Authored by Patrick Bracher.
After a third party liability claim was reported to insurers, loss adjusters acting on behalf of the insurers wrote to the claimant confirming that “the insurer has advised that liability is accepted”. An attempt was made to withdraw the admission and to rely on contributory negligence by the claimant. The English high court refused to allow the withdrawal of the admission.
The conduct of defence provision in the policy was in familiar terms. The insurer had decided to “take over and conduct in the name of the insured the defence of the claim”. The defendant insured was therefore bound by the admission of liability by the insurer. The defendant insured’s reliance on the provision in the conduct of defence term that “no admission, offer, promise, payment or indemnity shall be made or given by or on the insureds behalf without the insurers previous consent in writing” was easily rejected. The insurer could not give themselves consent in writing to make an admission. It was plain that the admission was not made on a without prejudice basis in the email exchanges.
The express words of the first sentence of the conduct of defence clause did not limit the rest of the clause. The power of the insured to deal with the claim was in absolute terms and the insurers had the power to admit liability.
The same result would following in South Africa.