General insurance pricing practices – FCA publishes final report

The FCA’s final report emerged yesterday (22 September) and focuses on remedies for customer detriment arising from certain of the GI pricing practices it has been investigating in depth since it raised the topic in its 2017/18 Business Plan. The remedies proposed by the FCA include requirements for greater transparency for customers and improved reporting to the regulator. However, the most eye-catching remedy proposed is a ban on “price walking” (charging higher premiums for loyal customers), which the FCA CEO described as “radical” in the media coverage of the report.

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Nuanced outcome to FCA business interruption insurance test case

The Commercial Court gave judgment yesterday in the BI insurance test case initiated by the Financial Conduct Authority (FCA), whose CEO has said that they “are pleased that the Court has substantially found in favour of the arguments we presented on the majority of the key issues”.

The FCA’s aim in taking these proceedings was to secure clarity on behalf of policyholders about how non-damage business interruption insurance policies should respond following the Coronavirus outbreak and the associated operating restrictions. The sheer breadth of the case – eight insurers directly involved, 60 insurers affected, 700 wordings and 370,000 policyholders potentially in scope – suggested from its outset that a binary ‘cover’ or ‘no cover’ outcome looked highly unlikely.

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Travel claims and Scottish Group Proceedings

No one can doubt that the ongoing COVID-19 (C-19) crisis has hit the travel industry hard. The short-term outlook for the industry is also fraught with uncertainty with, for example, France, the Netherlands, Aruba, Turks and Caicos, Malta and Monaco the latest places removed by Scottish Government from the list of destinations exempt from quarantine requirements due to an increased number of cases of coronavirus (link here). Unrelated to C-19, the recent introduction in Scotland of group proceedings could also affect the travel sector in terms of increased exposure to litigation.

Group proceedings – sometimes known as collective redress, multi-party or class actions – came into force in Scotland on 31 July 2020. The commencement may be found here and the relevant court rules produced by the Scottish Civil Justice Council (SCJC) here. The rules adopt an “opt-in” model for Scottish group proceedings which, on introduction, will only be competent at the Court of Session and may proceed only with the permission of a Court of Session Judge on an application by a “representative party”. Under the opt-in model, the court’s decision on the particular collective case will extend only to those individuals who have subscribed to the group proceedings action. A positive outcome for a representative party in a group action will not be able to be relied upon by anyone who did not opt-in. Non-subscribers will not be bound to accept a settlement from the defender and could raise their own claim. The SCJC continues work on related matters including extending group proceedings to public law (judicial review) cases and on the possibility of an “opt-out” regime under which everyone in a relevant class would be affected by the group proceedings unless they elect not to be involved.

Circumstances could arise where more than one holidaymaker claims to have suffered loss, injury or damage because of an alleged breach by a Scottish-based holiday provider of their obligations under the Package Travel, Package Holidays and Package Tours Regulations 1992 or under other relevant statutory provisions or at common law. Particular types of claim which might arise in this context include, for example, incidents of in-resort food poisoning affecting large numbers of customers. If such a group of claims raise issues of fact or law which are the same as – or similar or related to – each other, a representative party of an opted-in group of individuals may be granted permission by a Scottish Judge to proceed with a group action against the holiday provider.

Clearly, the immediate challenge for the travel industry is to navigate its way through and out of the current C-19 crisis. The evolving nature of the Scottish claims landscape is, though, certainly worth bearing in mind and group proceedings are not the only recent development here. Damages-based agreements were enabled as from 27 April 2020 and Qualified One-way Costs Shifting (QOCS) in personal injury claims is scheduled for implementation before the end of 2020. Readers who wish to discuss in more detail the impact of these changes in Scotland in the context of travel and holiday claims should feel free to contact me.   

Greg MacDougall, Partner, Solicitor Advocate and Head of Travel and Holiday Claims at BLM in Scotland

greg.macdougall@blmlaw.com  

Disclaimer: This document does not present a complete or comprehensive statement of the law, nor does it constitute legal advice. It is intended only to highlight issues that may be of interest to customers of BLM. Specialist legal advice should always be sought in any particular case.