Welcome to Insurance Briefing - a fortnightly round-up of insurance legal and business developments published on Out-Law - with analysis and commentary from the insurance team at Pinsent Masons. 

The six topics of focus this fortnight include:

Insurance third party rights rules do not apply retrospectively, court confirms

The more burdensome 1930 regime governing the rights of third parties to claim directly against insurers of insolvent defendants will continue to apply where the cause of action accrued and the defendant became insolvent before 1 August 2016, regardless of when the third party's right to compensation was established, a court has confirmed. Insurance law expert Colin Read of Pinsent Masons, welcomed the judgment, which he noted was "relevant to a number of other pending actions". He said: "The clarity the decision provides will help to avoid wasteful satellite disputes in those and other cases. After a wait of six years for the 2010 Act to come into force, we are now starting to see some cases on its application. For example, we have recently seen reports of an oral judgment in another case on the Act, involving the BAE System pension fund trustees, which reportedly confirms that a claimant may sue an insurer of an insolvent insured direct under the new Act, even where there is a coverage dispute. In other words, as was the aim of the legislation, the new regime provides a truly one-stage process for determining both the underlying liability of the insured and the consequent liability of the insurer." Read more...

New law will tighten regulation of claims companies, move regulation to FCA

Claims management companies (CMCs) will face stricter regulation when responsibility for regulation moves from the Ministry of Justice (MOJ) to the Financial Conduct Authority (FCA), though new rules stop short of a ban on cold calling and cold texting.  The CMC industry is expected to face a much tighter and tougher regulatory framework as a result including more individual personal accountability. Complaints about CMCs will also be dealt with by the Financial Ombudsman (FOS) under the new regime. The FCA is expected to consult on the details of plans contained in the Financial Guidance and Claims Bill, which was laid before the UK parliament on 22 June. The FCA is likely to consider implementing recommendations from the 2016 Brady review such as: a more robust authorisation process; increased personal accountability; and wider use of warrants and seizure powers. Read more...

Number of claims management companies falls as tighter regulation takes hold

The number of authorised claims management companies (CMCs) in the UK has fallen by 57% since 2011, with industry turnover also declining, according to the industry regulator. The Claims Management Regulation Annual Report 2017 showed that industry turnover fell 3% in 2016/17 to £726 million, the third successive year of decline. However turnover in the financial claims sector increased by 2% to £541 million despite a reported reduction in redress for payment protection insurance (PPI). The regulator said the financial claims sector was "top heavy" with six companies handling more than half of all PPI complaints and the 13 largest companies accounting for over 50% of turnover. In total there were 674 authorised financial claims companies last year, a drop from 790 the previous year. Read more...

Financial regulators consult on extension of Senior Managers and Certification Regime

The UK's financial regulators have promised a "consistent and proportionate" regulatory framework as they consult on proposals for the extension of individual accountability rules. The Financial Conduct Authority (FCA) has proposed a tiered approach to applying the Senior Managers and Certification Regime (SM&CR) across the wider financial sector, as set out in its consultation on the proposals. Both the FCA and the Prudential Regulation Authority (PRA) are also consulting on extending the rules to insurers and reinsurers, which are currently covered by the PRA's Senior Insurance Managers Regime (SIMR) and a revised version of the FCA's Approved Persons Regime (APR). It is proposed that the SM&CR, which currently applies to deposit-taking banks, be extended to almost all other firms regulated by the FCA at a date to be set by the UK Treasury, expected for some time in 2018. It will replace the current APR for those firms and change how individuals working in financial services are regulated, according to the FCA. Read more...

UK bill to ensure sanctions powers post-Brexit

The UK government has published plans for a Bill that will allow it to impose global sanctions after it leaves the European Union. The Sanctions Bill will allow the UK to continue to play a "central role in global sanctions to combat the threats of terrorism, conflict and the proliferation of nuclear weapons", the government said. The UK currently imposes non-UN sanctions through the 1972 European Communities Act. After Brexit it would not be able to enforce those sanctions without new legislation. The proposed Bill includes additional powers to cut off funding for terrorists by making it easier to freeze assets and block access to bank accounts. Read more...

Uber France partners with Axa to offer insurance cover for drivers
Uber France is to work with insurance company Axa to offer accident cover to its drivers. Axa will "bring its experience in the protection of independent workers, notably on coverage of medical expenses, disability indemnities, and survivor benefits in case of an accident" to Uber's drivers by autumn 2017, it said. Pierre-Dimitri Gore-Coty, Uber's head of operations for Europe, Middle East and Africa said: "We're thrilled to partner with Axa, to develop an innovative package that will provide independent workers that use Uber technology with accident insurance. This partnership will provide a safety net for the independent workers ... and we'll carry on listening about further improvements we can make to create the best possible experience." Read more...

Find the briefing online here. For regular comments, news and views from the insurance team at Pinsent Masons, see our insurance content on Out-law here.

You may also be interested in:
Investment Management Brief - 27 July 2017  
Financial Services Enforcement Monthly Publication - July 2017   

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