2.1. Australian Government announces measures to allow foreign insurers into insurance market (Australia)

The Australian Federal Government recently announced its intention to introduce measures aimed at increasing competition in the Australian general insurance market by allowing Australian consumers, through an Australian licensed broker, to purchase home and contents insurance from foreign insurers who are otherwise unregulated by the Australian Prudential Regulation Authority (APRA).

This move has been announced in response to recent, significant increases in the cost of premiums in disaster-prone areas, particularly in northern Queensland. These premium increases have effectively priced consumers out of the market for property insurance in these areas.

At present, insurers must be authorised by APRA to offer insurance for sale in Australia. One current exemption to this rule is where a licensed Australian broker has certified that insurance for a risk cannot “reasonably” be written with an authorised Australian insurer. The Government intends to broaden the definition of “reasonableness” to include instances where a foreign insurer is able to offer a “substantially” lower price than the premium offered by Australian insurers.

The legislation to implement these changes has yet to be introduced into Parliament. However, foreign insurers interested in entering or expanding their presence in Australia would be wise to keep abreast of these developments.

The Government media release regarding these proposed changes can be found here:http://www.financeminister.gov.au/media/2014/1023-initiatives.html.

2.2. Law firm brings appeal against High Court decision against insurer which settled with firm’s clients without the involvement of the firm (England and Wales)

We understand that Gavin Edmondson Solicitors (GES), a personal injury specialist firm based in the North-West, recently filed skeleton papers at the Court of Appeal in preparation for their appeal against a High Court judgment in August in their claim against Haven Insurance (Haven).

GES claimed that Haven acted unlawfully by denying the firm of costs by settling insurance claims with the firm’s clients without the involvement of the firm, and with the knowledge that the clients had instructed solicitors. The papers filed at the Court of Appeal reportedly also allege that Haven’s actions induced a breach of contract, and that it misused confidential information obtained through the Road Traffic Accident portal where the clients’ cases were lodged.

In the High Court judgment the subject of the appeal, it was held that nothing prevented direct contact of GES’s clients by Haven, nor settlement between Haven and those clients. In that Judgment, HHJ Milwyn Jarman QC also ruled that Haven acted with explicit consent and for the administration of justice.

If GES’s appeal is successful, it is possible that hundreds of other claims between Haven and other personal injury firms could be reopened. A successful appeal could also provide scope for new claims by law firms who have encountered similar issues with other insurers.

2.3. FCA review finds that most intermediaries do not adequately manage bribery or corruption risk (UK)

The Financial Conduct Authority (FCA) has published a report on its thematic review of whether insurance intermediaries adequately manage bribery and corruption risk. The FCA’s conclusion was that most of the intermediaries it visited did not adequately manage this risk and that, for the majority, work was still in progress to implement appropriate risk management procedures.

As a result of the FCA’s review, two of the intermediaries that it visited have agreed to limit their business with certain introducers and clients until appropriate remedial work has been completed. However, it was not all bad news. The FCA did observe examples of good practice during its review, and intends to update its guidance on financial crime systems and controls to incorporate these examples of good practice.

The report which sets out the findings of the thematic review and the examples of good practice can be found here: http://www.fca.org.uk/your-fca/documents/thematic-reviews/tr14-17. The proposed changes that will be made to incorporate these examples of good practice into the guidance on financial crime systems and controls can be found here: http://www.fca.org.uk/news/guidance-consultations/gc14-07-proposed-guidance-on-financial-crime-systems-and-controls.