Category: Insurance case law · Reviewed by Tim Roche, Director · PI & Commercial · Last reviewed June 2026
A Commercial Court decision on notification of circumstances under claims-made liability policies, addressing the meaning of “circumstances which may give rise to a claim” in the context of dual-tower professional indemnity arrangements.
[verify reported citation][verify exact date]The dispute arose from a complex arrangement in which two layers or towers of professional indemnity cover existed in respect of the same underlying insured. Beazley Underwriting Ltd (“Beazley”) underwrote one tower of cover, and Travelers Companies Inc (“Travelers”) underwrote another, with the two insurers having succeeded each other or having operated side by side in respect of overlapping periods. The underlying insured, a professional services firm, became aware during one policy period of a series of complaints, queries, complaints letters or other matters indicative of potential future claims and gave notification to its insurers. The question for the court was whether those notifications, given in respect of the matters then known to the insured, were effective to attach future claims arising from the same underlying facts to the policy year in which the notifications were given, or to a different policy year, and accordingly which insurer was on risk. Beazley contended that the notifications had effectively brought the claims within the cover provided by Travelers (or vice versa), and the dispute proceeded by way of a coverage action between the two insurers. The case involves detailed analysis of the policy wording, the structure of the towers and the content and timing of the notifications given by the insured to insurers. The Commercial Court was required to construe the notification clauses and to apply them to a substantial factual record. [verify factual detail against the full judgment, particularly the identity of the underlying insured and the nature of the claims notified]
The principal issue was the construction of the phrase “circumstances which may give rise to a claim” (or materially identical wording) in claims-made liability policies, and whether the matters notified by the insured during the policy year fell within that phrase. The court had to consider: (i) the threshold of likelihood or possibility required for circumstances to be capable of giving rise to a claim — must the prospect be probable, possible or merely conceivable?; (ii) the level of specificity required of the notification; (iii) the link required between the circumstances notified and the claims subsequently asserted; and (iv) how those tests apply in the context of dual-tower arrangements where the practical consequence of the analysis is to allocate the indemnity burden between two insurers rather than between insurer and insured.
The court (Christopher Clarke J [verify presiding judge]) construed the notification provisions in the light of the existing authorities including J Rothschild Assurance v Collyear, HLB Kidsons v Lloyd’s Underwriters and Friends Provident v Sirius. The judge held that the phrase “circumstances which may give rise to a claim” is to be given its ordinary meaning, requiring more than a remote or theoretical possibility but not requiring certainty or even probability that a claim will in fact be made. The notification must identify circumstances with sufficient specificity to enable the insurer to understand what is being notified, and there must be a causal link between the notified circumstances and any subsequent claim that is sought to be attached. Applying those principles to the facts, the court allocated the indemnity burden between the two insurers [verify outcome — confirm which insurer was held to be on risk]. The judgment provides extensive guidance on the practical operation of circumstances notifications and on the construction of notification clauses in claims-made wordings, and is frequently cited in subsequent professional indemnity coverage disputes.
The phrase “circumstances which may give rise to a claim” in a claims-made liability policy requires the existence of circumstances which present a real, as opposed to a fanciful or merely theoretical, possibility of giving rise to a claim. A valid notification of such circumstances requires the insured to identify those circumstances with sufficient specificity to enable the insurer to understand the matters being notified. Future claims will be deemed first made during the notification year if there is a sufficient causal link between the notified circumstances and the claim as subsequently asserted. In a dual-tower arrangement, the analysis allocates the indemnity burden between insurers according to which year is properly identified as the year to which the claim attaches.
Beazley v Travelers is a significant Commercial Court authority on circumstances notifications under claims-made liability policies and is regularly cited in disputes between successive insurers or between insurers within stacked towers of cover. For professional indemnity, directors’ and officers’ liability, financial institutions, cyber and similar classes of business, the decision provides authoritative guidance on the construction of the standard “circumstances which may give rise to a claim” formulation. For brokers, the case underlines the practical importance of structured, specific and well-evidenced notifications at year end, especially when the client is moving between insurers or has overlapping covers. For claims handlers, the decision is relevant to the conduct of allocation disputes between successive carriers, and to internal reserving practices when borderline notifications are received. For underwriters, the case supports the legitimacy of treating notifications that present a real prospect of a claim as fixing cover for the related future claims, and provides a framework for declining notifications that are too general or speculative. Apex Insurance Brokers references Beazley v Travelers in client guidance on year-end notifications, claims-made arrangements and the practical management of dual-tower covers.
[verify reported citation]By Matt Bartlett, Director, on 2026-06-06. Next review: 2026-12-06.
This entry is part of the Apex Insurance Wiki. Last reviewed by Matt Bartlett on 2026-06-06. Apex Insurance Brokers Limited, FCA FRN 724952, Companies House 07014570. Not regulated advice — consult your broker on your specific position.
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