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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