Claimants and their solicitors are keen to obtain as much information as possible about defendants’ insurance arrangements but what is an insured defendant obliged to disclose about their private insurance arrangements?
When a potential defendant receives notification of a claim, the individual or company concerned are required to forward details to their professional indemnity insurers pursuant to the terms of the insurance policy. They will invariably be reminded of their need to do this by the claimant or their solicitors. In addition, a claimant will often seek details of their insurance - in particular the name of their insurer and the limit of indemnity. Given the potential prejudice or tactical disadvantage that responding to such a request may cause, is the disclosure request valid (and should it therefore be complied with) or is it just a fishing trip?
Does legislation require it?
In December 2009 the UK introduced the Provision of Services Regulations 2009, which implemented a new European directive. This required the majority of businesses and significantly, a number of professional service providers, to provide details of their compulsory indemnity insurance (namely the contact details of the insurers and the territorial coverage of the insurance). However, although some claimant solicitors may refer to this in support of their insurance information requests, the Regulations do not apply to healthcare services (ie, individuals and organisations directly providing healthcare). Accordingly, details should not be disclosed under the mistaken belief that it is a legal requirement to do so.
What have the courts said?
Details of a defendant’s insurance arrangements have usually been considered (with the odd exception) to be a private matter between an insurer and its insured. The courts have been mindful that disclosure of this information could cause serious prejudice to a defendant (West London Pipeline and Storage Ltd v Total UK Ltd). Further, as the Law Commission has highlighted, a claimant must take a defendant as he finds him. This means that the claimant must face the same risk as anyone else in coming to a view about whether the person or body against whom they consider they have a claim, has the ability to pay. Even if the defendant is insured, there may have been breaches of the insurance policy by the defendant insured which render the insurance contract void. The mere existence of insurance is not necessarily a guarantee that a defendant is good for the money: these are private contractual matters. Accordingly, the courts have been reluctant to interfere too greatly but a recent decision in 2013 is noteworthy.
Although not relevant to all, few healthcare professionals and providers will fail to have heard of the group litigation being pursued by a significant number of women against (among others) various private health care providers for damages arising out of the provision of defective breast implants produced by a French company. As part of the PIP breast implant litigation (XYZ v Various (2013)), the issue of a defendant disclosing insurance details was raised at an early interim application before the courts.
A number of the claimants involved in the group litigation applied for an order that one of the defendant health care providers, Transform Medical Group (CS) Ltd (Transform), disclose additional insurance details. The claimants were concerned that Transform would have insufficient insurance (and accordingly funds) to (i) fund its own participation in the litigation to the end of trial, (ii) meet any orders for damages/compensation, and (iii) meet any orders to pay the claimants’ costs. As one of the other defendant health care providers (Harley Medical Group) had gone into liquidation earlier in the litigation, the claimants’ view was understandable. The application to the court sought information “as to the nature and extent of [Transform’s] liability insurance cover ... and/or that it do serve a copy of the relevant insurance policy documents”. It was argued that the court could make such an order under its powers as permitted by the Civil Procedure Rules (CPR), namely (a) its case management powers (under CPR 3.1(2)) and/or (b) its powers to order further information/clarification of any matter which is in dispute in the proceedings (under CPR 18).
Mrs Justice Thirwall DBE did not consider that the court’s powers relating to further information were sufficient for the applicant to rely on as the insurance position did not form part of the actual dispute (ie, the legal or factual issues). In contrast though, the judge decided that the case management rule did apply as the information would also assist the court in effectively and proportionately managing the case in accordance with the overriding objective that applies to all litigation. In accordance with CPR 3.1(2), Mrs Justice Thirlwall DBE ordered Transform to provide a witness statement or statements detailing whether the company has adequate insurance to fund its participation in the litigation to the completion of a trial and any subsequent appeal. She concluded such disclosure would not give the claimants an “unfair advantage”, or prejudice Transform but would enable more appropriate and cost effective case management. She did not however require disclosure of the policy documents nor evidence that Transform had sufficient insurance to meet any order for damages or the claimants’ costs in due course. The ability to enforce a judgment was not considered to be an issue affecting case management.
An unfounded fishing trip?
While this case has not set a clear precedent that defendants must routinely provide detailed insurance information, it clearly demonstrates that where the court will also benefit from the knowledge it will order its disclosure. This is particularly relevant in the aftermath of Lord Jackson’s reforms of the civil justice system where proportionate legal costs are critical. However, while claimants will inevitably seek to utilise the caselaw to support their requests, insureds should not disclose any more insurance information than necessary and certainly not do so without their insurers’ consent.