Rejected insurance claim - Ombudsman or legal action?

[Brendan Burgess]

A friend of mine has told me that he is suing an insurance company who rejected a fire claim on his home. Damage of around €200k.

He has instructed a firm of solicitors and junior and senior counsel. They seem to be working on a no foal, no fee basis.

I don't know how good or bad his claim is, but I suggested that he go to the Ombudsman instead. He had not even considered it and his solicitors apparently hadn't mentioned it as an option either.

Advantages of the Financial Services Ombudsman

He is more likely to win his case under the FSO

Under the Act...

(4) The Financial Services Ombudsman is... is required to act in an informal manner and according to equity, good conscience and the substantial merits of the complaint without regard to technicality or legal form.

A judge will decided according to the law and not equity or substantial merits, so he has a better chance of winning with the Ombudsman.

There is a fair chance that the complaint will be settled during the mediation stage.

Financial Services Companies do not want to be named and shamed in the FSO's annual report, so they may settle it quicker.

He does not run the very high risk of paying the costs if he loses.

Advantages of the courts system

I'm struggling to think of any advantage in going to court.

If he wins, he will recover his legal costs from the insurance company.

Maybe the threat of expensive legal proceedings will make the insurance company settle?

If he has a weak case, he has a better chance of winning, as a judge will give a lot less time to it than the Ombudsman and so might make a wrong decision. But against that, if his case is weak, he is likely to lose and get an award of costs against him.

People seem to put some value on getting "their day in court".

Disadvantages of the courts system

The frustration of dealing with multiple court appearances and adjournments.

Reliance of the legal profession to make your case for you. Many solicitors are incompetent and seem to enjoy dragging stuff out for years and years.

I would argue against using no foal no fee solicitors

Good solicitors and barristers are very likely to be too busy to take on speculative work. So if someone is doing it on this basis,they will probably not be very motivated or very good. They will end up against a good team used by the insurance company.

I have often seen a "rock solid" case deteriorate dramatically on the steps of the court. The plaintiff comes under huge pressure from his legal team to settle. They know that if they lose,they will get nothing. But if they settle for €50k + costs, they will get paid.

 

[RETIRED2017]

I would say the Ombudsman all the way before a no foal no fee solicitor . are you sure the junior and senior counsel and barrister are on a no foal no fee often you will find out the will require an up front fee to cover advice and expenses before going into court ,

An Ombudsman will take time to go through all of the Information on paper all involved know the results will reflect the Information presented to back up there claim,

 

[renter45]

The insurance company should give a reason why his claim is being declined, if its non disclosure I doubt ombudsman or judge would overturn that.
This isn't the fella that shed blew up and insurance declined the claim as he had tenants in the house and never advised them??

 

[cremeegg]

That is a brilliant post Brendan.

This especially opened my eyes.

I have often seen a "rock solid" case deteriorate dramatically on the steps of the court. The plaintiff comes under huge pressure from his legal team to settle. They know that if they lose,they will get nothing. But if they settle for €50k + costs, they will get paid.

It reminds me of certain employment law advisors who say that they will refund their fees to any client who follows their advice and has an award made against them. When it comes down to it their advice is "settle".

However I dont think many other posters would get away with a comment like this.

Many solicitors are incompetent and seem to enjoy dragging stuff out for years and years.

Substitute "public servants" for "solicitors" and see how it reads.

 

[todo]

Brendan,

Which court are they going to, if its the high court then yes go the FSO route first.

But if they plan to go to a lower court maybe the costs of losing would be allot less, then if they had to fight the FSO in the high court.

 

[DirectDevil]

A few thoughts.

Many insurance policies contain an ouster clause. This clause ousts the jurisdiction of the courts by compelling the contracting parties to submit the dispute to arbitration. Referral to the FSOB does not constitute submission to arbitration in the strict sense envisaged under an insurance contract.

Not every matter is actually suitable for arbitration.

If the policy has for any reason been voided ab initio because of some issue like non-disclosure or misrepresentation there is an argument to say that no contract exists and that no compulsory arbitration clause therefore applies.

Parties to a dispute like this are perfectly free to agree between themselves to submit an issue to arbitration. There are advantages and disadvantages to the process.

The FSOB option has merit and demerit. As pointed out by Brendan no legal costs [on a party and party basis] are incurred by a complaining party. However, for a claim of this size the complainant here will have to incur fees for expert evidence and legal advice anyway in formulating the complaint. To proceed otherwise would be very unwise.

What happens when the FSOB rules on a complaint ? Their finding is legally binding on the parties to the dispute. There is a right of appeal to the High Court by way of a motion. How does that work ? One of the disputing parties will commence the proceedings. Who will be the respondents ? The FSOB will be one party. However, you would also need to join the other party to the proceedings as a notice party. This now turns the matter in to a High Court action between the party appealing the FSOB decision on one side versus the FSOB and the other party on the other side. This exposes the loser to a potential liability for legal costs i.e. their own costs and those of the other parties.

I get the impression that the FSOB findings seem to enjoy a good level of success in appeals. Even if there are small imperfections in any FSOB ruling I suspect that they are unlikely to be overturned unless there is something manifestly wrong. Here is a link to the FSOB's link page of High Court judgements in relation to their cases. https://www.fspo.ie/archives/FSO.asp#highcourtjudgments.

In relation to legal costs in litigation the general rule is that costs follow the event. However, that is not a rigid racing certainty. It is for the trial judge to make the final orders on costs according to how they see fit on the merits something which could include deciding to make no order on costs.

Finally, I hope that the client in this case got a written agreement with the solicitors in relation to fees. Generally, there is a requirement on solicitors to give a client a Section 68 letter which sets outs an estimate of the likely costs involved.

P.S. I do not like no foal no fee arrangements for a host of reasons. I would rather be advised by a competent solicitor and counsel that my prospects of success in a particular matter are poor rather than being given false encouragement on a dodgy speculative adventure which could end up costing me a lot of money if I am saddled with the other side's costs.