Annual Review of Insurance & Reinsurance Law 2008
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Annual Review of Insurance & Reinsurance Law 2008 For further information about In surance & Reinsurance Law, please contact: SYDNEY BRISBANE John Morgan, Editor John Baartz T +61 2 9230 4953 T +61 7 3334 3254 [email protected] [email protected] Oscar Shub, National Practice Leader MELBOURNE T +61 2 9230 4305 [email protected] Louise Jenkins T +61 3 9613 8785 Andrea Martignoni [email protected] T +61 2 9230 4485 [email protected] Annette Hughes T +61 3 9613 8430 Michael Quinlan [email protected] T +61 2 9230 4411 [email protected] PERTH Dean Carrigan Jenny Thornton T +61 2 9230 4869 T +61 8 9488 3805 [email protected] [email protected] Matthew Skinner HONG KONG T +61 2 9230 4038 [email protected] Simon McConnell T +852 2840 1202 John Edmond [email protected] T +61 2 9230 4287 [email protected] HANOI Michael Ball Bill Magennis T +61 2 9230 4973 T +84 4 3936 0990 [email protected] [email protected] Malcolm Stephens HO CHI MINH CITY T +61 2 9230 4828 [email protected] Nigel Russell T +84 8 3822 1717 [email protected] This publication is available online at http://www.aar.com.au/pubs/ari/index.htm For more information about Allens Arthur Robinson’s Insurance & Reinsurance practice, including pub li ca tions, recent experience and current team details, please go to: www.aar.com.au/services/insur We would very much like your feedback on this Review. If you would like further information about our regular Forums on Insurance & Reinsurance Law, please contact Business Development Manager Jessie Plaia on +61 2 9230 4539. Annual Review of Insurance & Reinsurance Law 2008 Also available online at: http://www.aar.com.au/pubs/ari/index.htm © Allens Arthur Robinson 2009 Written and published by Allens Arthur Robinson Deutsche Bank Place, Corner of Hunter and Phillip Streets, Sydney NSW 2000 www.aar.com.au The summaries in this review do not seek to express a view on the correctness or otherwise of any court judgment. This publication should not be treated as providing any defi nitive advice on the law. It is rec om mend ed that readers seek specifi c advice in relation to any legal matter they are handling. Preface The Allens Arthur Robinson Annual Review of Insurance and Reinsurance Law enters its second decade. It does so in circumstances where the global fi nancial crisis has overtaken us, but the cases and the regulatory changes reported in this edition refl ect a much more benign litigation and insurance market. However, this is not to say that the cases are not important, indeed some of them have much greater importance in a period of fi nancial stress. In particular, there are a number of decisions relating to the notifi cation of facts and circumstances that require careful consideration, having regard to the fact that insureds may be entering a market in 2009 where terms and prices harden, with the consequence that the locking in of a claim to current covers may well be advantageous. From an insurer's point of view, the difference between a relatively vague disclosure or notifi cation of facts and circumstances and what constitutes an actual notifi cation may well become of critical concern. These cases give some guidance on what are sometimes diffi cult issues. Apart from cases dealing with this subject, there is a wide range of decisions reviewed this year. On the regulatory front, we now have the DOFI reforms in place and we are entering the new year with fi nalisation of the APRA reforms for the prudential supervision of corporate groups. In October, there were some signifi cant changes to the Insurance Act 1973 (Cth) with the introduction of a policyholder compensation facility and a new regime for judicial management of insurers instead of the insolvency regimes under the Corporations Act 2001 (Cth). There has also been a strengthening of the powers of APRA, particularly its information-gathering powers. Although there may be no expectation for strengthening of regulatory arrangements directly relating to the insurance industry in the forthcoming year, there are many outstanding and prospective issues that are likely to have an impact on insurers. For example, there are several outstanding judgments in relation to the liabilities of directors, and the transfer of the uniform consumer credit laws to a federal regime and regulation through ASIC will obviously affect various forms of credit insurance as well as the risks and liabilities associated with those who are providing and intermediating credit products. The ambitions of ASIC to prescribe the form of professional indemnity insurance for holders of Australian fi nancial services licences will be further tested when those licences are required to be held by various credit providers and their intermediaries. A large number of people have contributed to the review and it is diffi cult to adequately acknowledge and thank them all but I would, in particular, like to acknowledge and thank Jenni Priestley, Caitlin Sinclair and Arlene Cullen for their assistance. Jenni and her team, together with our publications group, have done another fi ne job in producing this review. John Morgan Editor John Morgan Editor Partner, Sydney T +61 2 9230 4953 [email protected] Contributors Abigail Gill Dean Carrigan Lisa Mortimer Alicia Salvo Duncan Travis Mark Farquhar Allen Clayton-Greene Eibhlin McBride Mark Hare Amanda Taylor Hannah Biggins Mark Lindfi eld Andrea Martignoni Harry Evans Matthew McCarthy Andrew Byrne Hugh Foley Megan Sandler Andrew Maher Jackson Allen Monique Carroll Angela Morris James Sidwell Peter Haig Anna Brown Jason Ng Philip Hopley Brett Cook Jenni Priestley Rebecca O'Brien Bryn Dodson Joe Power Rebecca Semple Caitlin Sinclair Joelle Vincent Rima Hor Carl Xu John Morgan Sarah Bryden Catie Shavin John Rainbird Simone Collier Claire Harris Jonathon Dooley Simon McConnell Claire Machin Justin Simpkins Susie Stone Damian Walsh Kieran Humphrey Allens Arthur Robinson Insurance & Reinsurance The global economic crisis is no longer something about which people speculate. It is a reality that has signifi cant ramifi cations in all areas of economic life, but most signifi cantly for the insurance industry. In times of crisis, people who have suffered loss or damage become more inclined to enforce, through the courts, their legal rights against alleged wrongdoers. These claims inevitably affect the insurers who insure directors and offi cers of corporations for claims against them in that capacity, professional services companies for the provision of professional advice and services, and those organisations that become involved in disputes, the outcome of which may be insured. This critical situation, coupled with the growth of class actions and availability of litigation funding, must inevitably see a rise in insurance-related and insurance-funded litigation. Allens Arthur Robinson (Allens) has been servicing clients in Australia for more than 180 years and the Asia Pacifi c region for the past three decades. Allens is one of the largest and most highly regarded law fi rms in the Asia Pacifi c region, with 189 partners and more than 600 other legal staff. We provide a full range of commercial legal services to many of the region's leading corporations and government organisations, including more than 70 of Australia's, and more than 25 of the world's, top 100 companies (among them a large number of national and international insurance and broking companies and Lloyd's syndicates). Our leading insurance and reinsurance practice offers clients a team of specialists who can quickly identify the critical issues and regulatory risks and offer practical and commercial solutions. We are known internationally for our expertise in all aspects of insurance law, including corporate, regulatory and contentious matters. We have more than 20 years' experience representing London-based insurance syndicates in claims in Australia. We also have a well- established practice in Asia, with a dedicated insurance and reinsurance team based in Hong Kong. It was very pleasing to be ranked as a leading insurance fi rm by Chambers Global and Asia Pacifi c Legal 500 in 2008 and for our Insurance and Reinsurance Group to be recognised as comprising a 'strong team of front and back-end people with immense technical expertise' (Chambers Global 2008). We have also previously received the ANZllF award for 'Insurance and Reinsurance Law Firm of the Year'. We offer the full range of insurance and reinsurance services, including advice on government policy, and regulatory and legislative matters and the conduct of large, high-value and complex litigation. Oscar Shub National Practice Leader Partner, Sydney T +61 2 9230 4305 [email protected] Oscar Shub National Practice Leader Partner, Sydney T +61 2 9230 4305 [email protected] John Baartz Michael Ball Dean Carrigan Partner, Brisbane Partner, Sydney Partner, Sydney T +61 7 3334 3254 T +61 2 9230 4973 T +61 2 9230 4869 [email protected] [email protected] [email protected] John Edmond Annette Hughes Louise Jenkins Partner, Sydney Partner, Melbourne Partner, Melbourne T +61 2 9230 4287 T +61 3 9613 8430 T +61 3 9613 8785 [email protected] [email protected] [email protected] Bill Magennis Andrea Martignoni Simon McConnell Partner, Hanoi Partner, Sydney Partner, Hong Kong T +84 4 3936 0990 T +61 2 9230 4485 T +852 2840 1202 [email protected] [email protected] [email protected] John Morgan Michael