Are you obliged to disclose your insurance policy to a prospective claimant?

Claimants often go fishing for insurance policy information to form a view on whether a prospective defendant is worth suing or whether another deep pocket is available. What are the limitations and protections afforded to doctors when they are asked to disclose such information?

It has long been the case that claimants should take their defendants as they find them. Whether or not a potential defendant has insurance should not factor in to the claimant’s decision to sue and Courts have been reluctant to force defendants to disclose the details of any insurance policy, particularly at the pre-action stage. That does not mean claimants and their lawyers don’t ask for that information, sometimes threatening all manner of sanction or applications to the court to compel disclosure.

The Third Parties (Rights against Insurers) Act 2010 (TP(RAI)A 2010), which came into force in August 2016, made it possible for claimants to obtain information about an insolvent defendant’s insurance provision, with a view to suing the insurer directly. Under Schedule 1 TP(RAI)A 2010, insurers must provide third parties with information relating to any insurance policy, including the terms of the insurance contract and whether insurance cover has been declined. However, this act only applies to insolvent parties.

Solvent Insureds

So what information can claimants obtain where the defendant is not insolvent? The answer, it seems, is not very much. The recent decision in Peel Port Shareholder Finance Company Ltd v Dornoch Limited highlighted the courts’ reluctance to force disclosure of a party’s insurance details where the insured is solvent.

In that case, Peel Port were the owners of a warehouse which was damaged by fire in January 2013. Peel Port alleged that the fire was caused by a company called EAPL, which was insured by Dornoch Ltd. EAPL entered no defence against Peel Port’s claims, and Peel Port therefore believed it was likely to be successful in its claim for over £1 million pounds. EAPL was not insolvent at the time of this case, but Peel Port asserted that if it was successful it its claims, EAPL would be unable to meet the judgement and would be wound up.

Dornoch denied that the claim was covered by its policy with EAPL as it alleged EAPL had failed to comply with certain conditions in the policy. Dornoch set out the terms of the endorsement which it said EAPL had not complied with, but did not disclose the entire policy. Peel Port applied to the court for an order requiring the disclosure of the entire policy wording under Civil Procedure Rule (CPR) 31.16, which allows prospective parties to litigation to apply for disclosure before court proceedings have started. Peel Port argued that it needed to see the endorsement in the context of the full policy wording in order to assess whether or not it was worth bringing proceedings.

The court refused to order the disclosure of the insurance policy in full. It reasoned that while the question was one for the court’s discretion, the “statutory and procedural landscape” was such that the court should only consider ordering disclosure of a solvent insured’s insurance details in exceptional circumstances. The circumstances in this case were not considered sufficiently exceptional to overcome the fact that there has never been a statutory provision enabling a litigant to obtain the insurance details of a solvent insured, or the fact that various other attempts to use provisions of the CPR to obtain insurance details have previously failed.

XYZ v Various – Another attempt to use the CPR to obtain insurance details

One such other attempt was the application in XYZ v Various. That case was made up of the four test cases brought in the PIP implants litigation against various defendants, one of which was Transform Medical Group (CS) Ltd (Transform). In that case, the claimants applied for Transform to be compelled to disclose details of its insurance policies and indemnity cover amounts, as the claimants feared they would be successful in their case but recover nothing, or only part of their costs, due to Transform being unable to meet any damages and costs orders made against it.

The case pre-dated the TP(RAI)A 2010, and in any event, Transform was still trading, although technically insolvent. The claimants applied for an order under CPR part 18, which allows the court to order a party to clarify any matter in dispute or to give additional information in relation to the case. Mrs Justice Thirwall noted that whether or not Transform was insured was not a matter in issue in the case, and therefore could not be the subject of an application under CPR part 18. However, she was swayed by the claimants’ argument that should it transpire that Transform did not have adequate insurance to fund the litigation and to meet any judgement made against it, this would result in wasted litigation and a waste of the court’s resources. She therefore made an order under CPR 3.1 (which gives the court a general power to make any case management order it thinks appropriate), compelling Transform to provide witness statements setting out whether or not it had adequate insurance to fund its participation in the litigation.

This was an interesting compromise, although given the cases before the court were test cases for nearly a thousand individuals it may have been a pragmatic step to avoid having to select new test cases for the group litigation.

In any event, given Peel Port, it remains very difficult for claimants to obtain insurance details of solvent defendants.

So what can claimants obtain?

The General Medical Council Good Medical Practice Guide requires doctors to have adequate and appropriate insurance or indemnity cover to cover their medical practice. Should a patient ask for details of a doctor’s insurance or indemnity arrangements, you are under a professional duty to confirm you hold adequate and appropriate insurance or indemnity arrangements, but you are not under any obligation to disclose details of the policy or the policy provider or the details of the discretionary indemnity provider.

In summary, there is no obligation on doctors to provide insurance or indemnity policy details to patients or prospective claimants. Even once a claim is brought, the above cases demonstrate that the courts are extremely reluctant to force a party to disclose its insurance arrangements and any policy wording, even in exceptional circumstances. It seems that what claimants can expect to be told is that there is an adequate insurance policy or indemnity arrangement in place. Of course if the medical defence organisations exercise their discretion not to indemnify a particular doctor in relation to a particular claim, or an insurer declines indemnity due to a breach of the policy terms and conditions then such confirmation could not be provided.

This should clarify the position and affirm that fishing expeditions should be seen for what they are.