FORUM: Resolving insurance disputes


Financier Worldwide Magazine

March 2016 Issue

March 2016 Issue

FW moderates a discussion on resolving insurance disputes between Cathy Hawkins at BLM, Chris Chapman at Freshfields Bruckhaus Deringer LLP, Stephen King at Mills & Reeve LLP, Nicholas Bradley at Pinsent Masons LLP, and Colin Peck at Weightmans LLP.

FW: What key trends have you seen in insurance disputes over the last 12-18 months? Are there any common factors causing such disputes?

King: The general picture is of a reduction of about 30 percent in claims being made across all classes of insurance. As a consequence, there are fewer disputes arising. The key driver for this reduction seems to be an improvement in the general economic situation. Claims and disputes can be quite cyclical and linked closely to economic conditions and activity. The squeeze on litigation funding and the cost of going to law has increased both the use of alternative dispute resolution mechanisms such as mediation or arbitration and the use of specific provisions in insurance contracts requiring such mechanisms to be adopted. The relatively low numbers of worldwide catastrophic events, though there have been some, means that reinsurance disputes have also lessened. Investment in fraud detection and prevention has increased with insurers keen to see prosecutions where fraud is rooted out.

Peck: In general, the number of insurance disputes seems to be reducing, year on year, over the last few years. This is probably a result of a number of things, including better wordings, more regulation and oversight, the soft market, overcapacity, and increased commerciality. Disputes between policyholders and insurers will, to a large extent, depend upon the particular class of insurance involved. There are specific wordings and claims issues particular to the financial institutions insurance market, the D&O market, the combined general liability market, the property market, the construction market, the energy market and so on. Many disputes arise from the information presented, or not presented, to insurers at the time the risk was first placed or on renewal and upon which insurers base their risk assessment and underwriting decisions – so-called non-disclosures or misrepresentations by policyholders. Disputes often also arise over the policyholder’s compliance, or otherwise, with terms and conditions in the policy. Breach of policy terms, conditions, warranties and ‘conditions precedent’ is probably the most common cause of disputes between policyholders and their insurers.

Bradley: There has been a fall in the number of claims disputes involving financial institutions, which was a feature of the period following the global financial crash in 2008. Most banks and other institutions that were facing large claims in the US have settled with claimants and regulators, although one or two notable exceptions remain ongoing. That includes the claims against RBS both in the US and in the UK. There has been an ongoing increase in claims against both individuals, such as directors and entities arising out of alleged breaches of regulatory requirements. That is simply a feature of the increased regulation which financial institutions in particular are subject to.

Chapman: One trend has been an increase in insurance disputes relating to regulatory issues. This has followed an overall increase in regulatory activity around the world leading to more regulatory fines and costs, some of which are insured. For example, in the UK financial services sector, regulators have increasingly focused on holding individuals to account and this has led to more D&O claims and disputes. Regulatory activity has also increased in other sectors, with investigations relating to cross-border bribery and corruption another growth area. Common subjects for insurance disputes relating to regulatory activity include arguments about the trigger points for cover, with individuals and companies incurring significant legal costs before insurance wordings traditionally begin to pay. Disputes about pre-inception disclosure also remain relatively common in this area, although generally policy wordings have become more insured-friendly in this area in recent years.

Hawkins: Disputes commonly arise due to misunderstandings about what situations the insurance policy covers. Regarding public liability policies, some policyholders don’t realise that they do not usually cover contractual liability, where the insured would not be liable in negligence, unless there is special provision. There also seems to be an increasing expectation that underwriters ought to know things without being told. But in fact, apart from where information really is ‘common knowledge’, the writers cannot be expected to know about the details of the policyholders’ business. That is why they ask questions and expect a fair presentation to be made of the risk. A common factor in misunderstandings about policy cover may be that there is a failure of communication at some level about what insurance policies cover – this is often in the SME market where busy people perhaps do not give it much thought or have not had enough input from a broker.

Breach of policy terms, conditions, warranties and ‘conditions precedent’ is probably the most common cause of disputes between policyholders and their insurers.
— Colin Peck

FW: What types of insurance dispute are you seeing regularly in the market?

Bradley: We see a number of insurance disputes in the energy and construction sectors. A fairly recent development has been the drop in oil prices over the last year, which has put significant pressure on the balance sheets of many companies operating in the energy sector. In a changed landscape where every dollar counts, we have seen an increase in claims disputes arising as a result. Many insurance disputes at consumer level now go to the Financial Ombudsman Service (FOS), rather than the Courts. Often this is driven by claims management companies (CMCs). We have seen a rise in financial services companies challenging the FOS on issues of wider importance and the extent of FOS jurisdiction. Insurers face increased activity from CMCs which, while now regulated, create new challenges in terms of securing effective customer outcomes.

Hawkins: A perennial concern is the application of hot work conditions, and whether they have been breached. On the ground, some policyholders can be casual about risks, or consider some of them but not all. There are also arguments that the claim has been notified late. Again, some policyholders do not realise when there has been an incident that may have repercussions in any claim that may follow. As such, because they do not realise it, insurers suffer a detriment because they then cannot manage the situation for the best.

King: Undeclared trading claims have increased. This is often associated with E&O claims against brokers, arising from renewals where a company has changed its trading profile and moved into areas where specific cover has not been arranged. Some of these disputes may disappear as the Insurance Act takes effect in August and where the onus will shift more to the insurer to enquire about the presentation of risk put to them by the insured or their broker. Another area is late notifications, often following mergers or acquisitions, where events have developed and successor insurers push back to earlier insurers disputes in which the insurers involved had limited their coverage to narrow areas of the matters notified to them. There are also aggregation issues, usually tied to product or professional indemnity claims where class actions are developing. Additionally, co-insurance issues are fairly prevalent, where several policies covering different classes of risk may all respond to the same events.

Peck: We deal with different types of dispute, involving losses in the UK or overseas jurisdictions,  often involving losses to building projects, properties or businesses as a result of machinery breakdown, fire, or natural perils such as flooding, storms, hurricanes, earthquakes and so on, or liability claims from damage or injury caused by work or products supplied by acompany. We also see claims from financial, regulatory or employment practices investigations which result in proceedings being brought against a company or its individual directors. Cyber attacks and losses are also a growing threat for policyholders.

Chapman: High-value cross-border insurance disputes still arise relatively regularly in the market, however there is an increasing tendency for them to settle without the need to litigate. This often requires detailed investigation and discussions with insurers first, but that can take place without the need for formal proceedings, and insurers may be prepared to settle even high value claims if they are satisfied with the results of an investigation into the underlying issues. This is more pronounced in developed markets and less noticeable in emerging markets.

FW: Once an insurance dispute surfaces, what initial steps should be taken to evaluate the best options for a speedy resolution?

Chapman: It is, of course, important to notify insurers early and to keep them up to date. Like other businesses, insurers want to understand the nature and cost of what they are involved in before making decisions in relation to it. Early steps to understand the underlying issues quickly and to explain them to insurers in a clear and coherent way can be an important initial step to enable the early resolution of an insurance dispute. Brokers can play a role facilitating and participating in discussions with insurers and paving the way for a compromise. There is sometimes a tension between the need to be open and transparent with insurers and an insured company’s concerns about confidentiality, especially where a dispute involves highly sensitive information. In these cases, agreeing a process to maintain confidentiality but allowing the right level of information flow can also be an important early step.

King: The key to the early and effective resolution of disputes is early engagement. Establishing the identity of interested stakeholders and their key drivers for resolution is essential. Once those issues are ‘at large’, the opportunity for compromise through negotiation becomes clearer. A major influencer is the time taken to resolve a dispute and the attendant increased cost involved in delay – often the posturing of the parties, fearful of revealing their key interests, when doing exactly that will often open the door to resolution. Intelligent assessment of evidence and the ability to call on the right experts at an early stage is essential. Presuming how evidence will stack up, or not, without the benefit of specialist knowledge is very risky.

Bradley: Much depends upon the nature of the dispute and its commercial importance, including whether it is high value or low value. From an insured’s standpoint, in any dispute it is critical to get a proper analysis of the fact pattern that has led to the dispute as quickly as can be done. This means that an appropriate officer of the company, such as the risk manager or legal counsel, will need to have access to the relevant documents and individuals, and organise an appropriate review. It will also be necessary to ensure that the individual has immediate access to the relevant contractual documentation relating to the dispute, including insurance contract wordings, endorsements, slips, and so on. From the insurer side, it may be useful to ensure the brokers are involved in assisting with the collection of outstanding information.

Peck: The key here is to do a thorough search and review of all documents – hard copy and electronic –and interview individuals who might have a bearing on the dispute. Of course, it must then be analysed legally but as important, it then needs to be assessed dispassionately and commercially on a ‘risk versus reward’ basis. That applies both to policyholders and insurers. A ‘fresh pair of internal eyes’ is often the point at which a party finally, privately, starts to understand the other party’s position. Unfortunately, all too often this only takes place late in the day. Both parties, and their advisers, also need to be open to the idea of a possible ‘facilitator’ from their existing commercial relationship, who might be able to help arrange or promote discussions without either side feeling that they have ‘lost face’ by making the first approach.

Hawkins: At this point it is vital to get all the information that is needed together as quickly as possible, and get input from underwriters and any other people whose opinion or knowledge is important. It is particularly important to be clear with the policyholder what the matters of concern are. It may be that their input will assist in deciding on the options available to insurers. It is important for insurers to have as much information as possible, including the costs of all options, the strength of their position and full knowledge of the commercial repercussions. It is particularly important to give very careful consideration to how robust the policy wording that they rely on is, because they can be open to interpretation by the courts if it is not what underwriters expected. It is very important to know what passed between the insured and its brokers on the one hand, and underwriters at the point of ‘sale’ of the policy.

From an insured’s standpoint, in any dispute it is critical to get a proper analysis of the fact pattern that has led to the dispute as quickly as can be done.
— Nicholas Bradley

FW: What advice would you give to companies in terms of establishing a resolution strategy that allows them to manage the issues they face, such as policy misinterpretations?

Peck: For policyholders, the key is to truly understand how the risk associated with their day to day business or project has actually been presented to and viewed by insurers, and the extent of insurance cover they are being offered. How will it respond in any given loss circumstances and, importantly, what are their obligations under the policy? The burden is really on the policyholder’s broker, and any internal risk or insurance manager, to make sure that they understand, have sought and obtained the most appropriate form of cover for the company based on their knowledge of the business operations, perils faced, supply chain risks and limits of indemnity required. It is not possible to consider every eventuality, but it should be possible for a policyholder, with the help of their broker, risk manager or lawyers, to identify the most likely risks to their business and to then ‘stress test’ their policy so that they understand how it would, or would not, respond in any particular loss circumstance.

Hawkins: The first thing is to be as sure as possible of the company’s position, strengths and weaknesses, and the cost implications. It is important to give the insured and their brokers an opportunity to comment and offer their explanations. Keeping up good, meaningful communications between them will enable there to be proper engagement, whatever the resolution strategy. There is a need to be flexible and suggest solutions that might avoid ‘full on’ litigation. Meeting the insured and brokers face to face, for example, enables a thorough and proper consideration of policy misinterpretation because it enables the parties to better understand each other’s point of view. After that there are obviously a lot of ways forward, such as without prejudice discussions, legal proceedings and declaratory proceedings to establish wordings. Flexibility and imagination are needed.

Chapman: Some disputes about the interpretation of a policy may be easier to resolve, because they involve a legal argument which is relatively simple to understand. Insurers generally approach insurance disputes in a commercial way so it may be possible to resolve genuine uncertainty in a policy wording by agreeing a discounted settlement payment, which removes the risk of an unfavourable adjudication. For those sorts of disputes, the focus can be on identifying the legal issues, understanding the relative merits and reaching an agreement on quantum. Factual disputes may be more difficult to resolve, but that may be assisted by a careful investigation and clear presentation of the results.

King: The ‘misinterpretation’ or misunderstanding will usually arise once a claim has been notified. The broker arranging the policy may be defensive and could be a blocker to an early resolution. A crucial issue at this stage is to understand how the policy has been interpreted against the company and allowing the company to take advice on that stance. The broker may have a role to play here but may also exclude themselves from involvement if they consider they could be open to criticism. At this point, the company should have access to a specialist in policy interpretation and be prepared to take early legal advice on the stance adopted against their interests by the insurer. The pre-action stages of any dispute should allow the parties to put their cards on the table and establish areas of common ground, allowing any third party claims to be dealt with without prejudice to the ongoing dispute over policy interpretation.

Bradley: The key is to have in place a management structure for dealing with disputes as and when they arise, so the fact pattern is established quickly, those involved, such as the risk management team, have an understanding of the relevant insurance policy terms, and the legal team is involved in the direction of the dispute from an early stage. A roadmap needs to be in place at an early stage, as part of a dispute project plan alongside detailed and accurate cost budgeting.

FW: Before pursuing litigation or arbitration, are you seeing more parties use alternative dispute resolution (ADR) for insurance and reinsurance matters?

King: More and more of the mechanics for dealing with and resolving disputes are provided for in well written policy clauses that not only oblige the parties to seek a resolution by ADR, but also ensure that such steps remain entirely confidential to the parties for the protection of brand image or reputation. There is an accepted norm that litigation is prohibitively expensive, public, depleting of management time and damaging to commercial interests. Unless there is some specific reason why a party to a dispute requires a binding judicial authority on a particular point, it is to be avoided in favour of alternative mechanisms which are private, suit a timetable the parties to the dispute can agree between themselves, can be imaginative in terms of the actual resolution deal, and maintain, and in some cases even strengthen, commercial relationships.

Bradley: ADR is used in insurance disputes, particularly mediation in professional indemnity type disputes, but I don’t think there has been any significant shift in the last five years to more use of ADR. Mediation tends to be used after litigation has started, alongside the Court process, rather than before parties commence proceedings. We have seen an increased use of so-called ‘escalation’ provisions in the dispute resolution clauses of insurance policies. Typically these will require a dispute to be referred to senior management within a company, with a time period built in to allow the respective parties to try to negotiate, before recourse either to arbitration or litigation. These clauses are not always well drafted, and there have been challenges to their validity on the basis that they are void for uncertainty. So careful drafting is needed at the outset, but they can be a useful reality check for parties to stop and pause, and possibly have one more go at resolving a dispute through negotiation, before embarking on proceedings.

Hawkins: More parties are using mediation for straightforward policy misinterpretation. Some parties are open to just obtaining QC’s opinion on what the wording means, when applied to the situation. Most insurance disputes, in our experience, are not resolved by proceedings in any format. It is almost always done without prejudice. Also, insurance disputes, in contrast to other claims, can be resolved by declaratory proceedings if it is just about whether the policy applies or not.

Chapman: There is an increasing tendency to settle even high value and complex disputes without the need for litigation or arbitration. That may not necessarily involve a formal ADR process but, where formal procedures are adopted, mediation remains very popular. As well as providing a good environment and opportunity for settlement discussions, mediation can encourage the parties to focus their minds on the strengths and weaknesses of a case at an early stage. That by itself can help lead to an earlier settlement and is one reason why cases may settle soon after a mediation, even if the mediation itself is not successful.

Peck: There has been a growing acceptance of the use of mediation, adjudication and other alternative dispute resolution techniques, such as an early neutral evaluation by a respected expert or retired judge. Often, such ADR forums are written into the policy as a step which must be taken before the parties can resort to litigation. This is to be welcomed as a positive development, although on occasion it can simply introduce an extra layer of cost and delay if either of the parties is not open to finding such a solution without a judgment of the court and so is perhaps simply ‘going through the motions’ of that ADR process. If both parties are genuinely committed to trying to resolve their differences through ADR, then undoubtedly it can offer a quicker and more cost effective way of resolving disputes, often with the very real bonus that it maintains commercial relations between the parties.

The pre-action stages of any dispute should allow the parties to put their cards on the table and establish areas of common ground.
— Stephen King

FW: Should a dispute develop into a class action or mass tort lawsuit, what are the main challenges facing the relevant parties? In this context, how are damages analysed and quantified?

Chapman: This can depend on the type of action and the jurisdiction. For example, it may be possible to use a standardised approach to calculating quantum and a settlement value for some US securities class actions, and that can make it easier to understand the risks and to settle with the claimants and insurers at an early stage. In Europe, for the most part, the processes and approaches for dealing with mass torts are less developed. Even where there are similarities to US causes of action, the strategic considerations are different in Europe and quantum calculations may be more fact specific. Mass torts in many jurisdictions in Europe may take the form of a large number of simultaneous small claims. Calculating the potential quantum for the purposes of an insurance claim in these sorts of cases can be particularly difficult. That is a particular issue in the UK at the moment for mass redress exercises arising from regulatory considerations, especially in the financial services sector.

Hawkins: I have not experienced policy disputes developing into a class action or mass tort lawsuit. Policy disputes are more generally about the coverage of one or a small number of parties on a policy. However, this can happen in product liability cover. If insurers are not covering a party which is liable to many claimants, it is important to agree among the parties a sensible way of recording and evaluating the various claims. It will be difficult to resolve the dispute if there is not an agreed process determining this, and knowledge of the strength and amount of the primary claim.

Peck: With the exception of the new Consumer Rights Act 2015, which will make it easier for groups of consumers to seek compensation from companies that have fixed prices and formed cartels, we do not really have US style class actions in the UK. We have group litigation orders but they are not really the same thing. We also have the ‘loser pays winner’s costs’ doctrine, no treble or ‘exemplary’ damages, and no jury trials of these claims in the UK, which means that damages awards are compensatory and not big paydays for claimants. The challenges are in collating, reviewing and assessing not only the similarities but also the differences between the merits of each claimant’s claim. Although there is greater exposure for the insurer, there is also the knowledge that they should be dealing with all possible claimants ‘in one go’. For the policyholder, although there is a tactical ‘strength in numbers’ and possible costs saving benefits, such large actions can be very time consuming and lead to it progressing much more slowly than it otherwise would. There may also be real differences of opinion between the group of claimants as to what they want to achieve out of the litigation and their settlement parameters.

Bradley: It is important to note that the class action system in the US is very different to the systems we have in the UK and Europe. Several issues arise in the context of US style class actions or mass torts. These include how to allocate loss over various policy years and time on risk if multiple insurers are involved, and how settlements are treated where liability has not been admitted. Other issues include allocation of defence costs where coverage is in dispute, the logistics of information gathering and disclosure between multiple parties, and the lengthy timeframes for disputes involving multiple parties. The main challenges concerning insurable mass torts in a European context, are that they are what has recently been described as “disaggregative”.

King: The challenge for the claimants pursuing the claim will be proving their case, managing the volume of claims and finding a common interest to negotiate around. The challenge for the insured parties will be establishing cover and mitigating reputational issues. The challenge for the insurer will be avoiding having to reserve their rights when the extent and merits of the claims facing their insured may be unclear and where issues around batching or aggregation cannot be determined. Keeping relevant interests engaged and cooperating is an essential management task in such cases. In terms of analysing and quantifying damages, these can be very tricky cases. On the one hand there may be commercial sense in seeking an early resolution, but where the scale of the claim and the size of the clamant group is not settled, this can be dangerous. It may be far better to try and find some common points to test early on, possibly with ADR and use them to assess overall exposure.

FW: In your experience, what can parties do to reduce the costs and disruption associated with an insurance dispute?

Bradley: Obviously, it is better for all parties involved if insurance disputes are avoided at the outset. Many disputes could be avoided if all parties spent more time at the inception of the policy on getting the policy terms right and fully reflected in the wording. At the stage when a claim arises, it is usually better if the insured has an open and constructive dialogue with the insurer, with the full engagement of the broker where it is broker placed business. If there is a dispute, it is important that all avenues to resolve the dispute through negotiation are explored. Senior management within each party needs to retain control over the direction of the dispute and not allow the dispute to run away with itself through lack of management by the party concerned. Once engaged in arbitration or litigation, it is important that a party has a clearly defined strategy, including an exit or settlement strategy. Proper reporting and project management is required, together with cost budgeting and monitoring, for each stage of the dispute process.

King: Ensure that in presenting the risk to the insurer the corporate has collected together all material facts. Where there may be areas of potential confusion or lack of clarity in the risks presented, take the initiative in making this apparent to the insurer. Prompting an insurer to ask questions about risks will allow them to do just that, so that future problems are avoided. If no questions are asked it is less likely that if an insurer complains that matters were not disclosed, for example, their case will be preferred. If disputes do arise, key lines of communication between people who are familiar with the insurance landscape is essential. Set up a liaison between the insurer, broker, risk or insurance manager and the lawyer and leave that small group to control how information is collected and used. Use earlier disputes as an opportunity to learn and collect together information that will prove useful in future. Establish what you want from the dispute and put it on the table early on in the dispute so that posturing and time wasting is avoided.

Peck: It is important that all relevant documents and individuals are identified and reviewed very early on to avoid any ‘nasty surprises’ later on. It is also very important that any assessment of the merits is undertaken dispassionately and then reviewed periodically. In our experience, most policyholders and insurers do not want to be involved in disputes; they are time consuming, costly and commercially troubling. There is normally a way out if both sides are genuinely prepared to compromise and be realistic. If an early discussion or mediation is a genuine option, then it should be explored. Failing that, if litigation must be pursued, then the lawyers should be instructed to narrow the issues as much as possible to cut down on the documents, witnesses, experts and time needed at court.

Hawkins: As with any dispute, parties can definitely reduce costs disruption by making sure everything is resolved within a short window. This needs commitment by both sides to being constructive and up front about their positions. They should meet sooner rather than later to try to resolve matters. If they are still too far apart, it’s important that both sides know why that is and understand what the disruption and cost will be in seeing this to conclusion through arbitration or litigation.

Chapman: The costs of a detailed investigation to resolve an insurance dispute can be high, but a well-run investigation can still save significant time and cost if it avoids the need for litigation or arbitration. In some cases it may be possible to persuade insurers to pay for the costs of an investigation, although insureds will need to consider carefully whether they need to incur their own costs retaining an expert or legal advisers to monitor the process and comment on the outcome. The amount of disruption caused by an insurance dispute can depend on the circumstances, but in many cases it may be possible to align the steps needed to deal with insurers with what is required to resolve the underlying issues in any event. It may be possible to leave coverage issues to be dealt with later, and in some cases insurers may be prepared to pay in the meantime, subject to a right to claw-back uncovered losses later.

There is an increasing tendency to settle even high value and complex disputes without the need for litigation or arbitration.
— Chris Chapman

FW: Looking ahead, are there any particular trends and developments you expect to see in the insurance disputes landscape?

Hawkins: The fact that the Enterprise Bill could provide policyholders with an entitlement to damages specifically because insurers pay the claim late, will probably mean more open and active engagement about difficulties with the claim. In those circumstances it will be harder for insureds to say that they are entitled to damages, if the insurer has been clear about what it is considering and what it needs to see, to enable its consideration of the position. There may also be a period of grappling with the new Insurance Act 2015. Most of us have spent a lot of time looking at how this works but it won’t be until we actually operate it that the full experience will build up. Some insurers have declared themselves bound by it, ahead of time. An interesting problem will be policy wordings that were written without the Insurance Act in mind. There may also be some factual disputes about what a fair presentation involves, under the Insurance Act.

Peck: In the UK, currently there is a distinction between the grounds on which an insurer can avoid a policy or decline a claim in relation to consumers, compared to corporate risks. The Consumer Insurance (Disclosure and Representations) Act 2012 and the Marine Insurance Act 1906 respectively mean that English law is currently more favourable to consumers than corporate policyholders because it recognises a difference in commercial sophistication and bargaining positioning. Following proposals by the Association of Insurance and Risk Managers in Industry and Commerce, and the UK Law Commission, this distinction is likely to be narrowed by the introduction of the new Insurance Act 2015 which comes into force in August 2016. This will bring the UK more in line with Western Europe, Scandinavia and Australia. However, we anticipate that there will probably be an initial period where there is a string of litigated disputes until insurers, policyholders, and their lawyers understand how the courts are going to interpret the new Insurance Act 2015.

Bradley: There are a number of things on both the short term and long term horizon. One is the new Insurance Act 2015, which will apply to all non-consumer insurance policies after August 2016. It will have an impact on how insurance policies are placed, how important terms in insurance policies fall to be interpreted, and how claims may be dealt with. Another is the considerable debate at the moment as to whether arbitration, in the traditional form, really provides the benefits it was originally intended to offer the parties as a form of dispute resolution. At the same time, we may see increased use of fast track style arbitrations, such as the ARIAS Fast Track Arbitration Rules (AFTAR), to resolve certain types of insurance dispute. Finally, cyber is the current hot topic in insurance circles. Everyone is concerned about cyber risk, which takes many forms. This may be covered under specific data breach type policies, or through add-ons to other types of policy, such as D&O.

King: The government’s Integrated Project Insurance initiative has yet to develop and will require a sea change in the approach to insurance. The goal is to have a construction industry with a goal of timely project completion and solutions rather than recriminations when things go wrong. Traditional insurance will be confined to a single policy covering any losses though a reward structure. This is very different to the present free for all. If it works, the numbers of disputes will reduce and at a time where the economy is growing and construction projects are increasing this one development could have a huge effect on insurance disputes. With oil price falls increasing the costs of transporting the crude product, alternative storage and transport options are under consideration and may require innovative insurance solutions and pricing.

Chapman: Regulatory activity around the world is likely to remain high, at least in the short term. As a result, the current increase in insurance claims relating to regulatory issues is likely to continue. This may mean that we may see the development of new wordings which better match the triggers for cover to the costs incurred by firms and individuals. Increasing sophistication within the market and among insureds may mean that the tendency toward settlement without the need for litigation continues. Greater regulation of the insurance market itself will present challenges and may also lead to changes in the way disputes arise and are handled. In the UK, this is most likely to affect the retail sector, where we may see more issues arising in relation to the sale of insurance products by intermediaries, as opposed to the handling of claims.

Catherine Hawkins is a partner in BLM’s London office. She leads the London Property Damage team and provides services to the London Market. Ms Hawkins advises clients on related insurance policy coverage matters, such as non-disclosure, misrepresentation and fraud, and questions relating to Ombudsman’s advice. She also defends associated litigation brought by tenants or neighbours affected by fire, flooding or structural collapse where clients may be wholly or partially liable for damage and business interruption. She can be contacted on +44 (0)20 7865 3308 or by email:

Chris Chapman is a counsel in Freshfields Bruckhaus Derringer’s London office. He specialises in high value financial services litigation, investigations and regulatory enforcement proceedings, including insurance claims and regulatory issues affecting insurers and insurance intermediaries. He can be contacted on +44 (0)20 7427 3487 or by email:

Stephen King is an experienced dispute resolution lawyer with a background in insurance law and the management of the defence of a variety of insurance and public sector related cases. From issues around common law duties of care, to breach of statutory duties in relation to product supply, human rights and regulatory obligations, Mr King is partner lead on medical malpractice and medical devices litigation and has been acknowledged for his work on health sector related matters. He can be contacted on +44 (0)1603 693 257 or by email:

Nicholas Bradley is head of Pinsent Masons Insurance Team. He advises insurers, reinsurers, Lloyd’s syndicates and intermediaries in relation to complex claims and coverage issues, with particular expertise in D&O, professional indemnity, E&O, reinsurance, marine and energy, property and political risk lines of business. He has had involvement in many of the major market issues and several high profile reported cases. He can be contacted on +44 (0)20 7667 0026 or by email:

Colin Peck is a partner in the London Market Team at law firm Weightmans LLP. For 25 years he has specialised in providing insurance and reinsurance policy coverage advice and related disputes, including conducting arbitration, litigation and mediation, both in London and internationally. He has handled disputes involving entities in North America, Western Europe, Scandinavia, Latin America, the Middle East and the Far East. He can be contacted on +44 (0)20 7822 1984 or by email:

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