Richard Evans' article on insurance contract law reform (Legal Report, April) was most welcome. While I agree with the majority of his views, I cannot accept his suggestion that any action for damages against insurers should be limited to, including the claims payment, the sum insured.
This is not, I understand, the practice in other jurisdictions (including Scotland). In my opinion it would not be appropriate to reserve for the award of damages as it is not permissible to reserve for fines by the FSA.
Severe financial problems, in my experience in undertaking expert witness work for over 10 years, occur when there is a major loss and where the insured's bank will not support its client where there is some doubt that the claim will be paid.
And even when it is eventually paid, the sum insured is often exhausted.
The whole principle of insurance is to put the insured back into the same position as he was before the loss, and this cannot be achieved if a limit is put on damages.
One of the main objects of the British Insurance Law Association report to the Law Commission in 2002, which Lord Justice Longmore recently described in the Court of Appeal as "balanced and impressive", was to identify the problems in current law and to commence a dialogue that will eventually bring our law up to date with other countries where reform has already taken place, particularly Australia.
The dialogue is now in full swing and it is hoped that practitioners in the insurance market, and the law, will contribute to these discussions by giving examples to the Law Commission where current law is operating unfairly against the insured.
Let there be a level playing field and certainly, where an insured has put his insurer to extra costs in not cooperating fully by providing the documentation or otherwise to enable his insurer to settle the loss, such costs should be deducted from the claim.
Derrick G Cole
Secretary
Sub-committee on insurance contract law reform
British Insurance Law Association
