Better deal for insurance claimants
The 2015 Insurance Act, which introduced major changes to insurance laws – notably strengthening insurers’ remedies for fraudulent claims – was followed by the Enterprise Act 2016. Its provisions, which become law in 2017, are set to assist honest policyholders – but conditions do apply.
The Act will retrospectively insert a clause in the 2015 Insurance Act to allow insurance policyholders to claim damages from their insurers for foreseeable losses incurred by the failure to pay valid claims within a reasonable time, or at all. This will create a formerly-absent implied term in every insurance contract to the effect that every insurer must pay sums due on a claim within a reasonable time.
The legislation is intended to end the type of injustice suffered by case study subject Mr Sprung, whose insurer withheld payment to settle his factory vandalism claim for more than three years without justification. This caused Mr Sprung’s business to fail, but he was declared (by a very reluctant court) to be legally unable to make any claim against the insurer for its loss, as no requirement for the insurer to pay a claim within a reasonable time was in force.
The new regime will open a route to bring relief to consumers and, more particularly, Britain’s 5.4 million businesses, whose sole current remedy for late claim settlement receipt is to seek payment of interest from an insurer on a delayed claim settlement.
A ‘reasonable time period’ will be classified within each individual claim’s context and is likely to take into account its size and complexity, the nature of the affected business, additional rules governing treatment of customers and clients and any factors beyond the insurer’s control which arise while the claim is being processed.
If an insurer has justifiable grounds to dispute an insurance claim and withhold payment until investigation and assessment are concluded, this forms a potential defence to any action for loss caused by delay. However, this effectively creates an enhanced implicit duty on the insurer to communicate complications and concerns quickly and clearly to an insured party to conclude the claim. The insured must act reciprocally.
It is crucial to note that insurers are able to contract out of the implied late payment loss claim terms when agreeing business insurance contracts (but cannot exclude it from consumer insurance contracts). The Insurance Act 2015 requires any intention to do so – and provision for contracting out – to be clear and transparent.
However, contracting out of the implied term’s operation is not permissible where an insurer deliberately fails to pay an insured party within a reasonable time, or is indifferent about its breach of the obligation to do so.
Amendments to the Limitation Act 1980 will require late payment loss actions against insurers to be brought with one year of the date of the insurer’s settlement of a claim that is considered to be delayed.
If an insurer refuses to pay out a valid claim, the usual six year limitation period will apply.
The new legislation will undoubtedly aid businesses across the UK from August 2017, but potential pitfalls still exist – and there is an increased onus on the policyholder to provide more detailed information when an insurance proposal is being formulated.
All businesses – especially those with continuity and business critical operations insurance – need to be particularly vigilant for insertion of an insurer’s contracting-out clause.
In the future, as in the present, seeking professional advice before signing any agreement is advisable.
Burton & Dyson can advise you on all aspects of business insurance including policy cover requirements based on fully evaluated risk disclosure.
We can help you to assess foreseeable loss that would constitute a potential claim in the event of late payment.
We are able to review insurance contracts to ensure these provide maximum protection for you and your business and do not contain prejudicial terms, particularly contracting out provision.
We will deal quickly and efficiently with your claims against insurers and act to recover any losses you might sustain as the result of late payment that may affect you, your business and your family.
For more information, please contact: Lisa Whitelam at ljw@burtondyson.com or call 01427 610761.
Conveyancing firms see increase in transactions
The average conveyancing firm has seen a 62 per cent rise in conveyancing transactions since 2010/11, according to new research from the search provider Search Acumen.
The rise is accounted for in part by a consolidation in the conveyancing marketplace. Land Registry data analysed by the company showed that the number of firms registering property transactions has fallen 29 per cent over the four year period from 2011, when there were more than 7,500 to 2014 when there were 5,400.
This has been boosted by an increase in the number of new build homes being completed. 130,660 new homes were completed in the 2014-15 financial year; an increase of 17,280 from 113,380 during 2010-11.
This boost looks set to continue with 253,000 new homes given planning permission in 2015, a five per cent increase on 2014.
Link: Search Acumen Study
Take up of shared parental leave understated
Recent press reports have claimed the take-up of shared parental leave by new parents could be as low as one per cent.
But it turns out this is not the whole story. The figure given in the press was based on only part of a research exercise conducted by My Family Care and the Women’s Business Council.
The two organisations surveyed more than 1,000 individuals and 200 HR directors. The one per cent figure which has gained traction in the press relates only to the responses from the 200 HR directors surveyed. These responses referred only to men, who were not necessarily new parents.
The one per cent figure did not take into account the responses from the 1,000 individuals who were also surveyed. This paints a drastically different picture. 10 per cent of the employees surveyed were new parents or had adopted a child in the past 12 months. From this group, 24 per cent of women and 30 per cent of men said they had taken shared parental leave.
The findings of this survey are backed up by the findings of a similar survey of 628 people by Totaljobs. This found that 86 respondents were new parents of whom 31 per cent said they are using or had used their right to shared parental leave while 48 per cent did not use their right and 21 per cent said they were ineligible.
While the sample size is small and it may be too early to get an accurate picture of the uptake of shared parental leave, it is clear the real figure is much higher than many press reports have suggested.
Link: My Family Care Research
Separating Couples spurn mediation meetings
Since April 2014 it has been compulsory for divorcing couples to attend a Mediation Information and Assessment Meeting (MIAM) before an application could be made for a court order in divorce proceedings.
But a response from the Ministry of Justice to a Freedom of Information Request showed that only five per cent of applications for private law proceeding to a family court actually followed the new compulsory route. This means that fewer than 5,000 MIAMs have taken place against a background of 112,000 private law applications.
The Freedom of Information Request was made by National Family Mediation. The organisation’s Chief Executive, Jane Robey said: “By requiring separating couples to attend a mediation awareness meeting, the government’s aim was to introduce a cheaper and less confrontational alternative to court. But with fewer than one in 20 of couples even attending the initial meeting, let alone following that route through to its conclusion, the law has failed.”
“We genuinely welcomed the law change requiring couples to explore mediation as an alternative to combative court proceedings. We knew it could not transform the culture of divorce on its own, but these figures suggest even this small government step has flopped.”
Mediation is intended to keep decisions about property, finance and children with the family rather than delegating decisions to a judge.
Link: National Family Mediation Research
Stamp Duty hike likely causes storm before the calm
The flood of property investors rushing to beat this month’s Stamp Duty Land Tax increase is likely to calm down in coming weeks, research suggests.
From this month, a three per cent surcharge is set to be introduced on buy-to-let properties and second homes.
Many people were desperate to complete their transaction before the changes came into force at the start of this month, which has led to a sharp increase in mortgage applications.
Nationwide believes that landlords have fuelled a surge in mortgage approvals at the start of 2015, with almost 75,000 agreed in the first month of the year alone.
Robert Gardner, chief economist with the mortgage lender, said: “Much of the increase is likely to be related to the impending increase in Stamp Duty on second homes.
“This is likely to have brought forward a significant number of purchases, which in turn will probably result in a fall back in approvals during the spring/summer.”
It is thought that the initial flurry of approvals will be followed by a rather cooler period for the property market over the summer months.
That said, property prices are still expected to grow by around eight or nine per cent over the course of the year.
Link: Nationwide House Price Index
Call for Court of Appeal to consider divorce court quandary
A landmark decision by a senior Judge could have significant implications for couples involved in high-value divorce settlements.
Speaking during a hearing, Mr Justice Moor has said that couples who have details about their private lives and finances widely publicised in the media during family court proceedings may have grounds for a legal challenge.
The Judge suggested that the time may have come for the Court of Appeal to consider the issue of how much information should be placed in the public domain.
He said that such a debate may be “overdue” as it becomes increasingly apparent that there is a split in the highest ranks of the judiciary.
Some Judges have argued that divorce proceedings are intrinsically private affairs and there should be strict controls on the details that newspapers and other media outlets are allowed to report.
Mr Justice Mostyn is among those who have voiced discomfort at the way certain cases have been covered.
“Reporting how a case is conducted, and what legal points are raised, in an abstract way is one thing, laying bare the intimate details of the parties’ private lives is altogether another,” he said recently.
But this view goes against previous comments by Sir James Munby, president of the family division, which have set out the case for increased transparency.
Danger of unmarried couples not having an up-to-date will
The Law Society has recently warned about the risk to cohabitees if either partner dies without having made a will.
In these circumstances, the deceased’s assets are likely to go to their children, estranged wives or husbands or, in the absence of close relatives, the government. Their surviving partner, meanwhile, may be left with nothing.
The risks involved were thrown into sharp relief by the well-publicised case of a bereaved woman, whose long-term partner had not updated his will.
When Norman Martin died suddenly of a heart attack, his share of the couple’s three-bedroom home passed to his estranged wife.
His partner, Joy Williams, subsequently took the case to court and although the Judge ruled in her favour, she had to endure around four years of uncertainty.
The Law Society has pointed out that an up-to-date will would have meant that Ms Williams would have been spared a considerable amount of stress.
President Jonathan Smithers said: “This case is an important reminder for unmarried couples to make sure they have a valid and up-to-date will, and to seek expert legal advice regarding any co-owned property, if they intend their current partner to inherit upon their death.
“Making a will is extremely important. Solicitors have the necessary qualifications and training to address the often complex issues associated with drafting a will and can help ensure that your estate is left to those who you wish to inherit after your death.”
Link: Law Society Article
‘Common law marriage’ and cohabitation paper published
The Library of Commons has published a briefing paper relating to ‘common law marriage’ and cohabitation across England and Wales.
The paper includes statistics for the number of cohabitants in Britain and general information on how the law applies to cohabitants, as well as future reformation proposals from the Law Commission.
Although cohabitants can have legal protection in many respects, it gives no actual legal status to a couple – unlike marriage or civil partnership – and, presently, a cohabiting couple has little legal protection should they decide to separate.
In July 2007, following consultation, the Law Commission published a report titled: Cohabitation: the financial consequences of relationship breakdown, which considered the financial consequences of the ending of cohabiting relationships. The Law Commission recommended the introduction of a new statutory scheme of financial relief on separation, based on the contributions made to the relationship by the parties. The scheme would be available to eligible cohabiting couples and couples that had had a child together or who had lived together for a minimum period would be eligible. In March 2008, the Labour Government announced that it would be taking no action to implement the Law Commission’s recommendations until research on the cost and effectiveness of a similar scheme recently implemented in Scotland could be studied.
On 6 September 2011, Jonathan Djanogly, then a junior Justice Minister, announced that having carefully considered the Law Commission’s recommendations, together with the outcomes of research on the Family Law (Scotland) Act 2006, the then Government did not intend to reform the law relating to cohabitation in that Parliamentary term. In a separate report, published in 2011, the Law Commission recommended that some unmarried partners should have the right to inherit on each other’s death under the intestacy rules, without having to go to court. The Coalition Government did not implement this recommendation.
The full Commons Library briefing paper, ‘common law marriage’ and cohabitation is available to view online at the link below.
Link: ‘Common law marriage’ and cohabitation paper
‘The state is selling justice’
Increasing court fees to pay for the legal system “smacks of the state selling justice”. That’s according to Chantal-Aimée Doerries, Chair of the Bar Council, who said the Government’s strategy of cutting state spending on the courts and tribunals system and shifting the cost to those who use the courts represented a “growing trend that perhaps views justice as a commodity”.
A range of court and tribunal fees – including for employment and immigration cases – were increased by the Coalition Government and ministers recently completed a consultation on further fee hikes, including increases in civil court fees and those for divorce.
Giving evidence to the Justice Select Committee, Ms Doerries said that the Bar Council accepted that some costs should be collected from individuals and companies, but warned against a “fundamental” shift from state-funded courts to courts funded by fees.
“There is an obligation on the state to provide an accessible and functioning justice system and there seems to be at the moment a growing trend that perhaps views justice as a commodity, something which somebody chooses to use rather than actually a fundamental right within a functioning democracy,” she said. “Having just had the year of the 800th anniversary of Magna Carta it smacks really of the state selling justice,” she concluded.
Link: The Bar Council
Gender pay gap in the spotlight
The Government has published draft gender pay gap reporting regulations for consultation.
These regulations, that are due to come into force on 1 October 2016, will apply to private and voluntary sector companies with at least 250 “relevant employees”; those ordinarily working in Great Britain and whose contracts are governed by UK legislation. Mandatory reporting will also be extended to the public sector and there will be further consultation on how this will work in practice.
Under the regulations, employers must take their first snapshot of data on 30 April 2017 and publish their figures by April 2018. Data will need to be reported annually after that. Employers must publish their mean and median gender pay gaps, as well as the number of men and women within each quartile of pay distribution. Additionally, employers have to publish information relating to the gender bonus gap.
The report needs to be published on the employer’s website every year and employers must also upload it to a Government-sponsored website. A written statement confirming the accuracy of the information will also be required.
Guidance to assist employers with implementing the regulations will be published later this year.
Link: Mandatory Gender Pay Gap Reporting
