MEMORANDUM 76
Submitted by Zurich Municipal (CA 1)
Introduction
Zurich Municipal is part of the Zurich Financial Services Group, a global leader in the provision of integrated financial services.
Within the United Kingdom, Zurich Municipal employs over 500 people focused exclusively on the risk and insurance needs of public sector organisations. We offer a comprehensive range of products to our customers, including insurance, loss control and risk management consultancy services.
In addition, Zurich Municipal also acts as claims handling agent for Municipal Mutual Insurance (MMI), the former local authority insurer that ceased trading in 1992. As a consequence of our experience with public sector insurance and the role undertaken on behalf of MMI, Zurich Municipal has dealt with a number of civil claims for abuse. Claims that relate to incidents that occurred prior to 1992 means our involvement is primarily as claims handler on behalf of MMI. For those that have occurred after this date our involvement is as the primary insurer.
Statistics
Unfortunately we are unable to provide the specific statistics requested for this Inquiry. This is due to the fact that for insurance purposes Zurich Municipal has no requirement to capture specific data on abuse. Claims of this nature fall within a public liability class and will therefore be grouped with a range of other claims that also fall within this category. For underwriting purposes we look at a category as a whole rather than the distinct nature of the claims within it. Our computer systems were never designed to isolate and extract the particular information required for the Inquiry.
In terms of illustrating costs, it is important to note that abuse claims can have a number of different factors, including physical, sexual, psychological and emotional. The nature and severity of the abuse and other factors such as the claimant's ability to recover will impact on the level of compensation awarded. A guide and reference point as to the level of awards is the Criminal Injuries Compensation Authority.
Criminal Proceedings
The areas the Committee is addressing specifically focus on issues with criminal proceedings and investigations with abuse cases. As an Insurer, Zurich Municipal plays no role in this part of the process, although it is affected by the results of such proceedings. It is important to understand that if criminal prosecutions establish guilt, then an insurer's ability to successfully defend a claim in the civil courts is drastically reduced. The criminal process is seeking to ascertain guilt beyond all reasonable doubt where as civil litigation determines liability within a "balance of probability" framework. Therefore, any re-examination of the allegations on which a criminal conviction is based becomes somewhat academic and insurers will normally seek an early settlement. In our experience a civil claim for abuse has never preceded a criminal prosecution.
Our approach to abuse cases in civil litigation is both balanced and fair. Where there is a case of this nature to defend Zurich Municipal will do so. As a business, we adopt a firm stance towards any obvious weaknesses and inconsistencies encountered in a claim and will defend a case to trial. When a specific allegation is made, an insurer will often conduct their own investigations to establish the facts as quickly as possible to identify both justified and unjustified claims. We operate with the utmost sensitivity to these situations, conscious of the distress that revisiting an event can have on a claimant, so where there is a genuine liability we will always resolve the claim both quickly and fairly.
Insurers have to take a realistic approach with abuse cases and any resultant civil litigation, recognising that the cost of going to trial is often disproportionately expensive. The time and resources needed for such litigation, the inability to claim back costs and the potential damage to reputation are all factors that insurers and their clients need to consider before defending a case to trial.
Conclusion
Insurers are not primary players in any aspect of the criminal process, but they are consequentially affected by the results of ensuing proceedings in relation to the handling of civil claims.
March 2002
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