Involving both insurer and broker leads to settlement

A company director and sole shareholder came to us for advice. He had been unsuccessful in making a claim under his occupational disability insurance. The policy terms for the insurance had been revised on several occasions over the years. As a result it appeared that the insurance no longer covered company directors but only employees.

When the director became ill in 2008, he claimed under the insurance for a two-year period of illness. At that time, the insurer raised a query about the period for which he was entitled to payment. The insurer took the view that the revised policy terms also applied to him and commenced proceedings to recover the excess payments it had made to him.

On behalf of our client we put forward a defence against this claim. At the same time, we attempted to increase our client’s chances of success by involving the insurance broker, who sold him an inappropriate policy, in the proceedings. If the insurer’s claim was successful, the broker would have to pay.

After studying both cases, we concluded that whatever the outcome these proceedings will cost a great deal of time and money. Even though the sums involved were relatively small. We therefore advised the company to investigate the options for reaching a settlement. We also contacted both the other parties, the insurer and the broker, to discuss this. It turned out that neither of them was keen to go ahead with lengthy and expensive legal proceedings and they were easily persuaded to make concessions to reach a settlement.

Within a few days, the settlement was agreed to the satisfaction of all parties and the matter concluded. So when involved in legal proceedings it’s always worth asking yourself whether there’s any point to conducting the proceedings or whether a settlement would be preferable. During every case we continually carry out cost/benefit analysis and present our findings to our clients, with open honest advice about the options available.