INSURANCE RECOVERY LITIGATION
CD: Could you outline some of the most significant developments within the insurance recovery litigation space over the past 12 months?
Wordley: The most significant development within insurance law generally in the last 12 months has been the introduction of the Insurance Act 2015, and we expect the effect of this to be seen in the insurance litigation space over coming months and years. For the last 15-20 years, sophisticated policyholders with specialist advisers have been able to negotiate more favourable terms on an individual basis, but now we are seeing an alignment between such bespoke protection and the terms generally available to all policyholders in the market which reflect the provisions of the Insurance Act. However, those policyholders that do have the benefit of bespoke protection with terms more favourable than the Insurance Act will need to ensure that such protection remains in place. In addition to this new legislation, in 2016 the Supreme Court considered a case in which underwriters had rejected a claim because of an irrelevant lie told by the policyholder at an early stage of a claim, and held that collateral lies – that is to say, dishonestly embellishing a claim to improve the prospects of early settlement – will not automatically negate an otherwise valid claim. Across the litigation space, we are seeing more innovative ways of funding claims, in particular with the growth of third-party funders. This can be a valuable tool for a policyholder that wants to bring a claim against its insurer, but is concerned about litigation risk and the effect on its balance sheet.
Apr-Jun 2017 issue
Holman Fenwick Willan LLP