Insurance timeline 2014, 2015, 2016 Key developments, legislation and cases 2014 BIS Consultation on ADR/ODR 2 June 2014 • The BIS has launched a consultation which seeks views on proposals to apply the EU ADR Directive and EU Online Dispute Resolution (ODR) Regulation into UK law. • Consultation closes on 2 June 2014. Law Commission reform of business insurance law May 2014 • A draft Bill has been released which proposes reforms to business insurance law, but we await the accompanying Commissions' report • The recommendations are default provisions where commercial parties may contract out of the reforms and substitute their own agreed regimes. An exception is the “basis of the contract” clause which would be abolished. Thematic review of broker conflicts of interest/remuneration 27 May 2014 FCA to publish its findings from its thematic review of broker conflicts of interest and remuneration in the UK SME general insurance sector. EU General Data Protection Regulation June 2014 • Having been voted through by EU Parliament, the Council is now to review the amended Regulation. Its next meeting is June 2014 • Articles 31 and 32 require notification of a personal data breach to the National Data Protection Authority and to the data subject. If these provisions remain, there is likely to be a surge in the uptake of cyber risk cover and an increase in claims. • The aim is for the Regulation to be adopted in 2014 but it is unlikely to come into force before 2017. Buffer Rule June 2014 • A new amendment to the Civil Procedure Rules (CPR) will come into force on 5 June 2014 which will allow the parties to agree a 28 day extension of time (so called buffer agreements). • Along with recent Hallam v Baker CA decision this may slow the current wave of solicitor professional negligence claims for missing court deadlines arising out of the new stricter sanctions regime under CPR 3.9. SRA consultation 18 June 2014 • The Solicitors Regulation Authority (SRA) is consulting on whether requirements for minimum levels of professional indemnity insurance cover are too high. It proposes a reduction from £2m to £500k. Other proposals include reduction of length of compulsory run-off cover, and limiting compulsory PI cover to claims from least sophisticated customers. • Its stated aim is to increase competition amongst PI insurers, increase availability of cover for smaller solicitor firms and make access to legal advice more affordable. • Consultation closes 18 June 2014. Please note that this timeline does not cover all insurance developments. If you would like additional information please let us know. Updated 22/05/2014 BD.1270 Supreme Court cases • AIB Group v Mark Redler & Co. Solicitors – hearing listed for 4 June 2014. Issue is whether breach of trust damages awarded to lenders are limited to actual loss. • International Energy Group v Zurich Insurance – hearing listed for 15 July 2014. Issues around causation of mesothelioma in context of employer’s liability policy insurance period and restrictions on indemnity in proportion to period of work. • BPE Solicitors v Gabriel – permission to appeal granted, hearing not yet listed. Permission refused for other parties Little and High Tech. Issue: whether solicitors liable for a failure to exercise reasonable care and skill where there had been a serious drafting error in a facility letter. • Thevarajah v Riordan – permission is sought to appeal, application likely to be considered June/July 2014. If granted, may provide eagerly awaited higher court authority on relief from sanctions under CPR 3.9 following Mitchell/Jackson reforms. • Santander v RA Legal – permission is sought to appeal, application was lodged March 2014. Issue is whether solicitors "acted reasonably" under S.61 Trustee Act for breach of trust relief. • Flanagan & Coles v Greenbanks Ltd (t/a Lazenby), Mr Cross Part 20 Defendant" – permission is sought by Mr Cross to appeal, application was lodged April 2014. Issues around effective cause of loss and whether negligence by another constituted a novus actus interveniens. Court of Appeal cases • Decadent Vapours v Bevan & Ors – hearing on 16 June 14 before Jackson LJ. Appealing refusal of relief under CPR 3.9 for failure to file fee for PTR checklist on time • Ikbal v Sterling Law – hearing floating on 14/15 July 2014. Solicitor exempted from liability under S.61 Trustee Act 1925 for loss of completion funds to fraudster, on basis that loss not caused by sol’s actions. Recent Sup. Ct. decision Santander v RA Legal suggests Ikbal causal test is wrong; issue should be whether “acted reasonably” in connection with the loss. • Equitas & Ors v Walsham Bros & Co – hearing floating on 16/17 July 2014. Preliminary issues on whether the broker owed an absolute and continuing duty to remit funds in contract, tort and restitution, and whether it had waived rights to deduct reinstatement brokerage, take a limitation defence and set off cross-claims. • Tokio Marine Europe Insurance v Novae Corporate Underwriting – hearing floating on 13/14 Oct 2014. Determination of preliminary issue on whether on the true construction of the retrocession, the defendant had agreed to follow the settlements of ACE under a master policy. • Dowling & Ors v Bennett Griffin (a firm) – Hearing floating on 13/14 Oct 2014. Issue is whether litigation solicitors were negligent in not advising of risk that a third party’s insurance was not effective and ascertaining whether its insurers had been notified. • Aspen Insurance v Adana Construction – hearing on 13/14 Nov 2014. Interpretation of wordings in a building services combined contractor’s liability insurance policy following a crane collapse. • Wellesley v Withers – hearing window 1 Jul 14 – 2 Jan 15. Defendant solicitors appealing liability for drafting an agreement negligently as a result of misunderstanding instructions. Claimant may appeal additional heads of loss on mitigation issues. Other forthcoming developments Third Party (Rights Against Insurers) Act 2010 • This Act allows a claimant to issue proceedings directly against the insurers of an insolvent defendant. It also provides for earlier disclosure of insurance arrangements and whether the policy would respond, without the need to issue court proceedings. The third party claimant may also notify the insolvent defendant’s insurers direct of its insurance claim. • The Act is not yet in force. Further small amendments need to be made by way of legislation. Implementation is expected in 2014. Financial Services (Banking and Reform) Act 2013 • Part 4 of this Act (SS. 36-38) introduces a new criminal offence of reckless misconduct in the management of a bank. This will likely impact FI/D&O insurers for costs related to investigations or prosecutions. However, prosecutions would likely only result from “cases resulting in the most serious public harm and with the most serious misbehaviour.” • The date for commencement of Part 4 of the Act is yet to be announced. Law Commission – Proposal for Consultation on Fraud by Victims of Personal Injury • The Law Commission have suggested this area of law as one which may benefit from reform. Current case law on fraudulently exaggerated claims permits recovery of the legitimate part of the claim • If the results of the 2013 consultation on the Commission’s next programme of reform show agreement by consultees on the benefit of this proposal it will be put forward to the Lord Chancellor in Summer 2014 for consideration. Other cases of interest • UBS v Kommunale Wasserwerke Leipzig & Ors – Comm Ct – Trial ongoing Apr/May 2014. The bank is suing a water co. for $600m under collateralised debt obligations (CDOs) which defaulted during the financial crisis in 2008. The water co. alleges its directors entered into CDOs without authority and as a result of fraudulent misreps. • Mortgage Agency Services Number One Ltd v Edwards Symmons – Chancery Div – Hearing listed 24 June 2014 (3 day window) for half a day. Issue is whether the lender is entitled to recover from an allegedly negligent valuer the break costs of interest rate swaps which the lender entered into to hedge risk under certain loans against properties for which the valuer gave valuations. • Deutsche Bank v Unitech – Comm Ct – Hearing listed 15 Sept 2014. Supreme Ct refused the Bank permission to appeal amendments to Unitech’s case on mis-selling arguments in relation to LIBOR manipulation allegations, so now a High Court battle will commence around those arguments. (NB a similar case, Graiseley v Barclays settled in April 2014.) • Accolade Wines v Volkerfitzpatrick & Others – TCC – 2nd half of split trial, listed for 29 October 2014. Large construction claim arising out of settling of concrete floor slab of warehouse, making warehouse unusable. Property damage and business interruption claim raising complex legal issues re causation, rectification and warranties. • MCashback v Nabarro Nathanson – Chancery Div – Trial listed for 3 November 2014. Professional negligence claim against solicitors, alleging negligent conduct of litigation. This case tests the HL decision Stone & Rolls v Moore Stephens (where insolvent co. had deceived auditors by fraud, creditors could not sue advisers for negligence) by testing whether legal advisers can be sued. • Godiva v Travelers, Willmett Solicitors, RSA and The Law Society – Comm Ct – Trial listed 17 November 2014. Large aggregation dispute concerning solicitors’ professional indemnity insurance and mortgage fraud. Potential for significant market impact for insurers. • Barclays v Landgraf & 2 other Dewey & LeBoeuf partners – Comm Ct – Trial expected Dec 2014. The Defendants resist payment of certain loans as they argue that the bank and their former firm induced them to take on personal debt to keep the firm afloat.