PAN ATLANTIC -v- PINE TOP: "Would you actually have offered the same terms of co

The House of Lords gave its long-awaited judgment in Pan Atlantic v Pine Top in July 1994. In a 67-page ruling with serious and immediate implications for insurers and reinsurers, 200 years of insurance case law have been reviewed and reinterpreted. Key parts of the 1994 decision of the Court of Appeal in CTI v Oceanus have been overruled. The balance and burden between insured and insurer, cedant and reinsurer have shifted.

The Pan Atlantic dispute arose from efforts by reinsurer Pine Top to avoid a policy covering Pan Atlantic's 1977-1982 Casualty Account. Argument centred on disclosure of Pan Atlantic's claims history prior to the 1982 year of account.

The House of Lords upheld Pine Top's right to avoid for the 1982 year, but introduced into the law a rule allowing the insured to defeat the underwriter's right to avoid by proving that, had the underwriter known the true full facts, he would probably have offered the business anyway on the same terms as he in fact did.