Fukushima: re/insurance coverage issues - IPBA 2012

Fukushima:re/insurance coverage issuesAngus Rodger2 March 2012

INTRODUCTION• Exclusions• Causation• Aggregation• Business Interruption352403 2

EXCLUSION 1:NUCLEAR CONTAMINATION“loss or damage arising directly or indirectly fromnuclear radiation or radioactive contamination howeversuch nuclear radiation or radioactive contamination mayhave been caused.”3524033

EXCLUSION 2:EARTHQUAKE“loss of or damage to property directly or indirectlyoccasioned by, happening through or in consequence ofearthquake, volcanic eruption, subterranean fire orany such convulsion of nature”3524034

EXCLUSION 3:FLOOD“Loss or damage caused by or resulting from Flood:-meaning rising water; surface water; waves; tidalwaves or tidal water; overflow of streams, rivers,lakes, ponds, or other bodies of water; or spray fromany of the foregoing; all whether driven by wind or notand regardless of any other event which contributesconcurrently or in any sequence to the loss or damage.”3524035

CAUSATION:BASIC PRINCIPLE• In order for a loss to fall withininsurance coverage, the loss must beproximately caused by an insured peril.• If the loss is caused by an excludedperil, there will be no coverage.3524036

CAUSATION:CONCURRENT CAUSES• Two or more causes that operate concurrently.• One cause is an insured event and the other anexcluded event.Interdependent: If neither cause would havecaused loss without the other, the excludedtakes priority and the insured cannot recover.Independent: If one event would havecaused loss without the other, the insured canrecover.3524037

AGGREGATION• Aggregation is significant for determining policy limitsand the application of deductibles.• Usually based on an event or occurrence.3524038

AGGREGATION12108642Retention0One OccurrenceTwo Occurrences3524039

AGGREGATION12108642Limit of coverRetention0One OccurrenceTwo Occurrences35240310

AGGREGATION BY EVENTThe “Four Unities”:•cause•locality•time•intentionCaudle v Sharpe [1995] LRLR 43335240311

AGGREGATION: HOURS CLAUSES• All damages from a given peril during a specific timeperiod.• Categories of hours clause:events based (NMA2244)manifestation of insured peril (NP)catastrophe based (LP098)35240312

BUSINESS INTERRUPTION:OVERVIEW• Actual financial loss from total or partial suspensionof operations• caused by• direct physical loss or damage to property.35240313

BUSINESS INTERRUPTION:CHANGE IN MARKETOrient Express Hotels v Generali[2010] EWHC 118635240314

QUESTIONS?35240315

Angus Rodger, PartnerSteptoe & Johnson99 Gresham StreetLondon EC2V 7NGarodger@steptoe.comTel. +44 20 7367 8000Fax +44 20 7367 8001www.steptoe.com35240316