The Ministry of Environment and Natural Resources recently issued administrative guidelines setting out the minimum insurance requirements for companies undertaking oil and natural gas exploration and production, processing and refining. All regulated entities engaged in such activities must secure civil liability, environmental damage and – if applicable – well control insurance.
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The Insurance Act 2015 (the “Act“) comes into force tomorrow. It represents a fundamental departure from existing insurance law. The changes impact on a number of key areas which are summarised in the following document: click here.
The Act will impact on insurers, insureds, brokers and reinsurers. Whatever your involvement in the insurance market, it will be necessary to be aware of its terms.
The terms of the Act will apply automatically but it is possible to “contract out” of the regime.
It is essential, therefore for insurers, insureds and reinsurers to consider the Act and to decide whether they are happy for it to apply to their relationship. If not, then it will be necessary to consider contracting out.
Whichever option is selected, it will be necessary to make changes to standard form documentation and business processes.
Our Insurance Policy Wording Unit can provide advice on all aspects of the Act and its implications for your business. To find out more: please contact a member of the Insurance Policy Wording Unit: Helen Chapman on ext.2588 or Clare Douglas on ext.5954.
The Supreme Court published two judgments on how dishonesty affects insurance claims before the end of the most recent Trinity term:
Hayward (Respondent) v Zurich Insurance Company plc (Appellant)  UKSC 48 and Versloot Dredging BV and another (Appellants) v HDI Gerling Industrie Versicherung AG and others (Respondents) UKSC 2014/0252 (The Merwestone).
The factual background in Hayward:
Hayward concerned a claim which had already been settled. Mr Hayward had suffered a workplace injury in 1998. He brought proceedings and the employer admitted liability. However, he exaggerated the extent of his injuries (to the tune of £419,000) in order to achieve a higher settlement figure from his employer’s insurer, Zurich. Five years later, Zurich had gathered sufficient undercover surveillance evidence to show that Mr Hayward had grossly and dishonestly exaggerated his injuries. A settlement for just under £135,000 was reached in 2003.
However, a further five and a half years after the settlement, Zurich had gathered even more evidence – enough to show that Mr Hayward had not just slightly exaggerated his injuries, but that he had fully recovered from his injuries by the time of the settlement. The tip-off came from Mr Hayward’s neighbours, who had observed him in his daily life.
Zurich sought to set aside the settlement agreement on the ground that Mr Hayward’s statements of case and accounts to medical experts were fraudulent misrepresentations. At issue was whether Mr Hayward’s lies had caused the settlement, whether Zurich needed to have believed in the lies and whether Zurich should have fought the case on the basis of their suspicions rather than settling. Continue Reading
The Hogan Lovells’ Corporate Insurance Newsletter for July has been published. This provides a round-up of UK, EU and international regulatory developments relevant to UK based insurance market participants. In this issue, amongst other items, we cover:
- FCA/PRA developments
- EIOPA led consultation on delegated acts for IDD
- Various publications from the IAIS, including consultation papers on insurance capital standards, governance and assessment methodology on G-SIIs
On the morning of 2 August 2016, the FCA published CP 16/20 its response to feedback it had received on its proposals regarding the handling of Payment Protection Insurance (“PPI“) mis-selling complaints. The FCA’s original proposals were set out in CP 15/39 (see our blog post).
Following feedback from firms, trade bodies, consumer organisations, claims management companies (“CMCs“) and individuals, the FCA still considers that the proposed package of measures laid out in CP 15/39 should be taken forward, albeit with some specific changes.
A further ten week consultation will follow the publication of CP16/20, ending on 11 October 2016. The amendments to the provisions of the FCA Handbook relevant to PPI mis-selling will be published in December 2016, to come into force in March 2017. The deadline for submission of PPI mis-selling complaints is to expire in June 2019. Continue Reading
Yes – to an extent. In the case of Versloot Dredging BV and another (Appellants) v HDI Gerling Industrie Versicherung AG and others (Respondents) UKSC 2014/0252 (The Merwestone), the Supreme Court held that lies made in respect of facts which are immaterial to the Insured’s right to recover do not invalidate the claim that they relate to; irrelevant embellishments do not give rise to a fraudulent or exaggerated claim.
In this webinar, we looked at the potential impact of Brexit (if and when it happens) on the insurance industry, including the possible implications for the rules on investments and reinsurance, and the effect on regulatory capital and the regulatory balance sheet.
We considered the corporate structures that could be used to facilitate passporting in the European Economic Area and how European insurers might operate in the UK, for example those wanting access to Lloyd’s. We also considered the issues that may arise before Brexit in relation to business as usual activities.
To view the webinar recording please click here. You can also access the webinar slides here.
What is genuinely innovative about today’s insurance sector? Perhaps little – but that is beginning to change.
For the past few years we have seen innovative ways of selling products – such as search engine aggregators – at the distribution end of the retail market. Yet with the majority of costs borne by insurers falling at the underwriting end, rather than the distribution end, there is surely space for significant change.
There is a buzz in the market with leading participants agreeing that the insurance industry is “ripe for disruption”. Continue Reading
The Department for Transport’s Centre for Connected and Autonomous Vehicles (CCAV) has begun a consultation on its proposed changes to the law surrounding liability for accidents and insurance cover to accommodate automated car technologies.
Increased use of automated car technologies will shift the nature of insurance claims. The increased safety of driverless cars should greatly reduce the number of individual accidents requiring fault between human drivers to be determined. On the other hand, if a risk affects one car, it is likely to affect all models of that car – such as an error that causes many cars in the same range to crash in a similar way or a fault which can be exploited by a cyber attacker.
The proposals in the CCAV consultation will affect both insurers and manufacturers. Where a car has crashed after a driver has handed over control to his or her vehicle, the Government are proposing to shift liability for such accidents from drivers to manufacturers. Motor insurance will remain compulsory but will include a product liability element. One aim of the CCAV consultation proposals is to amend primary legislation to ensure that insurance products will be available for automated vehicles. Continue Reading
Following last week’s vote for Brexit, many are wondering what impact the decision will have on litigation and arbitration in the UK. Will jurisdiction agreements in favour of the UK courts continue to be respected within the EU, and will English judgments be enforceable throughout the EU? How are court documents to be served in EU Member States? And what about agreements providing for London-seated arbitration?
On the one hand, it is, of course, far too early to say how the negotiations between the UK and the EU will address and settle questions of jurisdiction as between the UK and the remaining EU Member States. It is possible that the UK and the EU may agree that the UK should continue to apply EU conflict of laws rules in one form or another after Brexit takes place, negotiating some special relationship with the EU similar to that enjoyed by EFTA Member States. Only time will tell.
On the other, even without speculating as to what legal relationship may ultimately come to be negotiated between the UK and the EU, there is good reason to believe that relatively little will change where litigation and arbitration is concerned. This is because EU Member States are already subject to Conventions that will be unaffected by Brexit and that provide a global framework for legal proceedings, ensuring cooperation between courts in different contracting states. When the UK comes to leave the EU, both the UK and the remaining EU Member States will continue to be bound by these Conventions.
To find out more, please click here.