Earlier this month the Australian Federal Court provided helpful guidance to insurers entering into settlement agreements with their insureds.

The Full Court in AAI Insurance Limited trading as Vero Insurance v Technology Swiss Pty Ltd  considered the doctrine of subrogation, how it applies when entering “full and final” settlement agreements before recovery is commenced, and when the indemnity amount of the settlement payment is unclear. We expect this case’s guiding principles will be seen in New Zealand courts soon enough.

In this article, Katie Shanks, Luke Knights and Johnson Zhuang discuss why this decision is a timely reminder for insurers that commercial settlements still require planning and careful consideration of the implications for recovery efforts.

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