Handling Claims Co-operation and Settlement
When your organisation makes a claim, it may appear that insurers are being demanding in the information they require from you or in the involvement they want to have in running the claim. However, you should be aware that it is usual for policies to incorporate mechanisms to ensure that insurers are kept up to speed with, and have a say in, the rectification of any losses or defence of any claim.
Co-operating with Insurers
Insurers will require regular updates on losses and claims so that they can monitor the position, set reserves, and protect their interest in recoveries. You should ensure that you respond to reasonable requests from insurers and keep them regularly updated on the development of the loss or claim and intended future steps. In particular, look out for specific time limits governing the provision of documentation to insurers.
Some policies will state that no claim will be payable without certain information being provided. For a cautionary tale see our bulletin on the Ted Baker Plc & another v AXA Insurance Plc  EWHC 3548 case.
Failing to keep insurers updated could give rise to arguments that they have been prejudiced and are entitled to reduce or extinguish your indemnity. Conversely, if you have kept insurers updated and they have not raised objections, it could be difficult for them to ultimately disagree with a course of action.
When in receipt of a third-party claim, do not admit liability, make any payment to a third party, or agree to any set-off, even for commercial reasons, without insurers’ formal written consent.
- Keep insurers updated on developments in losses or claims.
- Comply with insurers’ requests for information where possible, and in a timely fashion, or try to reach agreement about the scope of the requests.
- Do not admit liability or pay money without insurers’ consent.
- Ask for insurers’ prior support and agreement at each and every step of any negotiation.
- Consider seeking a waiver from insurers if there are coverage issues.
Next month, we will round up the top tips discussed in our series on policy pitfalls. In the meantime, you can find out more about claims co-operation, settlement, and other policy pitfalls in our paper: Professional and Management Liability Insurance Claims: Common Pitfalls for Unwary Policyholders.