Royal & Sun Alliance Insurance Limited & Ors v Equitas Insurance Limited
Decision date: 21 October 2025
Neutral citation: [2025] EWHC 2704 (Comm)
Court: High Court (Commercial Court)
Insurance classification confidence: high
Overall AI summary confidence: medium
Short overview
A short description of the case, material issue, and outcome where supported by the judgment.
AI confidence in this overview: medium
This is a reinsurance dispute between RSA (insurers/reinsured) and Equitas (successor reinsurer) about losses under excess-of-loss reinsurance for 1981–1985. The judge decided four Phase 1 issues: the £4m excess is eroded by indemnity payments only; the claims co-operation clause did not alter the follow-the-settlements clause and the reinsurers were bound to follow the TTSA subject to the proper-and-businesslike-steps point; Equitas failed to show a failure to take all proper and businesslike steps; and RSA is entitled to simple interest at 2% above Bank of England base rate from the date of each respective loss.
Ratio decidendi
The legal reasoning necessary to the outcome, where it can safely be identified from the judgment.
AI confidence in this ratio summary: medium
The binding ratio is that, in back‑to‑back excess‑of‑loss reinsurance which follows the original policy terms, the layer/excess wording is to be read as referring to indemnity limits so that erosion of the reinsurance excess is caused by indemnity payments only (defence costs do not erode the excess); and a Claims Co‑operation Clause requiring notification and agreement about "course to be adopted" does not, absent clearer wording, annul or circumscribe a Follow the Settlements clause so as to free reinsurers from following an insurer's compromise such as the TTSA when the cedant has taken proper and businesslike steps.
Obiter dicta
Judicial observations that were not necessary to the outcome, where they can safely be identified.
AI confidence in this obiter summary: medium
The judgment comments (obiter) that it is commercially coherent for reinsurers’ exposure to defence costs to arise only once the indemnity excess is exhausted, and that prior partial payments by reinsurers on a contrary construction do not determine proper construction in the absence of estoppel.
Warning
The automated summary was prepared from the beginning and end of a long judgment; consult the original decision for the complete reasoning. The middle of the judgment was omitted from the judgment, which may omit factual detail, evidential findings or reasoning that materially explain or support the conclusions summarized above.