The main topics we're focusing on this week are:
Welcome to Insurance Briefing - a fortnightly round-up of insurance legal and business developments with analysis and commentary from the insurance team at Pinsent Masons.
NEW REPORT: Pinsent Masons commissioned Meridian West to conduct a series of in-depth interviews with our leading banking clients. The report uncovers the realities of legal technology uptake by the major banks and highlights market best practice. Although developed in the banking sector, the report highlights a number of equally relevant issues for the wider Financial Services sector, particularly insurers. For example, it examines understanding attitudes to legal technology; the maturity of legal technology; benchmarking the use of legal technology; challenges facing legal teams and their solutions and collaborative approaches to creating solutions. Access the report here.
FCA business plan says it will investigate insurance claims inflation
LEGAL UPDATE: The FCA has said in its business plan for 2018-19 that it will focus on regulatory work to prepare for Brexit, meaning that it has limited resources for new initiatives and projects in the next year or two. It will only undertake one new general insurance project, the assessment of claims inflation in insurance. This relates to the FCA's forthcoming regulation of claims management companies (CMCs) in spring 2019 and is designed to assess how far brokers and motor insurers are inflating claims through referrals to CMCs and keeping volume discounts from their own repairers. While there is plenty of activity in its recent Business Plan that impacts upon the general insurance industry, much of the FCA's work is current and ongoing rather than new, including IDD implementation; the wholesale insurance market study and assessment of value in distribution chains among others.
EU regulator to focus on insurance conduct of business
harmonisation
The EU insurance regulator will focus its harmonisation efforts
this year on conduct of business issues and supervision, according
to a new report. The European Insurance and Occupational Pensions
Authority (EIOPA) is backing supervisory convergence as a way of
ensuring a high, effective and consistent level of supervision
throughout the EU by granting a similar level of protection to all
EU policyholders and beneficiaries, according to its 2018/19
supervisory convergence plan. Insurance law expert
Iain Sawers of Pinsent Masons, said that firms would
welcome EIOPA's prioritisation of conduct of business issues as
part of its plans to increase supervisory harmonisation and
consistency. "EIOPA's plan to develop a common supervisory
tool box and culture and to encourage the widespread sharing of
supervisory good practices will greatly assist insurance companies
grappling with different regulatory frameworks in the EU. It is
also encouraging to see the concrete steps EIOPA is preparing to
take over the next year or two including visits to local
regulators, running a programme of practice exchanges through
bespoke workshops and integrating conduct themes into its
supervisory handbook."
Insurer must compensate solicitor after 'settling
direct' with its clients
An insurer which offered to settle directly with personal injury
claimants who had filed notices of their claims on the Road Traffic
Accidents Portal (RTA Portal) must compensate the claimants'
solicitors, who would otherwise have been entitled to costs by
virtue of a conditional fee agreement (CFA). The UK Supreme Court,
in a unanimous judgment, upheld the existence of what is known as
the 'solicitors' equitable lien', which law firm Gavin
Edmondson Solicitors was entitled to enforce against the
insurer, Haven Insurance. It did, however, disagree with the way in
which the Court of Appeal had attempted to "re-formulate"
the lien to create a general principle protecting solicitors from
any adverse interference with their expectation that they would be
able to recover their costs.
PPI deadline driving up financial
complaints
The 2019 deadline for complaints related to mis-sold payment
protection insurance (PPI) is driving up the number received by
firms, which have increased to their highest level in more than
four years. Financial services contentious regulatory expert
Jonathan Cavill of Pinsent Masons,
said that although firms would be "happy that the end of the
PPI mis-selling saga appears to be in sight, the increase in
complaints would make things difficult for them in the short-term.
In previous articles, we had commented how the PPI longstop date
and associated FCA advertising campaign would bring a reciprocal
increase in PPI complaints. This has rung true. We are also aware
that many firms have felt the impact of the increased velocity of
complaints on their complaints-handling teams and wider
businesses...Due to the PPI advertising campaign, firms should
consider that customers are becoming more aware of their rights to
complain both to businesses and to FOS for non-PPI complaints
generally. Because this increase in customer awareness, we can
expect that in the future there is the potential for non-PPI
complaints to increase off the back of this."
Arbitrator appointed on multiple related cases was not
biased, court finds
The English and Welsh Court of Appeal (CoA) has dismissed a claim
that an arbitrator who accepted multiple appointments from one
party in an arbitration would be biased as a result. The court
dismissed an appeal by oil and gas giant Halliburton against the
appointment of an arbitrator, 'M', in a dispute with
insurance company Chubb in a matter related to the 2010 Deepwater
Horizon oil rig explosion. International arbitration expert
Richard Dickman of Pinsent Masons, said the case
demonstrated the potential tension between two of the
fundamental principles of international arbitration: party autonomy
and arbitrator impartiality.
Brexit and cyber attacks threaten EU financial system, say
regulators
Brexit and cyber attacks are two of the "key risks to the EU
financial system", the joint committee of the EU supervisory
authorities (ESAs) has said. The potential for "sudden risk
premia reversals", and risks around the "sustainability
of investments" stemming from "climate change and the
transition to a lower-carbon economy" were also identified in
the committee's new spring 2018 risk report.The committee
provides for cooperation between the European Banking Authority
(EBA), European Securities and Markets Authority (ESMA) and
European Insurance and Occupational Pensions Authority (EIOPA).A
recent report by Pinsent Masons, found that the majority of the
UK's biggest companies have already triggered Brexit 'no
deal' contingency plans. Businesses that undertake
comprehensive structured scenario planning around Brexit will be
best prepared for the changes Brexit promises and to meet their
duties to shareholders,
Guy Lougher of Pinsent Masons said at the
time.
Insurance briefing is a round-up of legal and business developments published on Out-Law.com.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances,
