Firms must ensure that they handle claims effectively and properly and, where appropriate to do so, they must offer assistance to their customers in the process of making a claim, including, where relevant, alerting their customer to policy terms and conditions that may be of benefit to the customer. Any claim settlement offer made to a claimant must be fair, must take into account all relevant factors having regard to the terms of the policy and any representations made to the policyholder and must represent the firm’s best estimate of the claimant’s reasonable entitlement under the policy.
Where policyholders have commenced litigation against a firm, and it is agreed between the parties that the case has the potential to act as a “test case” for the determination of issues in relation to BI insurance policies for wider groups of customers, the Central Bank has the following expectations:
(i) Firms should be cognisant of the significant costs burden faced by such plaintiff policyholders and should consider how the issues in dispute can be narrowed to ensure that the litigation can proceed in the least costly and most expeditious manner possible, reflecting the firm’s obligation to act fairly, honestly and professionally in the best interests of its customers;
(ii) In circumstances where the firm obtains the benefit of a court’s interpretation of the relevant policy wording in its determination, and in consideration of the financial burden placed on the customer plaintiffs to mount the litigation to have their claims under the policy determined, a firm should agree:
(a) to pay the reasonable costs of such customer plaintiffs in agreed test case litigation, to be assessed in default of agreement; and
(b) should not seek its costs against these plaintiffs.
Finally, it is the Central Bank’s clear expectation that where a legal action has been concluded and the final outcome/s may have a wider beneficial impact for similar groups of customers, then firms should carry out an impact assessment to ascertain whether there is such a wider beneficial impact and take remedial action to ensure that those customers obtain the benefit of the final outcome/s.