What happens when you disagree with the way a PII claim is being dealt with?

Many of you will know that sinking feeling when an email or letter arrives telling you that a client is making a claim against your firm.

In some instances there might have been a mistake, oversight or error of judgement and liability is clear. At the other end of the spectrum there are instances where the claim is a “try-on” from a client who did not achieve the result they had hoped for when they instructed you. In between these scenarios there are numerous cases where liability is not clear-cut and there can be different views as to how a matter should be dealt with.

In our experience there is usually good collaboration between insurers (or their claims representative) and the insured law firm, resulting in an agreed strategy as to how a matter should be dealt with and, ultimately, whether it should be settled or defended. However from time to time views can conflict. For example an insured might consider that insurers are being too quick to offer settlement and are looking to minimise cost on a matter rather than defend the insured’s position – and honour. Alternatively we see occasions where the insured firm is anxious to offer a settlement quickly, where perhaps the claimant is a source of repeat business that is valuable to the firm. So what happens if you and your insurer do not agree on how a matter should proceed?

Know the terms of your policy

First and foremost, make sure that you know what your policy says about notifying and dealing with claims and understand the expectations of your insurer. Ensuring that you notify matters promptly and provide the information you know your insurer will require, is a good start to achieving a good working relationship. There are a couple of points that are of particular note when it comes to “getting off on the right foot”

Firstly, most policies contain a “co-operation and assistance” clause that require you to give your insurer all documents and information that they reasonably require, together with your assistance in relation to the investigation, defence, settlement or avoidance of a matter that is notified to them. If you want to make a good impression on your insurer, then always ensure that you are prompt and professional in responding to their requests.

Another “golden rule”, which is also the subject of a separate clause in most policies, is not to make any admissions of liability or offers of settlement without the consent of your insurer. In situations where you have made a clear error it can be tempting to offer reassurance to a client that you will ensure they are not disadvantaged……but never do this without checking with your insurer first.

Communication

Communication is key. If you are concerned about the way a matter is being dealt with it is always important to ensure that your insurer understands what your concerns are. We would always recommend that you discuss matters with your broker claims contact in the first instance. They are on your side and represent a safe harbour for initial discussions. At Howden our claims team has many years of experience and they will be able to talk through your concerns and offer you a perspective on the situation before going to insurers. They can then assist in advising you how best to approach insurers with your concerns.

In our experience most matters are resolved as a result of full and frank discussion on the issues. With you and your insurers are on the same page, you can then work together to achieve the best possible outcome.

Counsel’s advice

Sometimes questions of liability, causation or quantum are unclear and there can be valid arguments either way. In these situations it is often helpful to agree with insurers that the advice of counsel will be sought to advise and assist in determining the best possible strategy.

It is also useful to note that most policies also have what is commonly known in the insurance world as a “QC clause”. This clause responds in situations where the insured firm wishes a claim to be settled, but the insurer wants to defend it. In the absence of agreement the insurer is required to brief a mutually agreed QC (or in some instances senior counsel or a suitably qualified and experienced solicitor) to advise on whether or not the claim against the insured is likely to succeed. If counsel’s advice is that the claim is likely to succeed, then the insurer must take steps to settle the claim on terms agreed with the insured firm. Alternatively, if counsel considers the claim is likely to fail and should be defended, then that is the course that the insurer is permitted to adopt.

The control clause

If areas of disagreement with your insurer cannot be resolved, then it is important to be aware that most policies have a “control clause”. This is enables insurers to take over and conduct, in your name, any proceeding relating to a claim in respect of which the insurer may be liable to indemnify you under the policy. In our experience it is extremely rare for insurers to exercise the control clause and they will generally only do so as a matter of last resort. It can happen in situations where, for example, an insured firm is being completely unreasonable in their refusal to settle a matter.

You never want to be in a position where you are battling insurers as well as the claimant. If you have concerns about the way a matters is being dealt with, you should always let us know. The Howden claims team is here to help.

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