Insurance is all about risk. What is the risk to a policyholder of a fire, flood or cyber-attack? And what would they pay for some of the financial consequences of that risk to be transferred?
Insurance law involves the transferring of risk from the policyholder to the insurer (and possibly then on to reinsurers) through contracts. It is about assisting insurers develop insurance products and helping insurers comply with regulatory requirements, and helping policyholders get insurance and making a claim.
What is a typical transaction in insurance and reinsurance law?
There are two types of work: contentious and non-contentious.
Contentious work is where parties, often an insurer and a policyholder, disagree about whether a policy should pay out. Or a policyholder could allege that their broker was negligent.
Non-contentious work involved advising insurers on new insurance products and compliance with regulatory requirements. For consumers, advice can be on what they need to do under a contract.
Depending on the firm and department, you may find yourself working on either contentious or non-contentious matters, although some will do a mixture of both. Solicitors can have multiple matters on at any one time. The type of team depends on the type of work – the larger and more complex a matter is, the bigger the team will often be.
You may find yourself focusing on a type of client. Some will specialise in advising insurers or brokers, whereas others advise policyholders. If you advise policyholders, you will probably develop expertise in specific sectors, such as construction, travel or aviation.
What are working hours for insurance and reinsurance solicitors?
Working hours can be more predictable than other departments. This depends on when the advice is needed, or on court or regulator deadlines. Non-contentious advice on, for example, designing a new insurance product, can generally be planned for in advance, which makes a work life balance more manageable. For responses to regulatory requirements or major events, such as fires and floods, work will become time-critical and may require working late.
What are the best and worst things about insurance and reinsurance law
Insurance matters. It allows policyholders to manage their risk and make investments. Where a policyholder makes a claim, say for business interruption or personal injury, it is usually because their life or business depends on it.
A lot of the case law is based on the Marine Insurance Act 1906, so at first sight may not appear relevant to modern business. With the enactment of the Insurance Act 2015 we will see case law that applies the new (and some established) law in a modern setting.
What would a trainee experience in insurance and reinsurance law?
This depends on the type of work. Non-contentious work requires analysing contracts and FCA rulebooks, drafting documents and advice notes. Contentious work requires trainees to help correspond with other parties, and meet court and arbitral deadlines. Whether it is an advice note or litigation case, trainees can expect to be involved in legal research.
What developments in insurance and reinsurance law should students know about
InsurTech – the application of technology to the insurance industry – is having a big impact. InsurTech affects how insurance products are sold to customers and allows a greater range of policies to be offered in different ways. For example, cyclists and drivers can now buy insurance by the hour through an app, useful for those in the gig economy who don’t know how much or how often they will be using a vehicle. InsurTech also affects how insurers operate; technology can be used to improve analysing risk, identifying potential customers, and ensuring regulatory obligations are met.
What effect will Brexit have on insurance and reinsurance law?
Brexit will have a significant impact on the insurance industry. The insurance industry is regulated at an EU level. The type of Brexit that we see, and how the industry is subsequently regulated both in the UK and EU, will impact on what services can be offered, where and to whom. Already, Lloyd’s of London has opened a subsidiary in Brussels in order to provide customers access to the European Economic Area insurance market in the event Brexit would prevent this.
What skills does an insurance and reinsurance law solicitor need to do the job?
- The ability to think about abstract ideas and how they can play out in practice.
- A practical and commercial approach: policyholders want to receive a payout when things go wrong and insurers want to ensure they help those policyholders who have a legitimate claim; that often requires compromise.
Types of law practised in insurance and reinsurance law
Insurance is a specialist area. While insurance policies are contracts, there is a body of insurance statutes, regulatory rules and case law. Insurance can cover a range of risks, which means that you are likely to come across case law from different sectors, too, such as employment, construction, shipping, property and professional services.
KARI MCCORMICK is a partner in the dispute resolution department at BURGES SALMON LLP. She graduated with a law degree from Otago University, New Zealand.