S.I. No. 197/1991 - European Communities (Non-Life Insurance) (Legal Expenses) Regulations, 1991.

S.I. No. 197 of 1991.

EUROPEAN COMMUNITIES (NON-LIFE INSURANCE) (LEGAL EXPENSES) REGULATIONS, 1991.

I, DESMOND O'MALLEY, Minister for Industry and Commerce, in exercise of the powers conferred on me by section 3 of the European Communities Act, 1972 (No. 27 of 1972), hereby make the following Regulations:

1. These Regulations may be cited as the European Communities (Non-Life Insurance) (Legal Expenses) Regulations, 1991, and shall come into operation on the 26th day of July, 1991.

2. In these Regulations—

"Council Directive" means Council Directive No. 87/344/EEC⁽¹⁾;

⁽¹⁾O. J. No. L185, 4.7.1987, pp. 77-80

"the Principal Regulations" means the European Communities (Non-Life Insurance) Regulations, 1976 ( S.I. No. 115 of 1976 );

"appropriately qualified person" means a person appropriately qualified according to the laws of the State;

"class of insurance" refers to a class of insurance as specified in Schedule 1 of the Principle Regulations;

"lawyer" means any person entitled to pursue his professional activities under one of the denominations laid down in Council Directive 77/249/EEC⁽²⁾.

⁽²⁾O.J. No. L78, 26.3.1977, p. 17

3. Article 2 of the Principal Regulations is hereby amended by the substitution in subarticle (1) of the following definition for the definition of "the Directive":

"'the Directive' means Council Directive 73/239/EEC* as amended by Council Directive 87/344/EEC of 22nd June, 1987, O. J. No. L185, 4.7.1987, pp. 77-80;".

4. (1) Articles 4 to 11 of these Regulations apply to the class of insurance included in the class listed in Section A of the Annex at reference No. 17 and to undertakings carrying on such insurance.

(2) These Regulations do not apply to—

( a ) legal expenses insurance where such insurance concerns disputes or risks arising out of, or in connection with, the use of sea-going vessels,

( b ) the activity pursued by an insurance undertaking providing civil liability cover for the purpose of defending or representing the insured person in any inquiry or proceedings if that activity is at the same time pursued in the insurance undertaking's own interest under such cover,

( c ) the activity of legal expenses insurance undertaken by an assistance insurance undertaking where this activity is carried on in a state other than the one in which the insured normally resides, where it forms part of an insurance contract covering solely the assistance provided for persons who fall into difficulties while travelling, while away from home or while away from their permanent residence. In this event the insurance contract must clearly state that the insurance cover in question is limited to the circumstances referred to in this subarticle and is ancillary to the assistance.

5. Legal expenses insurance shall be—

( a ) the subject of an insurance contract separate from that drawn up for the other classes of insurance, or

( b ) dealt with in a separate section of a single policy of insurance in which the nature of the legal expenses cover is specified.

6. (1) An insurance undertaking carrying on legal expenses insurance shall, with the approval of the Minister, adopt at least one of the methods of operation as specified in the following subparagraphs (a), (b and (c) of this subarticle—

( a ) the insurance undertaking shall ensure that no member of staff who is concerned with the management of legal expenses insurance claims, or with legal advice in respect thereof, carries on at the same time a similar activity—

(i) where the insurance undertaking carries on one or more other classes of insurance, for another class carried on by it;

(ii) in another insurance undertaking having financial, commercial or administrative links with the first insurance undertaking and carrying on one or more of the other classes of insurance;

( b ) (i) the insurance undertaking, shall entrust the management of claims in respect of legal expenses insurance to an undertaking, having separate legal personality, which shall be mentioned in the separate insurance contract or separate section referred to in Article 5 of these Regulations;

(ii) if the undertaking having separate legal personality has links with another insurance undertaking which carries on one or more of the other classes of insurance, members of the staff of the insurance undertaking who are concerned with the processing of claims or with legal advice connected with such processing may not pursue the same or a similar activity in the other undertaking at the same time;

( c ) the insurance undertaking shall, in the insurance contract, afford the insured the right to entrust the defence of his interests, from the moment that he has the right to claim from the insurer under the insurance contract, to a lawyer of his choice, or other appropriately qualified person.

(2) Whichever alternative as specified at subarticle (1) of this Article is chosen by the insurance undertaking, the interest of the persons having legal expenses cover shall be regarded as safeguarded in an equivalent manner.

7. Any contract of legal expenses insurance shall expressly recognise that—

(a) where recourse is had to a lawyer or other appropriately qualified person to defend, represent or serve the interests of the insured person in any inquiry or proceedings, the insured person shall be free to choose such lawyer or other person,

(b) the insured person shall be free to choose a lawyer or, if he so prefers, other appropriately qualified person to serve his interests where a conflict of interests arises.

8. (1) Article 7 of these Regulations does not apply where all of the following conditions are fulfilled:

(a) the insurance is limited to cases arising from the use of road vehicles in the State;

(b) the insurance is connected to a contract to provide assistance in the event of accident or breakdown involving a road vehicle;

(c) neither the legal expenses insurance undertaking nor the assistance insurance undertaking carries on any class of liability insurance;

(d) measures are taken so that the legal counsel and representation of each of the parties to a dispute is effected by completely independent lawyers when the parties are insured for legal expenses by the same insurance undertaking.

(2) The exemption granted to an insurance undertaking pursuant to subarticle (1) of this Article shall not affect the application of Article 6 of these Regulations.

9. (1) Where a dispute arises between a legal expenses insurance undertaking and the insured person, such dispute shall be referred to arbitration in accordance with Part 3 of the Arbitration Act, 1954 , as if these Regulations were an Act to which section 48 (2) of the said Act applies.

(2) The legal expenses insurance contract must inform the insured person of his right to invoke the arbitration procedure referred to in subarticle (1) of this Article.

10. When a conflict of interest arises or there is disagreement over the settlement of a dispute, the legal expenses insurance undertaking or, where appropriate, the separate undertaking referred to in Article 6 (1) (b) of these Regulations, shall inform the insured person of—

(a) the right referred to in Article 7 of these Regulations;

(b) the possibility of having recourse to the arbitration procedure referred to in Article 9 of these Regulations.

11. Section C of Schedule 1 of the Principal Regulations is hereby amended by the substitution for the paragraph beginning "However," of the following:

"However, the risks included in classes 14, 15 and 17 in Section A may not be regarded as ancillary to other classes. Nonetheless, the risk included in class 17 (legal expenses insurance) may be regarded as an ancillary risk of class 18 where the conditions laid down in the first paragraph are fulfilled, where the main risk relates solely to the assistance provided for persons who fall into difficulties while travelling, while away from home or while away from their permanent residence.

Legal expenses insurance may also be regarded as an ancillary risk under the conditions set out in the first paragraph where it concerns disputes arising out of, or in connection with, the use of sea-going vessels."

GIVEN under my Official Seal, this 22nd day of July, 1991.

DESMOND O'MALLEY,

Minister for Industry and Commerce.

EXPLANATORY NOTE.

These Regulations allow insurance undertakings to underwrite legal expenses insurance while precluding conflicts of interests which may arise as a result. In particular, the Regulations provide for three alternative and equivalent methods to be used by insurance undertakings, with the approval of the Minister, for avoiding conflict of interests with regard to the management of claims made under legal expenses insurance policies. The Regulations also require that, subject to certain exceptions, any contract for legal expenses insurance must offer the insured person a free choice of lawyer to represent or serve his interests in any inquiry or proceedings and whenever a conflict of interests arises.