Disputes Yearbook 2025:
Insurance disputes

Landmark Construction All Risks judgment in Sky case

In December 2024 (and so missing the publication of last year's Disputes Yearbook), the Court of Appeal handed down its judgment in the landmark insurance case Sky UK Ltd v Riverstone Managing Agency & Ors in which Herbert Smith Freehills Kramer acted for the successful policyholder, Sky. This was a major Construction All Risks insurance claim brought by Sky in respect of damage arising out of the construction of its flagship building in 2014. Sky’s appeal was successful on all grounds.

The case considered key principles relevant to property policies including: (i) the meaning of damage; (ii) the period of damage; (iii) aggregation; and (iv) investigation costs: Court of Appeal delivers landmark judgment in Sky's insurance claim.

Russian aviation litigation

This year was a crucial year for the insurance industry as it contends with the fallout from Russia's invasion of Ukraine. Following the invasion, global litigation was launched against insurers and reinsurers to mitigate the loss of approximately 500 Western-owned aircraft which had been on lease to Russian airlines and were stranded in Russia.

In June 2025, the High Court handed down judgment in the Russian Aircraft Lessor Insurance Policy Claims following the "mega trial" which combined the claims of multiple lessors against their insurers before Mr Justice Butcher. Herbert Smith Freehills Kramer represented the lead claimant, AerCap, the world's largest aircraft leasing company, who claimed from its insurers the loss of 116 aircraft and 23 engines. The High Court found that all AerCap assets were lost and covered under the War Risks section of its insurance policy. Factoring in prior settlements, AerCap is entitled to USD 1.035 billion from War Risk insurers: High Court finds in favour of Lessors in Russian Aircraft Lessor Policy Claims: Full Analysis. In addition, the High Court awarded AerCap over USD 240 million in interest and made interim costs orders. 

The majority of War Risk Insurers have now applied to the Court of Appeal for permission to appeal elements of the High Court judgment and the consequential judgment addressing interest. The appeals do not include Mr Justice Butcher's findings on causation/peril such that there is no prospect that All Risks Insurers will be found liable in England for these losses under the lessors' policies. The Court of Appeal's decision on both sets of applications for permission to appeal is awaited: Russian Aircraft Policy Claims: Update on appeal and costs.

There are many other parallel claims on foot in the Commercial Court involving aircraft in Russia under (re)insurance policies taken out by the Russian airline lessees (Operator Policies) with trial scheduled for October 2026.

Insurance Act 2015

2025 year marks the 10-year anniversary of the Insurance Act 2015 (the Act) receiving royal assent, which paved the way for the most significant reform in insurance law in the UK in over 100 years. To mark the anniversary and to see what impact the Act has had on both the placement of policies and the handling of claims from the policyholder perspective, we worked with Airmic (the UK Association of Risk Managers) on a survey of risk managers to see what impact the Act has had on policyholders. Herbert Smith Freehills Kramer is the first and only law firm to this year become an Airmic Senior Partner.

The key findings of the survey were that the Act appears to have had a largely positive impact. However, policyholders should continue to be mindful, particularly when negotiating policy wordings, to ensure that conditions precedent and warranties are kept to a minimum and are clearly drafted and labelled: 10 years of the Insurance Act 2015: Airmic survey report published in association with HSF Kramer. 

This year, a number of cases have reached the courts on various issues relevant to the Act, including these two Court of Appeal decisions:

• Scotbeef Ltd v D&S Storage Ltd (in liquidation) [2025] EWCA Civ 203 which is a reminder of how significant the effect of breach of a condition precedent can be on a policyholder’s ability to claim under a policy. The Court of Appeal considered the proper categorisation of representations and warranties relating to information provided by the insured to the insurer prior to inception of the policy. The Court of Appeal found that the relevant clauses were future warranties (a promise by the insured that something will or will not be done) as well as being conditions precedent (because they were expressly labelled as such). As the insured was in breach of those warranties (which were also conditions precedent), the insurer had no liability. On the facts of this particular case, the various policyholder protections introduced by the Act (such as proportionate remedies for breach of the Duty of Fair Presentation, making warranties into suspensive conditions and the introduction of section 11) did not assist the insured.
• Delos Shipholding SA & Ors v Allianz [2025] EWCA Civ 1019 in which the Court of Appeal considered the duty of fair presentation under the Act and is one of the first cases to consider the requirements for a reasonable search of information held by the insured as part of that duty: Court of Appeal considers duty of fair presentation under the Insurance Act.

Dispute resolution provisions in insurance policies

A popular method for resolving insurance disputes is arbitration. Policyholders, brokers and insurers should therefore take note of recent changes brought in by the Arbitration Act 2025. The Act, in force from 1 August 2025, has important implications for dispute resolution under your policies – both existing policies and those to be placed in the future: New UK Arbitration Act 2025: Coming into force on 1 August 2025.

One key development from an insurance and reinsurance perspective is that arbitration agreements will now be governed by the law of the seat, unless the parties expressly agree otherwise. A governing law clause that applies to the policy generally will not be sufficient. The changes will not apply to arbitral proceedings (or court proceedings in connection with arbitral proceedings) that are already on foot before 1 August 2025. However, the changes will otherwise apply in relation to arbitration agreements whenever made which means the changes will apply to arbitration clauses in existing insurance or reinsurance policies: Insurance disputes and the new Arbitration Act 2025: check your policies.

The coming into force of the Arbitration Act 2025 is a timely reminder to take stock and review regularly the dispute resolution provisions in policies (whatever form of dispute resolution procedure they provide for) to check they work in the way that the parties intend. Two recent decisions concerning the same claimant highlight the costly jurisdiction disputes that can arise when dispute resolution provisions are not given the attention they deserve at the point of placement. These decisions also provide an important reminder to the insurance market to be cautious when issuing and executing market standard contracts: Signed, Sealed, Superseded? Court considers conflicting dispute resolution provisions in reinsurance contracts.