Notification issues

(1) Notifying circumstances

It is sometimes difficult to judge what to notify. In difficult cases, we can advise on whether circumstances are notifiable or not.
On notifying circumstances, you have to take care not to fall foul of Quinn v Law Society [2010] EWCA Civ 805, and we can provide advice on this aspect.

(2) Block notification

A prospective insurer wants to see how well a firm is going to operate during the policy period. But the claims/circumstances the firm is going to notify in the next 12 months are more likely to arise out of work that was done in earlier years: two or three, even six or seven, years ago.
If there are identifiable ‘circumstances’, we can make a firm insurable by drafting an effective block notification, to park those claims with the current insurer, and start again with a clean sheet. The block notification may even incentivise the current insurer to offer renewal terms, in the hope of recouping its losses over time.

Block notification requires legal analysis and drafting skills. Either too wide or too narrow, and it’s ineffective.

We have drafted block notifications for law firms for emerging ‘flavour of the season’ exposures including:

  •  Mortgage frauds (still coming out of the woodwork, despite the passage of time)• Coalminers’ compensation claims;
  • ‘Right to buy’ conveyancing transactions;
  • Personal injury under-settlement claims being promoted by ‘cannibal’ litigators;
  • Property investment schemes which may be unauthorised collective investment schemes;
  • SDLT and other tax schemes.

Our drafting is informed by the advice we have given on the effectiveness or otherwise of past notifications in policy coverage disputes (where the insured firms had not instructed us at the time of notification).

The Perils of DIY

Firm Y handled 1,800 ‘right to buy’ transactions. It received 40 file requests and three claims. The firm had a stab at block notification of all 1,800 files. The insurer challenged it, and in the run-up to renewal the insurance market shied away from the firm.

We were instructed. The firm had failed to spell out the circumstances which might give rise to claims. They had not identified a problem common to all the files. They should have done an analysis of the merits on the files where claims had been made and then – if a problem was identified – an audit of a further sample to see whether the problem had recurred.

We identified a pattern of behaviour which did amount to ‘circumstances’ and we drafted a fresh block notification before the end of the policy period. This enabled the Insured to obtain renewal terms.

 

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