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Jawdat Khurshid KC and James Bailey succeed in Privy Council life insurance dispute

2nd Mar 2023

McPhee v Colina Insurance Ltd [2023] UKPC 8

Jawdat Khurshid KC and James Bailey acted for the successful insurers, Colina Insurance Ltd, in the Privy Council in this life insurance dispute.

The case concerned a product known as “universal life insurance”. Although little known in the United Kingdom, universal life insurance is popular in North America and the Bahamas, where the dispute arose. The Bahamas Supreme Court and Court of Appeal found in favour of Colina. The Board upheld the decision of the courts below, by a 3:2 majority (Lords Leggatt and Stephens dissenting), dismissing the insured’s appeal.

The case raised questions of general importance relating to universal life insurance, as well as issues of construction relating to the policy wording. The central question was whether a charge known as the “cost of insurance” was fixed for the life of the insured, as the insured alleged, or was subject to annual increases. The Board was unanimous that Colina had the right to increase the cost of insurance annually. The majority also held that the courts below were entitled to find that the insured’s policy had lapsed on a number of occasions and that Colina had been entitled to increase the cost of insurance as a condition of reinstatement following lapse.

Jawdat Khurshid KC and James Bailey were instructed by Geraldine Elliott and Thomas McCall of RPC.