News

Partner Hermès Marangos comments on the High Court ruling in favour of Allianz Insurance against the University of Exeter following Allianz’s bomb detonation insurance case in Insurance Business Magazine and Commercial Dispute Resolution.

Hermès’ comments were published in Insurance Business Magazine on 27 March 2023, here, and in Commercial Dispute Resolution on 27 March 2023, here.

Hermès commented: “The court determined that detonation of a previously unexploded WWII bomb fell within the war exclusion clause of a property insurance policy. In doing so, the court ruled that the dropping of the bomb and not its later detonation was the proximate cause of the loss or at least “a” proximate cause of the loss. The dropping of the bomb, the judge ruled, was an act of war and so fell within the exclusion.”

“In circumstances where the court acknowledged the procedure followed by the insurer to be unusual, to say the least, there was no detailed reference to the fact that the elapse of some 80 years between the bomb being dropped and then once degraded and corroded being detonated, placed it in an entirely separate category very well understood by the industry, of “derelict weapons” for which the war exclusion clause should have no application. Similarly, there was no analysis of the particular architecture of the war risks exclusion, and how causation operates within the context of that clause including the temporal element.”

“In essence, to a reasonable observer the judge simply applied a “but for” test. In the circumstances, one expects that the judgment is likely to be appealed and a different analytical approach taken, given the importance of this issue to a world-renowned insurance industry.  If left to stand, the present ruling will sit as an anomaly in the interpretation of war risks exclusions.”