WASHINGTON, D.C. 20549

                       Report of Foreign Private Issuer

                       Pursuant to Rule 13a-16 or 15d-16
                       of the Securities Exchange Act of

                               December 21, 2004

                       Commission File Number 001-14978

                              SMITH & NEPHEW plc
                              (Registrant's name)

                                15 Adam Street
                           London, England WC2N 6LA
             (Address of registrant's principal executive offices)

     [Indicate by check mark whether the registrant files or will file annual
reports under cover Form 20-F or Form 40-F.]

               Form 20-F   X           Form 40-F 
                         -----                    -----

     [Indicate by check mark if the registrant is submitting the Form 6-K in
paper as permitted by Regulation S-T Rule 101(b)(1).]

               Yes  __                 No           X     
                         ------                   -----

     [Indicate by check mark if the registrant is submitting the Form 6-K in
paper as permitted by Regulation S-T Rule 101(b)(7).]

               Yes  __                 No           X     
                         ------                   -----

     [Indicate by check mark whether by furnishing the information contained
in this Form, the registrant is also thereby furnishing information to the
Commission pursuant to Rule 12g3-2 (b) under the Securities Exchange Act of

               Yes  __                 No           X     
                         ------                   -----

     If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2 (b) : 82- n/a.

                                                               Total Pages: 4


     Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                                   Smith & Nephew plc

Date: December 21, 2004                        By: /s/ Paul Chambers
                                                   Paul Chambers
                                                   Company Secretary


Smith & Nephew plc       T 44 (0) 207 401 7646                   [LOGO OMITTED] We are smith&nephew
15 Adam Street           F 44 (0) 207 960 2350
London WC2N 6LA

Smith & Nephew - excess insurers decline coverage

20 December 2004

Smith & Nephew plc announces that two of its excess layer product liability
insurers have informed it that they are declining coverage in respect of their
share of the liability arising from patients who require revision surgery
related to the macrotextured femoral knee component implant product. The
company's primary insurer, who is also a participant in excess layers, is
continuing to provide cover.

Smith & Nephew strenuously refutes the grounds cited for declining coverage,
which centres around the level of initial disclosure made by the company to
the insurers. The company is pursuing all avenues to enforce its coverage

At 30th November 2004, of the total of 2971 macrotexture products originally
implanted, 676 revisions have been carried out and settlements agreed with
patients in respect of 447 of those revisions amounting to 37m(GBP). The
insurance coverage being disputed of this amount is 12m(GBP).

In order to comply with the requirements of FRS12, the company is likely to
record an exceptional charge in its fourth quarter results on the basis that
all disputed claims and future claims are treated as irrecoverable. Whilst it
is too early to be able to make a firm statistical prediction of the ultimate
number of revisions, the exceptional charge may be in the region of 80m(GBP)
(pre-tax), inclusive of the 12m(GBP) of disputed coverage referred to above.

Commenting on the announcement, Sir Christopher O'Donnell, Chief Executive,

"Our first priority is to treat the affected patients fairly and promptly. It
is very concerning that two insurers have now declined coverage at this late
stage. We will take all steps available to us to enforce this coverage and to
bring this matter to a satisfactory conclusion."

A conference call for analysts to discuss today's announcement will be held at
5.00pm GMT/12.00pm EST today. This will be broadcast live on the web and will
be available on demand shortly following the close of the conference call at If interested parties are unable to
connect to the web, a listen-only service is available by calling 020 7019
9504 in the UK or 718 354 1153 in the US.

Analysts should contact Julie Allen on +44 (0) 20 7401 7646 or via email at for conference call details.



Peter Hooley                                       Tel: +44 (0) 20 7401 7646
Smith & Nephew Finance Director

Liz Hewitt                                         UK Tel: +44 (0) 20 7401 7646
Smith & Nephew Group Director Corporate Affairs

Angie Craig                                        US Tel: +1 901 399 5161
Smith & Nephew Vice President US Investor and Media

Financial Dynamics
David Yates - London                               UK Tel: +44 (0) 20 7831 3113
Jonathan Birt - New York                           US Tel: +1 212 850 5634