Let me get to the point very quickly. If you are an insurer who insists upon an innocent claimant signing an assignment agreement before you will settle their claim, firms will issue proceedings against you.
Really? Is this true?
I succeeded with such an approach this week at a regional county court with a very sensible judge.
Facts: RTA impact with property. The driver’s identity was known and the vehicle insured. Claim was worth north of £50k. Driver was not the owner. In fact the driver was a bit naughty and has no money. The claim was therefore against the RTA insurer. The insurer refused to pay unless an assignment agreement was signed by the claimant. The claimant didn’t want to sign this. As parties were in deadlock we issued proceedings. Liability was admitted under the EC Rights Against insurers Regs and it went to a disposal hearing.
Hearing: the DJ awarded all of the claim pleaded. It was a relatively low value claim (in litigation terms) and the claim was handled by a qualified and experienced loss adjuster. On costs, the defendant argued they should receive theirs or no order as to costs. We naturally relied upon their conditions for settlement being unreasonable – our client would have to assign their rights and the wording of the agreement meant the defendant could use our client’s name, without our client having control of such proceedings.
Judge’s view: he was very angry with the defendant. He explained in clear terms to the defendant’s barrister that the message he should feed back to those instructing him was to do some research on the Road Traffic Act. He explained that the RTA insurer would have the ability to pursue the driver under section 151(8)(b) for the damages paid out by the insurer. Counsel, who had been handed a bad brief, was obliging and explained his instructions were that the assignment was an internal policy decision of the insurer. This only made the judge angry as he sat in the family and county court, and clearly had more important things to do than listen to a rich insurance company pushing an innocent claimant around. The judge liked our argument about insurers insisting on a conditional settlement as being completely unreasonable as it exposed the claimant to 2 potential actions from the one incident. Sadly our request for indemnity costs was refused
which was a bloody shame as I lost £10 on a bet with a colleague.
Why do insurers insist upon this?
I am aware of 2 insurers who frequently insist upon these for RTA claims. During w/p discussions their fee earners have admitted that it is very rare for the insurer to pursue a driver using an assignment agreement. This is because most people who are involved in these types of cases have no money (e.g. criminals, underage TWOC’ers, foreign drivers who return overseas without trace, etc).
I suspect a consultant has managed to convince the insurers that the assignment agreement provides them with extra ammunition. This is stupid as most motor policies will include an express section on their rights of recovery from settling a claim involving a third party, and the Road Traffic Act also gives them a statutory provision to reclaim the costs. This is also particularly silly in subrogated claims as a claimant would be giving 2 separate insurance companies a cause of action arising from the same incident!
What should claimants do?
Due to the infrequency of the insurer actually pursuing someone using the agreement, they can run the risk that the low chance is worthwhile “signing and taking the cash”.
However, if you are an innocent claimant and don’t ever want to revisit the matter again, simply sue the insurer.
Also importantly for claimants, this silly conduct by insurers is a great costs building exercise. You can have some back-and-forth over the assignment agreement, before issuing and dealing with their defence. Thereafter, you may even be able to get lucky with a summary judgment application and then the costs of preparing for a disposal hearing if it gets that far. You are unlikely to fail in your costs arguments where a conditional settlement is presented by an insurer.
Over and out.