Trends and developments in insurance & reinsurance 2025 UK

COVID-19 business interruption

The year 2024 saw several significant insurance and reinsurance cases in the UK, particularly those related to the impact of the COVID-19 pandemic. These cases have provided crucial clarifications and set precedents that will shape the industry in 2025 and beyond.

The High Court ruled in Gatwick Investment Ltd & Others v Liberty Mutual Insurance Europe SE [2024] EWHC 83 (Comm) that government actions in response to COVID-19, such as lockdowns and restrictions, qualify as “action by the police or other statutory authority,” thereby triggering insurance coverage. The Court also clarified that furlough payments can be deducted from the loss claimed, as they reduce business costs.

In Bellini (N/E) Ltd trading as Bellini v Brit UW Limited [2024] EWCA Civ 435, the Court of Appeal dismissed an appeal, affirming that physical damage is required for coverage under the disease clause. This decision underscores the court's reluctance to rewrite clauses unless there is a clear drafting error.

The Court of Appeal also ruled in London International Exhibition Centre Plc v Allianz Insurance Plc & Others [2024] EWCA Civ 1026 that proving loss from business interruption due to COVID-19 requires showing that the interruption resulted from government action in response to cases within the specified radius. This extends coverage for non-damage business interruption losses.

In Unipolsai Assicuraziono SPA v Covea Insurance Plc [2024] EWCA Civ 1110, the Court of Appeal determined that the COVID-19 outbreak qualifies as a “catastrophe” and that the hours clause does not limit the indemnity. This aligns with standard property damage policies, providing broader coverage for non-damage losses.

These rulings reflect the courts' efforts to balance the interests of policyholders and insurers. The emphasis on government actions and the extension of coverage for non-damage losses demonstrate a nuanced approach to interpreting insurance policies in the context of unprecedented events. However, the requirement for physical damage in some cases underscores the importance of clear policy wordings and the courts' commitment to upholding the natural meaning of contracts. These decisions will likely influence future policy design and claims handling, ensuring that businesses are better protected against similar disruptions.

Western aircraft in the Russian Federation

The ongoing conflict in Ukraine has led to significant insurance and reinsurance litigation involving over 570 aircraft, valued at approximately USD13 billion (GBP10.2 billion). These aircraft, originally leased to Russian and Ukrainian airlines, were not returned following Russia’s invasion of Ukraine in February 2022 and the subsequent sanctions imposed by the UK, EU, and USA.

In Zephyrus Aviation Partners v Fidelis Underwriting Ltd [2024] EWHC 734 (Comm), Mr Justice Henshaw dismissed the reinsurer’s jurisdiction challenges, citing concerns about the fairness of trials in Russia due to state interference and judicial bias. The claims will proceed in the UK.

In contrast, the Ukrainian jurisdiction challenges were dismissed in March 2024. Henshaw J ruled that Ukrainian exclusive jurisdiction clauses are binding and enforceable, and claims in Ukraine will proceed before Ukrainian courts.

These decisions highlight the significant legal and political challenges in enforcing insurance and reinsurance claims in jurisdictions affected by geopolitical conflicts. The UK courts' willingness to override Russian jurisdiction clauses signals a strong stance against potential state interference, while the enforcement of Ukrainian clauses reflects a different set of legal and practical considerations. These rulings have implications for international reinsurance and the enforceability of cut-through clauses, emphasizing the need for careful policy design and legal strategy in high-risk regions. The focus on fair trials and the avoidance of inconsistent judgments underscores the courts' commitment to maintaining the integrity of the insurance market amidst global tensions.

Closing remarks

The insurance and reinsurance sector in the UK has faced substantial legal scrutiny in 2024, particularly in the context of the COVID-19 pandemic and the geopolitical tensions following the Ukraine conflict. The 2024 cases provide valuable insights into the courts interpretation of insurance policies and their approach to jurisdictional challenges. These developments highlight the sector's importance and the need for clear, robust policy wordings to ensure fair and transparent outcomes. As litigation continues into 2025 and 2026, the focus will remain on protecting businesses and maintaining the integrity of the insurance market.