Insurer fails to block misconduct trial on limitation grounds



Insurance giant RSA has failed to block a misconduct trial after claiming the case was brought outside the six-year limitation period to start court proceedings. The judge dismissed an application by RSA to strike out the claim and ruled that the case must go to a full trial.

The claim is being brought by global financial services group Allianz, which alleges that it lost money on its investment in RSA’s shares, after RSA failed to adequately disclose information about fraud at its subsidiary in Ireland between 2009 and 2013. When the misconduct came to light there was a sharp fall in RSA’s share price.

RSA asked the judge to dismiss two claims brought by Allianz in 2021, arguing they fell outside the six-year limitation period. In response Allianz claimed it did not have sufficient information to bring a claim until an Employment Appeal Tribunal hearing disclosed further information about the fraud in June 2015 and the Central Bank of Ireland announced it was starting an investigation into RSA in July 2015.

In making his decision the judge had to consider whether Allianz could have discovered the fraud earlier with ‘reasonable diligence’ under section 32 of the Limitation Act 1980.

RSA argued that Allianz should have been aware of the fraud as the result of its announcements to the Stock Exchange in November and December 2013, further announcements made in 2013 and 2014 and a press article published in 2015 under the headline “Ireland performance was ‘too good to be true’ says RSA CEO Hester.” It claimed this was sufficient information to make a professional institutional investor, such as Allianz, realise it needed to investigate further – and as a result Allianz’s 2021 claims fell outside the six-year limitation period.

The judge rejected RSA’s summary judgment application and decided that the limitation arguments should be considered at a full trial. He also concluded that as institutional investors monitor their investments in different ways, the announcements were insufficient to put Allianz on notice that it needed to investigate further. He also decided that it was unlikely that an investor would be searching for, or find, an individual press article and in any event the published article contained insufficient information to plead a case.

James Burgoyne of Brunel Professions said: “This case gives useful guidance about how the courts will interpret limitation. The judgement accepts that different institutional investors will monitor their investments in different ways and that the behaviour of one will not indicate how another would behave. For example, the manager of a tracker fund is unlikely to monitor holdings in the same way as the manager of an actively managed fund. This is important when considering when an investor could reasonably become aware of misconduct, triggering the start of the limitation period.”

A report about the case has been published by Stephenson Harwood. is owned by Brunel Professions, which is a leading professional indemnity insurance broker in the UK. Click here to get a quote or call 0345 450 1074 to speak to a broker.