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Insurance and Reinsurance Update - August 2009

1/08/2009
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  • Some recent professional liability cases
    The New South Wales Court of Appeal has recently delivered two decisions dealing with claims against solicitors. The first, Dominic v Riz [2009] NSWCA 216, pleasingly confined the obligations of a solicitor advising on a lending transaction whilst the second, Williams v Pagliuca [2009] NSWCA 250, provided a reminder that in many professional negligence cases, the proper assessment of damages may be on a loss of opportunity basis.
  • Regulatory update
    The Private Health Insurance Administration Council (PHIAC) implemented on 16 July 2009 a formal process for whistleblowers to report the misconduct or potential misconduct of a private health insurer. Misconduct that may be reported includes:
  • Asia insights: Chinese banks closer to investing into JV insurance companies
    Since the mid-1990’s, China has prohibited its banks form investing in Chinese insurance companies, but there has been considerable pressure from the banks to reverse this policy to enable them to better compete with foreign banks which have been investing in China’s insurance as well as banking sectors.
  • Asia insights: Anti-monopoly notification thresholds for insurers
    On 15 July 2009 China published the Measures for Calculating the Turnover of Financial Sector Undertakings for Notification of Concentrations (“Measures”), which took effect on 15 August 2009. The Measures were jointly issued by the Ministry of Commerce (“MOFCOM”), the People’s Bank of China, the China Banking Regulatory Commission, the China Securities Regulatory Commission and the China Insurance Regulatory Commission. The Measures specify how to calculate “turnover” for the purpose of applying the notification thresholds for mergers in the financial sector under the Anti-Monopoly Law (AML).
  • Asia insights: Transfer of state-ownership of insurance companies
    The Administrative Measures for the Transfer of State-owned Assets in Financial Enterprises (the Measures) were issued by China’s Ministry of Finance (MOF) on 18 March 2009. These Measures come into effect on 1 May 2009.
  • Private health insurance: observations following the release of the NHHRC Final Report
    Prime Minister Kevin Rudd released the Final Report of the National Health and Hospitals Reform Commission (NHHRC) on 27 July 2009.
  • Amending pleadings before or during trial
    The case of Aon Risk Services Australia Limited v Australian National University [2009] HCA 27 considered when a party is entitled to amend its case before or during a trial. ANU sued three insurers in 2004 in the ACT Supreme Court. Aon was joined in mid 2005. ANU settled with the insurers on the third day of a four week trial in 2006. It then sought an adjournment and leave to amend its claim to allege a “substantially different” case against AON. This amendment effectively recommenced the litigation.
  • When is an insured eligible to a refund for insurance duty?
    In Chief Commissioner of State Revenue v Qantas Airways Ltd [2009] NSWCA 163, the New South Wales Court of Appeal confirmed that entities which have placed insurance with an insurer that is not a “general insurer” under the Insurance Act 1973 (Cth) (Insurance Act) may be entitled to a refund of insurance duty paid in NSW for a certain limited period.
  • Professional indemnity insurance for credit licensees
    As discussed in our previous alert, under the National Consumer Credit Protection Bill 2009 (Cth) (Bill) a licensee must have adequate arrangements for compensating persons for loss or damage suffered because of a contravention of the Bill by the licensee or its representatives. Under the exposure draft of the National Consumer Credit Protection (National Credit Code) Regulations 2009 (Regulations)licensees must hold professional indemnity insurance cover that is adequate in order to satisfy the Bills’s adequate compensation arrangement requirements.
  • Access to insurance policies for mediation
    In Kirby v Centro Properties Limited (2009) FCA 695 (26 June 2009), the Federal Court considered whether a claimant is entitled to access insurance policies of a defendant when a mediation is ordered.
  • Reinsurance is not liability insurance
    In Lexington Insurance Company Limited v Wasa International Insurance Company [2009] UKHL 40, the House of Lords has clarified the way in which “back to back” reinsurance policies should be approached to be consistent with the underlying policy. Further, “full reinsurance” and “follow the settlements” clauses in general do not have the effect of bringing within cover risks that would not otherwise be covered by it.
  • Takaful: can it be done in Australia?
    The Muslim population in Australia is growing and with that must come an increased demand for Shariah-compliant financial products, particularly as the comparatively larger younger groups within the Muslim population reach an age where they should start purchasing insurance. This view is confirmed by the recent announcement by a major Australian bank that it is intending to enter the Islamic finance market by offering Muslim friendly banking products and this suggests that there may also be a market in Australia for Shariah-compliant insurance - takaful.
  • Non-admitted insurance in Australia
    In Australia, direct offshore foreign insurers (now referred to as unauthorised foreign insurers (UFI)) who carry on “insurance business” in Australia are required to be authorised by the local prudential regulator, the Australian Prudential Regulation Authority (APRA) and thus become subject to Australia’s prudential supervisory regime. This requirement was designed to ensure that Australian policyholders have the security of Australia’s strong prudential regime for general insurers.
  • Review of the General Insurance Code of Practice
    The General Insurance Code of Practice (Code) is a voluntary set of standards which insurers agree to uphold. It requires an insurer to be open, fair and honest with its customers and it sets out minimum standards for (amongst other things): selling insurance, customer service, financial hardship, claims management, complaints handling and catastrophe and disaster response. Operation of the Code is monitored by the Financial Ombudsman Service (FOS).
  • The application of “approved product list” exclusions in financial services insurance policies
    With recent economic events seeing a spate of failures of investment schemes and adverse impacts on investment returns, there has been an increase in claims by investors seeking to recover such losses from their financial advisors.
  • Third party access to corporate insurance policies
    There has, of late, been a noticeable increase in applications by plaintiffs and prospective plaintiffs for access to companies insurance policies. The approach taken by the courts to such applications is of interest to both insurers and policy holders alike as many commercial insurance policies include a clause to the effect that the contents of the insurance policy must be kept confidential and not disclosed to third parties.
  • Analysis of recent cases on double insurance
    ​QBE Insurance (Australia) Limited v Lumley General Insurance Limited [2009] VSCA 124 (QBE v Lumley) and Limit (No 3) Limited v ACE Insurance Limited [2009] NSWSC 514 (Limit v ACE) have provided insurers with further insight into the operation and scope of the equitable remedy of equitable contribution for double insurance.

​Who does this affect?
Insurers, reinsurers, insureds and insurance brokers and agents.

​What do you need to do?
Consider whether the issues and developments referred to in this publication may impact on your business. We can help.

 
 

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