Freedom of Choice - You Like It? It's yours!
Tuesday 21st November 2017
Nobile v DAS Rechtsschutz-Versicherungs AG (Case E-21/16)
I'm not an avid follower of the European Free Trade Associate (EFTA) Court, but sometimes there is something interesting that spills out that piques my interest - and this case has done just that.
In short, it reveals how BTE insurers have, essentially, been making up their own rules when it comes to providing indemnity. Who knew eh?
Article 201 of the Solvency II Directive deals with the issue of "Free Choice of Lawyer" under a contract of legal expense insurance. In particular, "where recourse is had to a lawyer or other person appropriately qualified according to national law in order to defend, represent or serve the interests of the insured person in any inquiry or proceedings, that insured person shall be free to choose such lawyer or other person".
Seems all well and good and, indeed, this is what the Court had determined - to the extent that it was the Claimant's right to instruct a lawyer of their own choosing, even from the point of notification or any effort to settle.
The Court found that DAS's contractual terms and conditions were incompatible with Article 201(1)(a) of the Solvency II Directive. Furthermore, "it would also be incompatible with that provision to accept that an insurance undertaking could be released from its obligations under legal expenses insurance contracts because the insured person breached such terms and conditions" (para 48).
So there we have it, don't take no for an answer. They are obliged to provide indemnity. The trouble is, how much time do you spend trying to argue with the insurer before relenting and taking out ATE which Claimants will have to pay for out of damages? Is that opening up yet another can of worms in relation to potential claims against Solicitors by their own clients?
It's going to be interesting to see how those situations play out, how many claims are actually made against Solicitors and actions taken against the insurers if they do continue to refuse indemnity.
And Brexit? Although it is likely that the insurers operating in the UK will still be bound by decisions such as in this case, I'm sure they will still be looking at that closely and with interest upon our unceremonious departure from the EU. I'm sure that nobody will intentionally leave any loopholes lying around in the EU Withdrawal Bill....
Have a look, it makes for interesting reading here.