In a world where the role of the doctor as a sole diagnostician is changing as rapidly as the progression in medical technology itself it is a natural par for the course that our reliance on big data goes hand in hand. Greg McEwen discusses what the consequences might be for our trust in human decision and the accuracy of their diagnoses, as AI gradually takes over. Continue reading
Eighteen months since the Insurance Act 2015 came into force the FCA is presently considering whether (and how) more SMEs should fall within the jurisdiction of the Financial Ombudsman Service. At present only smaller SMEs (“micro- businesses”) with €2m turnover and fewer than 10 staff can seek a FOS adjudication on disputed insurance issues. The FCA Consultation, concluding on 22 April, is seeking views on whether eligibility should be extended to small businesses with annual turnover of less than £6.5m and fewer than 50 employees. It is estimated that such an extension would provide an additional 160,000 businesses with access to the Ombudsman. In assessing how to respond to this consultation it is useful to consider the impact of the Insurance Act since the commencement on 12 August 2016. Continue reading
On 29 January the Automated and Electric Vehicles Bill completed its scrutiny in the Commons, at report and third reading stages. The AEVB is the third name for legislation in this area; the first was the Modern Transport Bill in the 2016 Queen’s Speech, the title of which then morphed into the Vehicle Technology and Aviation Bill. That Bill made some progress through Parliament during spring 2017 but then lapsed due to the general election in June. Its provisions on the insurance arrangements for automated driving are largely re-adopted and clarified in the current AEVB which now passes to the House of Lords.
In essence, part 1 of the AEVB will, when implemented, require compulsory motor insurance to be extended such that the motor insurer will be legally liable for damage caused by an automated vehicle driving itself. The quid pro quo for this extended liability is that the motor insurer will be given legal rights of recovery against any other person also liable. The Government has structured the legal regime this way in order to achieve the following:
- to make sure that third parties injured by an automated vehicle driving itself can claim against a motor insurer in the usual way (rather than, say, have to make a product liability claim)
- to provide the disengaged driver of the automated vehicle with these same rights, since he or she has, in effect, the status of a passenger when the car is driving itself, and
- to permit motor insurers subsequently to recover against vehicle manufacturers (and software houses and the like) where they have paid claims in the first instance because the vehicle was driving itself.
The Secretary of State for Transport put this is more conversational language, observing during the debate that “...when you drive your car, Mr Deputy Speaker, it is you who is insured, not the vehicle. As a result of the Bill, in future the vehicle will equally be insured.” It might have been more helpful had he added “when driving itself” at the end of his remark, since the AEVB definitely does not bring about anything like a complete change to insurance of the vehicle as opposed to the current law which requires insurance of a person’s use of a vehicle.
An absolutely critical pre-cursor to the operation of the new insurance and liability regime is that insurers obtain ready access to vehicle data in order to establish in which mode the vehicle was operating at the time of an accident. This is not addressed in the Bill, but the House was reminded of it yesterday by Craig Tracey MP, who asked: “…given that the users of automated vehicles have to be able to demonstrate that their vehicle was in fully automated mode in order to exercise their rights under the Bill, what commitments can he give that data confirming the status of the vehicle at the time of the crash will be made available to the insurer?”
Craig MacKinlay MP intervened towards the end of the debate (which lasted for less than two hours) and hinted at significant longer term changes in ownership and use of vehicles that many expect when fully automated cars become a significant part of the UK’s motor fleet: “As we take the inherently illogical human being behind the wheel out of the equation, I wonder what the point will be in the future of maintaining one’s own vehicle – a vehicle that spends 95% of its time completely unused.”
It is worth recalling that the new regime in the Bill is to apply only when the automated vehicle is driving itself. When it is being conventionally driven, existing arrangements will continue to apply (i.e. that the motor insurer is liable for losses caused by the negligent use of a vehicle by an insured person). Thus, the new requirement in the Bill may be seen as an extension to the compulsory cover required by s145 of the Road Traffic Act 1988. In fact, the AEVB will add a new subsection to s145 to make this very clear.
The Bill (and its predecessors) has been widely welcomed in principle across the insurance industry and it appears to have general cross-party support. For these reasons it appears likely that any amendments considered during its imminent passage in the Lords might be much more by way of clarification than attempts to change the proposed insurance regime fundamentally. For example, the concept of an accident “caused by” an automated vehicle might be more fully explored.
We shall provide further information as the Bill progresses.
Written by Alistair Kinley and Kerris Dale at BLM
The Vnuk problem
The original case arose from an injury claim in which a Slovenian worker was knocked off a ladder by the trailer attached to a reversing tractor on a farm. The ECJ ruled that as this vehicle was intended to be used on a road, it should be covered by the compulsory motor insurance regime under the 6th Motor Insurance Directive (MID).
More specifically, the decision was that compulsory motor insurance applied to any vehicle being used anywhere, for any purpose, for which it was intended. Such a wide ambit encompasses all sorts of vehicles traditionally covered under EL and PL policies, for example agricultural vehicles, construction vehicles, forklift trucks, EBTs and driveable aircraft steps.
How this ruling is interpreted among European courts is up for debate and is currently being considered by the EC. The outcome will have significant ramifications for the general insurance arrangements of corporates.
A much-awaited action plan from the European Commission (EC) on how to deal with the ramifications from the European Court of Justice (ECJ) decision in Damijan Vnuk v Zavarovalnica Triglav remains elusive, much to the frustration of governments, insurers and businesses across Europe.
“It is an ideal time to look in detail at how the potential for ADR can be maximised.”
Sir Terence Etherton, Master of the Rolls, Chair of the Civil Justice Council
The Master of the Rolls was speaking on the launch of the Civil Justice Council Consultation ‘ADR and Civil Justice’ in October: the deliberate use of the word “maximised” confirms that, in the view of the senior Judiciary the question to be addressed is not whether or not ADR should be used but how much and how often. The Consultation (responses are due by 15 December) feeds in to a number of reforms, reviews and reports that consider the shape of the civil process in the early 21st Century. It would be easy to take a view that the Online Court (non-tortious claims under £25,000) can be ignored, that the LASPO review (announced for 2018) will be an “it’s working / no change” review and that the ADR review is only really likely to affect higher value cases (which often settle and mediate anyway).
At midnight tonight the insurers’ faithful servant expires: the last commercial insurance policy based on the Marine Insurance Act 1906 will end and on renewal the Insurance Act 2015 will apply. There may be some wrinkles around contracting out and perhaps a multi-year policy could see some limited application of life support to rare atypical policies but Saturday August 12th 2017 marks the first anniversary of commencement of the Insurance Act 2015. From that point the MIA1906 will start to fade until the last claim has been presented, adjusted and paid. Whilst “full” implementation of the Law Commissions’ extensive programme of Insurance Reform will only be in place on May 4th 2018 (the date which marks the first anniversary of the commencement of the “late payment” term) to all intents and purposes the IA2015 is the only show now in town.
The legislation on insurance arrangements for automated driving is expected to re-emerge this the autumn, with the Queen’s Speech in June trailing the Automated and Electric Vehicles Bill (replacing the now-lapsed Vehicle Technology and Aviation Bill).
A further critical element of the regulatory regime associated with this rapidly developing technology is ensuring data security and integrity and that concern is front and centre of eight key principles published by the UK government on 6 August 2017.
The European Commission has just started a review of the legal regime of compulsory motor insurance put in place by the Motor Insurance Directive EC/2009/103 (the MID). The review is the wider REFIT evaluation of all aspects of the MID and is open for responses until 20 October. It therefore runs in parallel with the shorter four week consultation about the inception impact assessment (IIA) for the MID, about which we posted this blog last week.
Today marks the first anniversary of the commencement of the Third Party (Rights against Insurers) Act 2010. It is, as we have discussed, a successor to an Act of the same name dated 1930. It modifies and brings up to date the protections available for a claimant bringing an action against an insured but insolvent defendant. Despite the overhaul of the UK’s insurance legislation (CIDRA 2012, Insurance Act 2015 and of course TPRAIA 2010 there has been very little “insurance” case law on the new statutes but in the last few weeks a number of cases considering the new TPRAIA have been reported.
Peel Port v Dornoch was a case arising from a fire, causing damage of more than £1m at Sheerness Docks. In this instance the defendant was not in liquidation but the PL insurer, Dornoch Ltd relied on a “hot working” endorsement and alleged that their insured was in breach of the condition. The insurer had provided details of terms but not the policy. The claimant made an application for pre-action disclosure of the policy. Pointing to the information that the new Act requires to be provided and suggesting that as the substantial claim was likely to trigger an insolvency that it would save costs and the court should exercise its discretion to order disclosure. It was accepted the policy would be a disclosable document in coverage proceedings (between policyholder and insurer) and would form part of the statutory disclosure required by TPRAIA 2010 but the judge noted that policyholder was not insolvent and possibility (or even likelihood) of insolvency of policyholder did not comprise sufficiently exceptional circumstances to exercise discretion and order pre-action disclosure of the insurance policy.
BAE Pension Fund Trustees v Bowers & Kirkland was a case that arose from defects in the design of a concrete slab which was laid by D3, a company which had become insolvent. An application was made to join D3’s insurers as a co-defendant. The policy provided that disagreement about coverage would be subject to French Law and any coverage dispute should be arbitrated. The insurer argued that the breach of a condition meant that there was no insurance and that TPRAIA 2010 did not apply. In addition the jurisdiction clause meant that an English Court could not hear the case. The court noted that s2 provided a mechanism for determining precisely the sort of dispute that the insurer argued ousted the Court’s ability to determine the dispute. It was not necessary for the claimant to establish that it was entitled to a policy indemnity for it to join the insurer as a party. The legislation allowed the insurer to pursue the coverage arguments but this was the time to argue those issues and they did not form an argument to resist being joined as a defendant.
Redman v Zurich & ESJS1; a “friendly fight” between parties to establish a precedent about the TPRAIA transitional provisions and whether the 1930 or 2010 Act applies. In this instance Mr Redman died from lung cancer on 5 November 2013 some years after he had worked for a company now known as ESJS1. His former employer (now sued by his widow) was the subject of a voluntary liquidation commencing on 30 January 2014 and culminating in dissolution on 30 June 2016. All these dates precede 1 August 2016, the commencement date of the newer TPRAIA. Argument had however been raised that the insured (ESJS1) had not incurred a liability, against which it was insured under the contract of insurance, until after 1/8/16 and that, as a consequence, the 2010 Act applied. If the claimant had succeeded on the point she could have brought an action directly against the insurer – if she so chose. However this point was abandoned (the judge confirming correctly so) as the liability of the employer was incurred when the cause of action is complete: in this case when the claimant (or deceased) suffered damage. The further submission of the claimant was that the 1930 and 2010 Acts can apply in parallel. Albeit that this was, to use the Judge’s word “brave” it, also, was not successful. Mr Justice Turner confirmed that where both “triggers” (the policyholders insolvency and the occurrence of damage) pre-date the 1/8/16 commencement then only the more restrictive 1930 Act applies
In each of these case there are “no surprises” to date and indeed many of the issues and questions above have been considered in the BLM TPRAIA Flowchart. Peel Port did try to push the boundaries but as the Judge noted the availability of insurance cover is a regular feature of litigation and it is for the claimant to take the defendant as he finds him – insurance may well be commercially relevant to the litigation but coverage documents are irrelevant to the issues. Therefore Peel Ports maintains the status quo – policy documents, absent insolvency, are not discoverable in a non-coverage case. BAE Pension Fund and Redman are both determined as we would have expected.
However, it is early days as far as the new law is concerned and there will be other more complex cases that will be decided on more obscure facts and difficult interpretations of the law: perhaps to be determined before TPRAIA celebrates its second Birthday.
Written by Terry Renouf, consultant at BLM and member of the firm’s Time for Change team.
The emergence of the Internet of Things (IoT – the interconnection of everyday objects via the internet) raises important issues relating to security and hacking. In particular, the potential for civil claims against manufacturers resulting from a failure to provide any or sufficient security is not known.