AXA Corporate Solutions SA v National Westminster Bank Plc and Marsh Ltd [29.7.10]
AXA insured NatWest and its parent company, the Royal Bank of Scotland for both public and products liability (PPL) for the period 1998 to 2004 and underwrote 100% of the primary layer. The liability insurance was placed annually from 31 March each year in primary and excess layers.
AXA provided NatWest’s broker Marsh, by way of fax dated 20 March 2002, with the renewal documentation for 2002/3 and specifically stated that they would only renew the policy on terms which included a terrorism exclusion.
It was alleged in the US by victims of Hamas suicide bombings in Israel that a British charity, Interpal was a fundraiser for Hamas and that it collected donations through NatWest bank accounts. NatWest notified AXA of damages claims under the US Antiterrorism Act which NatWest considered to be covered by its PPL policy for the relevant policy years. Once notified, AXA raised coverage issues and sought a declaration that the policy contained an express term excluding liability for terrorism for the relevant period (2002/3). NatWest stated that they were not aware of the terrorism exclusion.
Hamblen J concluded that this lack of awareness made absolutely no difference, as NatWest’s brokers were aware and acting in their capacity as agent, for the purpose of receiving communication of the renewal terms on behalf of NatWest. As such, NatWest’s brokers were under a duty to convey those renewal terms to NatWest.
He ruled that a terrorism exclusion had been included in the PPL policy and was agreed in the following terms “Terrorism exclusion (wording to be agreed)”, as set out by AXA in their fax dated 20 March 2002. No further wording was required to incorporate the term into the renewed PPL policy, as the phrase was capable of both interpretation and application.
This case highlights the important responsibilities of a broker when acting as an insured’s agent. It also emphasises to insureds that their broker’s actions or omissions at placing or renewal can have very real and damaging effects upon subsequent claims.
It should act as a warning to brokers of the necessity to take great care to communicate all the key elements of insurers’ proposed terms to the insured during the placing or renewal process.
It is also interesting, from an insurers’ perspective, to note that the terms of the exclusion were deemed to be sufficient and that no further wording was required to incorporate the term into the renewed PPL policy. This highlights that, provided terms used can be readily interpreted, they will be enforceable.