduct and consumer harm.

Depending on your firm’s profile, 2025 was the year the regulatory burden might have begun to lighten in the commercial space. The SME Watershed means that for many large-scale risks, firms can revert to a more traditional commercial approach without the heavy governance required by the initial rollout of the Consumer Duty. Equally, we consider that this will also mean a sharper and stricter focus on higher product risk categories, whether that be consumer products or those under which microenterprises are insured, with the FCA having already shown a willingness to act assertively with the temporary ban on GAP sales in 2024.

On consumer harm, the FCA’s message is clear: if firms cannot prove through data that their product provides a tangible benefit to the end customer, then they are at risk of either enforcement or being asked to ‘do the right thing’, which is FCA-speak for paying redress. In our experience, the FCA is no longer looking for "good intentions" in policy documents but are digging into the detail of metrics and the root cause analysis that should sit alongside them. Can firm’s demonstrate good loss ratios, sensible claims numbers, appropriate declinature rates and commission structures etc. Now is the time to review the value offered by your products including the value taken throughout the distribution chain.

The FCA have explained that in 2025/26 they are prioritising thematic, multi-firm and market-wide work, relevant to a wide set of stakeholders, with a particular focus on how embedded the consumer duty is in various sectors (which we expect may include insurance). This is not, however, to the exclusion of action against individual firms where needed. They have also said that they have four “cross-cutting projects”: (a) a review of the products and services outcome; (b) a review of firms’ approaches to outcome monitoring; (c) a review of firms’ customer journey design; and (d) a review of the consumer understanding outcome.

The changes to NFM reflect the increased focus on workplace conduct over recent years and we would expect the insurance sector to be an area of particular focus.

Finally, the Solvency UK reforms may offer a genuine Brexit dividend for firms by providing a clearer path to invest in green infrastructure and other long-term assets. However, you will need to think carefully about your internal models and, as always, our plea to firms includes making sure that you are keeping good records of decisions made so that you can explain and evidence them after the event, if needed.