Crawford Legal Services’ Victoria Edwards, Partner and Head of Travel and Foreign Jurisdictions, and Andrew Higham, Solicitor within our travel and casualty specialty risks team, take a look at the right of recovery of insurers.
With foreign travel almost static due to the impact of COVID-19, insurers and others are looking at ways of recovering their losses. The mass disruption of this global pandemic has seen many insurers make payments to assist their policyholders following losses where third parties should have been liable. This need not be the end of the journey...
The Civil Liability Contribution Act 1978 (CLCA 1978) is a useful tool for insurers and a tool that’s likely to be utilised regularly when seeking recovery or contribution following an insurance payout. This is particularly the case in matters arising from out of jurisdiction disputes, following the decision of Mr. Justice Dingeman in Roberts v SSAFA/Ministry of Defence where it was held that the English courts have jurisdiction to hear the Part 20 proceedings. More recently in the same case (which dealt with a complex web of many legal issues) Mr. Justice Soole, confirmed that the Civil Liability (Contribution) Act 1978 had an overriding effect when issues of private international law arose. So far, so good.
The right to recover payments made under a policy when involving the CLCA 1978 has a limitation period of two years (s10 CLCA 1978 refers) and this runs from the date of ‘liability’ – usually meaning the date at which the damages liability is paid, or a judgment/ award is made by the Court. Before you know it, you’ve settled the claim, it is out of sight out of mind (we are all busy right?) and the statutory limitation period has expired. Case closed. Or is it?
The principle of subrogation
First – a quick overview: the principle of subrogation is a doctrine that allows an insurer, under a policy, to seek recovery of indemnity payments made to an insured from a negligent/ culpable third party that caused or contributed to the loss. The insurer “stands in the place of the insured”, and is thereby entitled to take advantage of any rights the insured/ Policyholder may have. The legal right to subrogate under a policy flows both common law and statute. The doctrine is particularly useful to insurers wishing to pursue a recovery following payment under a policy, as it allows for a six-year limitation period, usually, the date at which the policy responds – e.g. the payment(s) are made. This is useful because traditionally for many insurers, recovery be it via statute or this doctrine has been overlooked which could be due to a number of issues – employee resourcing, knowledge gaps in legal procedural and/or no real appetite to review a large backdated book of claims to dig out any certified contribution/ recovery claims with merit.
So, basically, we can step into the shoes of the customer and bring claims against the appropriate third party.
These claims could include, but not limited to, claims against:
- Airports and their subsidiaries/ baggage handlers for lost and/or damaged luggage.
- Third parties for recovery of personal injury payments and/or medical expenses/ repatriation.
- Tour operator recovery claims whereby a package holiday has been cancelled.
- Accommodation providers.
The potential for subrogated claims and recoveries has always been in the background but the impact of the pandemic has not only increased losses for insurers, it has also brought the issue of recoveries to the forefront and a new strategy is being adopted by many to tackle this growing area of loss.
While insurers and indeed the world are mindful of the impact the pandemic has had on the travel industry, we must become more efficient and pursue more rightful recoveries to continue to provide insurance policies at competitive rates for a market that will return to full fruition in the not too distant future.
Why Crawford Legal Services
Claims under a travel insurance policy can and will often have an element of both foreign jurisdiction and law, not to mention the issues which may arise from contractual indemnities in place – this can add additional challenges to insurers looking to recover.
The variety of claims and jurisdictions means that every day in the travel industry is different from the next. Each claim is different, requiring the right expertise. Traditionally, our clients would have to deal with many different suppliers to handle those claims.
Crawford Legal Services (CLS) International Travel & Foreign Jurisdictions Solution can provide assistance and work with you whatever your business needs. We have extensive experience and knowledge in assessing historic insurer data to draw out key claims that are ripe for recovery. One of our ‘value-add’ services following a deep dive, is the ability to assist you with training and/or process reviews to address any leakage and missed opportunities. This, in turn, funnels money back into your bottom line.
Interested? To see what we can do for you, please reach out to:
Partner, Head of Travel & Foreign Jurisdictions
Partner, Head of Recoveries