APPENDIX 7
Letter to the Clerk of the Committee from
the Association of British Insurers
CONFIDENTIALITY OF SETTLEMENTS OF CIVIL ACTIONS
BY POLICE FORCES UNDER INSURANCE POLICIES
I refer to your letter dated 9 June on the subject
of whether the terms of settlements of civil actions by police
forces should be subjected to confidentiality.
In preparing this response I have circulated
your letter to insurers who underwrite a large proportion of liability
insurances in the UK and have received responses from several
major companies.
The Committee has particularly sought guidance
from ABI on whether there are considerations leading insurers
towards generally seeking to include, or to accepting:
(a) confidentiality clauses in relation to
payments made, in the policies themselves; or
(b) confidentiality clauses in specific settlements
made under the terms of a policy.
In response to the first point, policy wordings
do not generally include clauses providing for confidentiality
of claims settlements, and I understand there are no moves to
introduce such clauses.
On the second, confidentiality agreements in
specific settlements may occur. The insured may request the insurer
to incorporate one into the final settlement or—as insurers
have the right under the policy to control the handling of the
claim—insurers may occasionally require a confidentiality
agreement. However, such clauses are very rarely used and are
difficult to enforce. The main purpose is to avoid publicity of
the claim or circumstances or perhaps a particular feature of
the settlement. The reasons could be several, for example:
— to avoid opening the floodgates to
copycat claims or spurious claims, or
— to protect business relationships.
The main purpose in handling claims is of course
for the insurers to perform their contractual responsibility in
protecting the insured. Unless a court action is involved, details
of settlements of claims are generally known only by the parties
to the insurance contract or the parties to the claim.
Publication by insurers of details of any particular
case would only be with the specific approval of the insured although
insurers would not be able to prevent publication by any of the
other parties.
Tim Humphreys
Liability Manager
26 June 1998
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