Sarah Cowey, Sushma Ananda and Joseph Rich acted in Royal & Sun Alliance Insurance Limited & Ors v Equitas Insurance Limited [2025] EWHC 2704 (Comm), a rare decision examining the operation of follow the settlements and claims cooperation clauses in reinsurance contracts.
The dispute concerned inter alia whether a claims cooperation clause modified the operation and effect of a follow the settlements clause and whether the reinsureds took proper and businesslike steps in entering into the underlying settlements. The settlements in question related to personal injury claims under US policies issued between 1981 and 1985. HHJ Keyser KC held that that the claims cooperation clause did not circumscribe the reinsurers’ follow the settlements obligation, but that the reinsurers had in any event consented to the course adopted by the reinsureds. The reinsurers were held not to have proved any failure to take proper and businesslike steps.
There was also an issue as to whether the excess under the reinsurances was eroded by indemnity payments and defence costs (as the Claimants argued), or by indemnity payments only (per the Defendant). HHJ Keyser KC held in favour of the Defendant on this issue, with the result that the excess was eroded under only one of the five reinsurance policies, reducing the quantum of the claim as a whole. The Court also refused the Claimants’ claim for compound interest on the sums awarded.
Sushma Ananda led Joseph Rich, instructed by BCLP for the Claimants. Sarah Cowey was instructed by Norton Rose Fulbright for the Defendant, led by David Scorey KC.
