Suspecting some claims underwritten on a marine cargo policy for used cars exported to New Zealand from Japan were for vehicles already damaged, insurers had a close look at terms of cover after a series of typhoons ripped through Japan in 2018.
In August and September 2018, Japan suffered extensive damage from a series of three typhoons named Cimaron, Jebi and Trami. Used cars held ready for export to New Zealand were damaged. Claims were made on an open insurance policy known in the trade as the AIMS scheme, underwritten jointly by AIG Insurance, Vero and IAG New Zealand. AIMS provided vehicle insurance cover from point of purchase in Japan to delivery in New Zealand. An open policy meant insurance terms operated as an umbrella, with specific vehicles later nominated for cover and premiums paid. New Zealand distributors using AIMS advised broker Sage Partners Ltd of vehicles they held in Japan ready for export; Sage then advised the insurance consortium of vehicles to be held covered. This advice came in a monthly summary.
The effect of this open policy was that distributors could have insurance cover for several weeks before insurers were formally advised of the risk they were underwriting. Insurers’ liability came to a head after typhoons Cimaron and Jebi swept through Japan. Insurers imposed a moratorium on underwriting any new business in Japan two days ahead of typhoon Trami sweeping ashore in early September 2018. At issue was the status of insurance for some 27,000 vehicles distributors claimed were held covered for the month of September.
The High Court was told this September total was not advised to insurers within seven days of the end of the month as required by the policy. Insurers agreed it was not fatal that the September monthly declaration was a few days late, there had been a regular past pattern of accepting late declarations. Those distributors insuring under the AIMS scheme all vehicles shipped out of Japan kept their September cover, provided the vehicle had been correctly declared in the appropriate end of month declaration. There was a penalty for sloppy paperwork. There was no insurance cover on vehicles acquired in previous months which had been added to a later month’s schedule of vehicles insured, Justice Gault ruled. There was also no back-dated open insurance cover for those distributors who did not insure all exported vehicles, instead taking ‘spot cover,’ opting into AIMS blanket marine cover for specific vehicles on a sporadic basis. Their cover did not start until insurers received actual notice of the risk and agreed to provide cover.
Insurers agreed to refund premiums paid on those vehicles the High Court ruled were not covered. The High Court was told the insurance consortium cancelled in October 2018 its participation in the AIMS scheme.
JDA Co Ltd v. AIG Insurance – High Court (29.10.21)
21.177