DAC Beachcroft’s report issues warning over the implications of new Act
The insurance industry faces several potential pitfalls when implementing the Insurance Act 2015, according to an insurance report released by law firm DAC Beachcroft.
Its Insurance Market Conditions & Trends 2015/16 report, published this week, warns insurers to carefully consider the implications of the Act, which is due to come into effect in August 2016.
It states: “Unqualified statements such as ‘We apply the terms of the new Act to all our customers immediately’ will have very wide ramifications, for example on long-tail business, unless it is also clearly stated that the interim provisions only apply to policies incepting after a certain date.” It also warns that “proportionate remedies” could be seen as confirming cover unless claims handlers make the settlement terms clear.
The report makes 50 predictions for the industry, including industry uncertainty around the Brexit referendum, the growth of new liabilities associated with 3D printing and wearable devices, and a rise in privacy and cyber liability claims.
On deferred prosecution agreements (DPAs), it warns of an “increased risk” of claims against directors and officers in the UK due to the likelihood that “after a DPA has been entered into by the entity, individual prosecutions will follow”. Companies could also sue directors for failing to take steps to prevent a breach of personal data.
It warns that data breaches are likely to become more costly, with the proposed new European Data Protection Regulation “expected to bring mandatory breach notification requirements”. There are also questions surrounding the application of the Defamation Act 2013 with some cases due to be heard on the “public interest” defence and other areas.
David Pollitt, partner and head of insurance at DAC Beachcroft, says: “We think evolving data protection law could really boost cyber insurance policies, with data breaches set to become more costly.”
In clinical negligence, Pt 36 will play a more tactical role in the defence toolkit and there will be a “raft” of cases clarifying its redraft; the pre-action protocol for the resolution of clinical disputes is likely to increase the frontloading of costs as parties make “more and earlier use of expert evidence”.
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