Conduct of Business Rules in the Belgian Insurance Industry The Presumption of Causation for Civil Liability. Introduction

Transcription

1 Conduct of Business Rules in the Belgian Insurance Industry The Presumption of Causation for Civil Liability Steffi Illegems Antwerp Liability Law and Insurance Chair (ALLIC) Introduction Twin Peaks II reform (Laws of 30 and 31 July 2013 and their Royal Decrees): MiFID conduct of business rules in insurance: Know your customer Inform your customer Supervision by Financial Services and Market Authority (FSMA) Link with civil liability: Article 30ter Act of 2 August 2002 relating to the supervision of the financial sector and to financial services (Financial Supervision Act or FSA) 2 Article 30ter FSA: If an insurance company or an insurance intermediary commits an infringement to a conduct of business rule and the policyholder suffers losses caused by the transaction, then, the transaction is deemed to be the result of the infringement, until the contrary has been proven. Not affecting the common law principles Notwithstanding any contractual stipulation 3 1

2 Aim of the research No jurisprudence legal doctrine unclear True meaning of the presumption Impact on insurance related claims? Focus on extra contractual liability Illustrated through hypothetical cases 4 Case 1 Subscription to an investment insurance (branch 23) No suitability test carried out by insurance broker, thus, not aware of: The policyholder s delicate financial situation His limited knowledge Stock market crash: value reduced to 10 % Policyholder wishes compensation and invokes article 30ter FSA 5 Case 2 Car insurance for a brand new car: full Omnium insurance Insurance broker does not identify the demands and needs: basic insurance provided Car crash no coverage of insurance company Policyholder wishes compensation and invokes article 30ter FSA against the broker 6 2

3 Pre contractual information duties Article 1382 Civil Law Code: Fault Damages Causal link between fault and damages Equivalence theory Article 30ter FSA: Infringement Damages caused by transaction Causal link between transaction and infringement = Loss causation = Transaction causation 7 1. Infringement In general: Violation of a command or prohibition, prescribed by law No relativity requirement or Schutznorm theory In concrete, what is the content of: Active information duties; Passive information duties (cases 1 and 2)? 8 E.g. passive information duties Obligation as such to obtain information: = command/probition = obligation of result No strict obligation concerning which/how information should be obtained: command/prohibition = obligation of means = general duty of care 9 3

4 2. Loss resulting from the transaction No further explanation by the legislator Explanatory Memorandum: loss related to the transaction No need (yet) to prove: Precise scope Causal link with the infringement Case 1: lost capital related to the transaction Case 2: loss of a chance to subscribe to an insurance with wider coverage? Rebuttable presumption of transaction causation Insurance subscription is deemed to result from the infringement Rebuttable (cf. article 61 Prospectus Act) Reversal of the burden of proof Doubt in the policyholder s advantage Rebuttal? No relation with the infringement at all Experience and knowledge of the policyholder Loss causation Article 1382 Civil Law Code: Fault Damages Causal link between fault and damages Equivalence theory Article 30ter FSA: Infringement Damages caused by transaction Causal link between transaction and infringement = Loss causation = Transaction causation 12 4

5 4. Loss causation if loss > transaction and transaction > infringement, then loss > infringement sufficient Evidence of: Precise scope of the damage Direct causal link with the infringement = Common law principles Loss causation 3 steps: a. Hypothetical lawful alternative? b. Difference between actual result and hypothetical lawful result? c. Calculation of damages? Illustrated by case 1 (cf. Court of 1st instance Brussels, 24 February 2012) 14 a. Lawful alternative? b. Difference actual result hypothetical result? Buy off of insurance contract No investment insurance (or other investment product) at all: Damages = initial investment recovered capital Another investment insurance or product: Damages = hypothetical (better) result recovered capital (!) decreases > negative market climate 15 5

6 c. Calculations Ex aequo et bono: guesswork Equal for loss of a chance Reduced compensation through the policyholder s own duty of care 16 Concluding remarks about article 30ter MiFID Act The extra value is rather limited Rebuttable character no loss causation No floodgates effect to be expected More suitable for investment insurances Legal uncertainty jurisprudence needed More a trap than a trump for civil liability claims 17 Thank you for your attention! Questions? Steffi.Illegems@uantwerpen.be 18 6