How should Australian lawyers approach the task of dual
representation of insured and insurer? A recent American decision
serves as a timely reminder for insurers that conflicting interests
between an insured and insurer is a serious issue which may arise
for solicitors who act as coverage and defence counsel.
The US decision
In America, the Supreme Court of South Carolina recently handed
down a decision in the case of
Harleysville Group Ins. v Heritage Group Communities Inc.
(2017) which was highly critical of an insurer who failed to
properly reserve its right to dispute coverage whilst
simultaneously defending legal proceedings. The Supreme Court of
South Carolina also found deficiencies in the "reservation of
rights" letters which had failed to inform the insureds that a
potential conflict of interest may have existed. As a result, the
letters were held to be ineffective and the insurer was precluded
from contesting coverage.
