Binding Authorities: Insurers’ Injunctions Against Coverholders

A recent Commercial Court decision highlights the difficulties insurers face when applying for an injunction against coverholders. Insurers should not assume that such relief will be granted as of right.

In this recent case, the insurer sought to restrain its coverholder from handling the run off of ATE legal expenses insurance under a binding authority the insurer had purported to terminate.

The Judge refused to grant the injunction sought. In particular, he held that the coverholder’s business interests in running off the covers precluded the insurer from obtaining this injunction. In contrast, the insurer’s interests could be protected by an award of damages at the main trial.

In addition, he also concluded that ordering the injunction would place the coverholder in breach of authorised sub-delegated authority agreements (and the other party to those agreements also in breach), and would place policyholders in a difficult position. These were further reasons which weighed