What Can You Do With A Fence-Sitting Insurer?

Sometimes an insured can be in a hard place: possible claims on one side that you would like to settle, and uncertainty as to whether an insurer will step up. Yesterday the High Court gave some useful guidance on what you can do in that situation, and also clarified the meaning of insureds' and insurers' duty of "utmost good faith".

The insured and the insurer

In this case, two financial advisers who held proper authorities issued by the insured acted outside those authorities, causing loss to investors. ASIC investigated, and took the position that, notwithstanding any defences which the insured might wish to explore or obligations toward insurers, it expected the insured to settle the investors' claims promptly and in full. Failure to do so would potentially endanger its dealer’s licence, putting it in an uncomfortable position.