Latest fortnightly round-up of insurance, legal and business developments with analysis and commentary from the insurance team at Pinsent Masons.

The main topics we're focusing on this week are:

Irish regulator provides Brexit reassurances to financial firms

Irish firms that delegate portfolio management to the UK "can have sufficient confidence" that they will continue to be able to do so once the UK leaves the EU, a senior regulator has said. Ed Sibley, deputy governor for prudential regulation at the Central Bank of Ireland (CBI), provided the industry with an update on the regulator's Brexit preparations at a conference this week. In a speech, he told the Banking and Payments Federation Ireland (BPFI) that while the prospect of the UK exiting the EU without a formal withdrawal agreement in place presented some short-term risks to Irish financial stability, these risks were, in the regulator's view, "manageable". Insurance and wealth management expert Tobin Ashby of Pinsent Masons said that the temporary run-off regime proposed by the CBI was a "pragmatic" measure. "The continued uncertainty over the direction of Brexit is proving difficult for insurers with relatively small numbers of customers in other jurisdictions in the EU as the wholesale restructuring of a transfer of business to a new subsidiary is hard to justify - and yet, for individual customers, it would clearly be a significant problem to lose their insurance on the day of Brexit," he said. Read more...

Insurer liable under third-party costs order despite limitation of liability, court rules

The High Court has ruled that an insurance company must pay 50% of the claimants' costs in a group litigation case, despite having limited its liability. The court found that the insurer, AIG, was liable for the costs under section 51 of the 1981 Senior Courts Act. The decision follows a similar judgment against insurers Travelers last year, when the Court of Appeal said the High Court was entitled to use its discretion to order a third-party costs under section 51. Insurance litigation expert Elaine Quinn of Pinsent Masons said indemnity insurers, particularly involved in group litigation, should take heed of the decision. "The specific facts of the case were key in persuading the court to grant the section 51 application. The critical issue here was the insurer's decision, while funding the insured's defence costs, to substantially relinquish control of the conduct of the defence to the insured and to fail to take steps to control it when there were grounds for intervening." Read more...

New sustainability requirements for insurance firms distributing investment products

EU investment firms and insurance distributors would be required to take environmental, social and governance (ESG) factors into account when providing advice to their clients under draft rules published by the European Commission. The current MiFID II and IDD framework directives require investment advisers and insurance distributors and intermediaries to carry out a suitability assessment before recommending a product to a customer. However, this suitability assessment is generally based on the customer's financial objectives and not on non-financial objectives, such as ESG considerations. The Commission intends to make the changes by amending delegated acts under MiFID II and the IDD. The proposed changes are significant for advisers and insurance distributors, and could potentially encourage more sustainable investments. Read more...

Pool Re will no longer provide terror attack event cover

Pool Re, the UK's state-backed terrorism reinsurer, is to stop providing cover for sporting events, concerts and tours, citing sufficient capacity in the commercial markets. The reinsurer began offering so-called contingency cover soon after London was awarded the 2012 Olympic Games, as the necessary cover was unavailable on the commercial market. It will withdraw its offering from the end of March 2019, after commercial contingency insurers indicated that they were now able to retain this type of risk. Chief executive Julian Enoizi explained that the purpose of Pool Re is "to provide reinsurance cover against terrorism losses where the commercial market is unable to do so in sufficient quantity to meet demand". Read more...

New UK economic crime task force is 'a positive step'

The UK government has established a new taskforce designed to tackle the ongoing threat of economic crime. The Economic Crime Strategic Board (ECSB) will meet twice a year and includes chancellor of the exchequer Philip Hammond, home secretary Sajid Javid, the chief executives of Barclays, Lloyds and Santander banks, and representatives from UK Finance, the National Crime Agency (NCA), the Solicitors Regulation Authority, Accountants Affinity Group and the National Association of Estate Agents. The board will prioritise, direct resources and scrutinise performance against the economic crime threat, as set out in the government's Serious and Organised Crime (SOC) Strategy launched in November last year. Read more...

Insurance briefing is a round-up of legal and business developments published on Out-Law.com.

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