Select Committee on Home Affairs Minutes of Evidence


APPENDIX 4

Exchange of letters between the Chairman of the Committee and Sir John Lovill, Chairman of Municipal Mutual Insurance Limited

 (a) EXTRACT FROM A LETTER TO THE CHAIRMAN FROM SIR JOHN LOVILL

  Further to my earlier letter I am now in a position to respond rather more constructively to your letter of 3 February 1998.

  As I hope you will appreciate, I am not familiar with the details of the particular inquiry in which your Committee has been engaged. That is more properly the province of Mr Wilmot and I understand that he will be replying to you in his own way. Perhaps I might confine myself to the issues as they affect the Insurers.

  I see that when Mr Alun Michael MP wrote to you in December 1997, before I became directly involved in this issue, he set out some of the reasons why the request for details of the Kevin Taylor settlement had been declined. Having considered that myself, I take a similar view. In commercial matters, and indeed in public affairs, certainty and finality are important considerations. It is neither desirable nor in many cases possible for there to be subsequent alterations to the terms of a concluded agreement.

  You are right in thinking that the level of awards can affect future premiums, but it is only one of the factors which an Insurer would consider. In fact, if the Insurer took the view that a particular case was so extraordinary in its nature and value then it might conclude that a similar event was unlikely when assessing future risk and fixing premium levels.

  Although an Insurer usually has the contractual right to control any civil claim covered by the policy, MMI has always followed a practice of consulting closely with police forces and authorities. Having said that, the commercial realities of any given situation have to be taken into account. Not least because insurance companies will owe duties to other policyholders, to co-insurers/reinsurers and to shareholders/members.

  I was surprised at your statement that the award to Mr Taylor in settlement of his claim "relates" to the Stalker Inquiry. That is not my understanding on this matter.

  I have given the most careful consideration to your request that we should disregard the confidentiality clause attached to the settlement terms. Firstly it would be wrong for us to act in such a unilateral way and secondly I do not believe it right for MMI or indeed any insurance company to break the mutual obligations imposed on all parties to a confidentiality commitment.

11 February 1998

 (b) EXTRACT FROM A FURTHER LETTER TO THE CHAIRMAN FROM SIR JOHN LOVILL

  I feel it might be helpful for me to bring the following to the notice of yourself and the Committee.

  Firstly, Municipal Mutual Insurance Limited ceased all underwriting activity on 29 September 1992 and is currently in solvent run-off. We are not conversant, therefore, with current insurance practice involving police authorities and it is unlikely that we shall be able to assist in that regard. Equally, in terms of future conduct of civil litigation involving such bodies we would have little to offer.

  Secondly, no insurance policy issued by this Company to any police authority, or indeed any other public body, has contained any provision or condition involving the imposition of confidentiality clauses in the terms of claims settlements.

  Lastly, and it follows from the previous paragraph, the clause applicable to the Taylor claim was negotiated entirely separately from the provisions of the insurance contract and was included in the terms of settlement approved by the Court. To the best of my knowledge no similar clause of confidentiality has ever been incorporated in any other claim settlement involving a police authority insured by this Company.

6 May 1998

 (c) EXTRACT FROM A FURTHER LETTER TO THE CHAIRMAN FROM SIR JOHN LOVILL

  Thank you for your letter of 11 May 1998, the contents of which I have discussed with my colleague, Mr Payne.

  He has reviewed all our correspondence and notes of meetings and telephone conversations made around the time of the settlement of the Taylor case. He has found no reference as to who proposed the confidentiality clause. We are therefore quite certain that the initiative for its inclusion did not emanate from this Company. However, as I have advised you previously, all parties accepted the inclusion of the confidentiality clause as part of the settlement submitted to and approved by the Court.

  If the above response enables the matter as far as we are concerned to be resolved in this correspondence, no doubt you will confirm this. Alternatively, should you still wish us to attend on the morning of 30 June next we remain available to do so.

20 May 1998

 (d) EXTRACT FROM A LETTER TO SIR JOHN LOVILL FROM THE CLERK OF THE COMMITTEE

  I attach a copy of the transcript of the hearing. The Committee's main interest in this matter is to establish whether there are in general (or in particular cases) reasons why the amounts of settlements of civil cases against police forces should not be disclosable. The Committee has noted that at Q41 and at QQ55-58 it is suggested that MMI saw advantage in there being a confidentiality clause in the Taylor case in order to avoid the possibility or prejudicing other cases which were in train. The Committee would be grateful if you could indicate whether this is correct; and also, to the extent MMI feels able to comment given that it is no longer taking on new business, whether (i) such circumstances giving rise to a need for confidentiality arise frequently or only rarely and (ii) there would be any difficulty in such cases if a confidentiality clause were time limited to expire when other specified actions had been settled.

3 July 1998

EXTRACT FROM THE REPLY BY SIR JOHN LOVILL TO THE CLERK OF THE COMMITTEE

  As explained in previous correspondence, it is our belief that the proposal to make the Taylor settlement subject to a confidentiality clause did not emanate from MMI, a view which appears to have been corroborated by the evidence of Mr Wilmot to the Committee.

  I do not know the identity of the two other claims referred to by Councillor Murphy. If they are the actions of Messrs Bowley and McCann, then given their close association with Taylor and the identical nature of their allegations against the GMP, I find great difficulty in accepting the proposition that MMI thought that the imposition of confidentiality clauses would prevent discussion between the Plaintiffs of any proposed settlement terms. I understand that the offers were made more or less simultaneously. They were certainly all approved by the Court at the same time.

  The need for confidentiality of settlement terms arises infrequently in our experience. In my letter of 6 May to yourself I stated that I knew of no other claim against a Police Authority involving a policy issued by MMI which was subject to such provision. It follows that your remaining question in relation to the inclusion of some time limitation to such clauses is academic, although subject to the agreement of the parties and approval of the Courts there would seem to be nothing to preclude such refinement.

9 July 1998


 
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