![]() and stable mechanisms which have been in operation for decades. In other words, it will not attempt to fix what is not broken. The new Directive maintains and renews the effect of some provisions contained in the 1987 Directive. Such provisions are those related to legal expenses insurance. The Directive provides that under- takings may offer to policy holders legal expenses insurance covering certain categories of claims. The legal expenses insurance must be included in a separate contractual document or a separate section within the policyholder's contract. The policyholder's freedom to select the lawyer who is going to represent him/her in negotiations or in court is almost absolute and may only be limited by the undertaking itself, provided that certain safeguards are in place to ensure the absence of any conflict of interest between the undertaking and the lawyer selected. Those safeguards have been designed to prevent the under- taking from reaching a settlement or handling a legal action in a way which is against the interests or is unfair given the circumstances of the insured. relation to the legal expenses insurance has a number of additional benefits, including the following: does not have to pay a lawyer to file a claim, defend a lawsuit or negotiate a settlement. Therefore, irrespective of the insured's income, the cost of litigation does not limit access to the justice system. member states, fraudulent claims have exceeded 10 percent of the total claims made against insurance companies. Provided that certain conditions are met, undertakings may appoint a lawyer of their selection, thus preventing the potential fraudster from setting up a fictitious claim with the assistance of a legal practitioner of his\her choosing. undertaking, he/she may rest assured experienced and battle-hardened practitioner, as it is often the case with insurance litigators. The policyholder will receive legal services of excellent quality, thus minimizing the risk of losing in a legal action or reaching an unfair settlement after receiving advice by a firm selected by him/her. At the same time, undertakings bear an ongoing responsibility to cooperate with highly qualified legal practitioners in order to offer the best services available to their clients. as of the time of writing, it is certain that the changes brought by Solvency II will prove to be beneficial not only for the shareholders and investors of insurance undertakings, but for the policyholders as well. The first prudential reporting by insurance and reinsurance undertakings under Solvency II with reference to the first day of application (for undertakings with financial year ending on December 31) is expected sometime during April 2016. |