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  • Irish Broker magazine celebrates 100 Years of Legal Protection Insurance 

In its September edition the Irish Broker published an article on the history, developments and benefits of legal protection insurance. The full article is available here


  • Hungary – Significant changes for legal services market and legal professions

The Act on Attorneys at Law (Act LXXVIII of 2017) will introduce in 2018 two new categories of legal professionals: Legal Counsel and Junior Lawyer. Both will be members of the Bar and can perform regular attorney activities. Presently, only Attorneys are admitted to the Bar and they will keep the sole authority for legal representation in criminal matters. 

Legal Counsels will carry out attorney activities as employee of a legal entity and they can be employed by a maximum of two legal entities (and their affiliated companies). Junior Lawyers are restricted to be employed by one legal entity and they work under the supervision and responsibility of a Legal Counsel. Employers of Legal Counsels and Junior Lawyers can pay the Bar membership and must provide the possibility for them to attend training courses of the Bar. Neither Legal Counsels nor Junior Lawyers need to take out liability insurance as employees but they are not allowed to accept any other attorney proxies. While Legal Counsels and Attorneys have to pass the same exams, Junior Lawyers, like Trainee Attorneys, do not have to take the exam but are registered with the Bar.

The new law will change the legal status of legal protection insurers’ in-house lawyers who will be able to apply for Bar membership and act as legal representatives of the insurer and, as already currently, policy holders. But for legal protection insurers this will also entail some additional costs due to payments of Bar membership fees and paid release from work for attending training courses. More detailed regulation in regard of training requirements and Bar membership fees is expected to be released.

Besides the above, the Act also regulates partnerships of attorneys and introduces the legal community office to facilitate the sharing of infrastructure. Moreover, the new Act introduces some restrictions on attorney fees which, presently, can be freely negotiated. Restrictions concern, in particular, the enforceability of success fees.


  • Italy – New rules intended to change business structure of law firms
  1. A draft law, to be approved before the summer break, will change the ownership structure of law firms. The draft law will allow non-lawyers to invest in a law firm; law firms can be incorporated as partnerships, limited companies or cooperatives. Lawyers will have to hold at least 2/3 of the firm’s capital and 2/3 of the voting rights to guarantee registered lawyers keep control over the law firm. Presently, non-lawyers (exclusively: professionals of registered activities, e.g. accountants, doctors, etc.) and lawyers can only form multi-disciplinary practices.

  2. The same initiative will introduce an obligation for lawyers to present clients a cost estimate prior to providing their services. The quote will have to distinguish between charges, expenses, and remuneration. It will also have to specify the complexity of the services assigned to the lawyer and include all charges from beginning to conclusion. It must be handed over in writing.

  3. On 11 October 2017, rules specifying the obligatory civil liability insurance of lawyers will enter into force (Decree n 238 of 11 October 2016). The rules define the extent of insurance cover, limits, deductibles, etc.

  • The Court of Appeal of Liechtenstein requests EFTA Court to interpret the free choice of lawyer

In a case against a legal protection insurer (Case E-21/16), pending before the Appellate Court of Liechtenstein, the EFTA Court has to decide about two important questions concerning the free choice of lawyer according to Article 201(1)(a) of Directive 2009/138/EC.

The case, procedure, and questions on the free choice of lawyer

The policy conditions of the legal protection insurance in question (DAS Rechtsschutz-Versicherungs AG) established that it was a breach of duty which released the insurance company from its obligations, if the insured mandated an attorney to present his interests without prior consent of the insurer. Consequently, the first question of the Court is whether this agreement breaches the right of the insured to freely choose his lawyer and, accordingly, is invalid.

The second question concerns the relevant point in time when the right of free choice of lawyer is triggered: if the agreement mentioned above is valid, when does the insured need the consent of the insured, only when the lawsuit is formally filed with the court or already at an earlier stage, e.g. when the insured seeks legal advice? (Please see the wording of the questions in English, German, and French at the end of this article.)

Due to the reappointment of one of the judges, a third question was raised regarding the lawful composition of the EFTA Court and consequently the validity of its decision. We omit this question since it has been rebuked and is not relevant for the substance of the decision.

The facts of the case: the Appellant (Pascal Nobile) had a legal protection insurance with the Respondent. The policy conditions established: ‘The insured person shall leave the conduct of the case exclusively to DAS. Without prior consent of DAS, the insured person shall not instruct any attorneys, experts, etc., nor shall he commence proceedings, take any legal steps, or agree to any settlements. The insured person shall not enter into any fee agreement with the instructed attorney.’ Mr. Nobile had a dispute with his landlady and sought legal advice from DAS and, subsequently, DAS negotiated with the landlady on behalf of the insured. Eventually, the landlady did not give in and the Appellant mandated his attorney to bring legal proceedings against the landlady. After being mandated, the attorney requested coverage of the costs of the legal proceedings from DAS. DAS reclined and the attorney brought action against DAS before the Princely Court (Fürstliches Landgericht) of Liechtenstein to establish that DAS is liable to provide cover in respect of the proceedings and that the policy covers the costs of these proceedings. The Princely Court dismissed the action because the contract was compatible with the law of Liechtenstein that implements Article 201(1)(a) of Directive 2009/138/EC, and, subsequently, an appeal was filed with the Princely Court of Appeal.

The procedure: the Oral Hearing is scheduled to be held at the Court on Thursday, 6 July 2017. The hearing is public. The Respondent, the Governments of Liechtenstein, of the Slovak and Czech Republics, the EFTA Surveillance Authority, and the European Commission have submitted written observations.

For more details: A notification about the case was published in the Official Journal of the EU: OJ 2017/C 155/05: http://eur-lex.europa.eu/legal-content/DE/TXT/?uri=OJ:C:2017:155:TOC)

http://www.eftacourt.int/cases/detail/?tx_nvcases_pi1%5Bcase_id%5D=302&cHash=306d398e75f0795d9f8a0c7251d17ae8

Notes:

EFTA States are Iceland, Liechtenstein, Norway, and Switzerland

EEA States are the 28 EU States and 3 of the EFTA States (Iceland, Liechtenstein, Norway)

The aim of the EEA Agreement is to guarantee the free movement of persons, goods, services and capital; to provide equal conditions of competition and to abolish discrimination on grounds of nationality in all 31 EEA States.

The EFTA Court in Luxembourg(http://www.eftacourt.int/the-court/jurisdiction-organisation/introduction) fulfils the judicial function within the EFTA system, interpreting the Agreement on the European Economic Area with regard to the EFTA States party to the Agreement. The judgments of the EFTA Court in direct action cases are final and binding and the parties to the dispute are required to comply with them.

The questions referred in Case E-21/16 regarding the free choice of lawyer:

1.        Does Article 201(1)(a) of Directive 2009/138/EC (Solvency II) preclude a contractual agreement between a legal expenses insurance and an insured person, according to which it is a breach of duty of the insured person, releasing the insurance company from its obligations, if the insured person mandates an attorney to represent his interests, without the consent of the legal expenses insurance, at a point in time when the insured person would be entitled to make a claim according to the legal expenses insurance contract?

2.        In the event that question 1 is answered in the negative: In litigation proceedings, when does an inquiry or proceedings referred to in Article 201(1)(a) of Directive 2009/138/EC start, leading to the free choice of a lawyer? Is the relevant point in time solely based on the formal commencement of court proceedings (the lawsuit being filed with the court), or are prior steps also included, and, if so, which ones?

1.        Schließt Artikel 201 Absatz 1 Buchstabe a der Richtlinie 2009/138/EG des Europäischen Parlaments und des Rates vom 25. November 2009 betreffend die Aufnahme und Ausübung der Versicherungs- und der Rückversicherungstätigkeit (Solvabilität II) eine vertragliche Vereinbarung zwischen einer Rechtsschutzversicherung und einem Versicherten aus, der zufolge eine Pflichtverletzung des Versicherten, die das Versicherungsunternehmen von seinen Verpflichtungen entbindet, vorliegt, wenn der Versicherte zu einem Zeitpunkt, zu dem er gemäß dem Rechtsschutzversicherungsvertrag anspruchsberechtigt wäre, ohne die Zustimmung der Rechtsschutzversicherung einen Anwalt mit der Vertretung seiner Interessen beauftragt?

2.       Falls die Frage 1 verneint wird: Wann beginnt in Rechtsstreitigkeiten ein Gerichts- oder Verwaltungsverfahren im Sinne des Artikels 201 Absatz 1 Buchstabe a der Richtlinie 2009/138/EG, das die freie Wahl eines Rechtsanwalts ermöglicht? Ist der maßgebliche Zeitpunkt ausschließlich der förmliche Beginn des Gerichtsverfahrens (wenn Klage bei Gericht eingelegt wird), oder werden vorherige Schritte ebenfalls berücksichtigt, und wenn ja, welche?

1.        L’article 201, paragraphe 1, point a), de la directive 2009/138/CE du Parlement européen et du conseil du 25 novembre 2009 sur l’accès aux activités de l’assurance et de la réassurance et leur exercice (solvabilité II) s ’oppose-t-il à u n accord contractuel entre une assurance protection juridique et un assuré qui dispose que, lorsque l’assuré est en droit de réclamer une intervention au titre du contrat, le fait qu’il donne mandat à un avocat pour représenter ses intérêts sans l’accord de l’assurance protection juridique constitue un manquement de sa part qui libère la compagnie d’assurance de ses obligations?

2.       En cas de réponse négative à la question 1: dans une procédure contentieuse, à quel moment débute la procédure judiciaire ou administrative visée à l’article 201, paragraphe 1, point a), de la directive 2009/138/CE conduisant au libre choix d’un avocat? Le moment pertinent est-il uniquement fondé sur le début formel de la procédure judiciaire (saisine du tribunal) ou des actions antérieures sont-elles également prises en compte et, dans l’affirmative, lesquelles?

  • French Cour de Cassassion decides that online platform can compare and rate lawyers

On 11 May 2017, the French High Court decided in favor of www.alexia.fr, an online comparative website for lawyers’ services. The Court established that lawyers’ ethical rules do not apply to third parties, such as alexia.fr, and that websites are allowed to set up tools to compare and rate lawyers, provided that the user of the website receives fair, clear and transparent information.

More on alexia.fr:

Alexia.fr is an online platform where users get in contact with lawyers. Users fill in a form and provide some basic information on the legal issue. Subsequently, the user receives quotes from lawyers interested in the case. Users can search the database according to areas of law or geographical proximity. Currently more than 4500 lawyers from all over France are registered on alexia.fr.

To read the full judgment in French
Cour de cassation, civile, Chambre civile 1, 11 mai 2017, 16-13.669: www.legifrance.gouv.fr/affichJuriJudi.do

  • 04/05/2017 - How German consumers perceive justice: ROLAND RECHTSREPORT 2017

For the seventh time, ROLAND Rechtsschutz-Versicherungs-AG asks consumers how they see and whether they trust their legal system. The ROLAND RECHTSREPORT 2017 summarizes the responses and, in addition, it focuses on how German citizens perceive mediation, internal security, and terrorism.  

The main findings of the report are that Germans:

  • Criticize the fact that courts are increasingly overloaded
  • Increasingly accept mediation as a way to resolve disputes
  • Feel less secure in their country and more threatened by terrorism
  • Generally support and accept public measures to fight terrorism

  • 21/04/2015 - EU Consultation on FinTech

As part of the Consumer Financial Services Action Plan https://ec.europa.eu/info/publications/consumer-financial-services-action-plan_en and in immediate follow-up to the EU Conference on FinTech https://ec.europa.eu/info/finance-events-170323-fintech_en the European Commission asks stakeholders for their opinion on how to create a (legal) environment in the EU where innovative financial service solutions can be developed and easily implemented. The public consultation is open until 15 June 2017: http://ec.europa.eu/info/finance-consultations-2017-fintech_en

The EU Commission wants to know which measures and regulatory adaptations can help to make the Single Market for financial services more competitive and better suited for IT based innovations. Until recently FinTech concerned mainly the banking sector but now includes InsurTech. Possibly, although not explicitly mentioned, the consultation can also touch on LegalTech considering that they can provide some of the services legal protection insurers’ clients expect and help automate some insurance segments.


  • 20/03/2017 - The Netherlands: Ministry of Justice published study

Objective of the study: evaluate whether the increase of the small claims limit has had a positive effect on access to law and compare the perceived quality of legal services providers before and after the reform.

Results:

  • Insured people perceive the quality of services provided by legal protection insurers very positively (this applies before and after the reform in 2011)
  • 7% of claimants are defended by legal protection insurers
  • Claimants profit that they do no longer have to hire a lawyer, do not have to pay court fees, and are allowed to defend themselves orally

Key elements of the reform of 2011:

  • Limit for small claims in civil commercial cases raised from €5,000 to €25,000
  • Competences of courts have changed
  • No obligation to legal representation by a lawyer

The study and research method:

  • The quality of services of legal representatives was measured and reviewed by a forum of lawyers, judges and court staff
  • Cases having a value between €5,000 and €25,000 represent 5% of all commercial cases
  • Between 33% and 50% of the sample cases concerned unpaid bills and debts

The full study, Improving access to the Court - Evaluation of the increment of the small claims limit for civil commercial cases at the Dutch Courts in 2011, is available in Dutch only. The executive summary is available in English form page 179 on https://www.rijksoverheid.nl/documenten/rapporten/2017/01/18/lagere-drempels-voor-rechtzoekenden-wodc-cahier-2016-14


  • European Commission organizes conference on 23 March 2017

#FinTechEU – Is EU regulation fit for new financial technologies?

The financial sector is the world largest user of IT products and services. Technology is shaping the market and new policy and regulatory issues are raising. With this conference the EU Commission seeks responses where regulatory change is needed and wants to exchange ideas to identify the best overall approach as well as specific measures for the EU financial services market. As no more seats are available, you can watch the livestream from 8.45 onwards: https://webcast.ec.europa.eu/conference-on-technological-innovation-in-finance-fintech

Program and more information: https://ec.europa.eu/info/finance-events-170323-fintech_en


  • 08/03/2017 - RIAD position

RIAD agrees with EIOPA in identifying legal protection insurance as a line of non-life business where the standard parameters for the calculation of the premium and reserve risks do not reflect the actual risk situation (see EIOPA consultation on the review of specific items in the solvency delegated regulation: https://eiopa.europa.eu/Pages/Consultations/EIOPA-CP-16-008-Discussion-Paper-on-the-Review-of-Specific-Items-in-the-Solvency-II-Delegated-Regulation.aspx)

Therefore, legal protection insurers urge EIOPA and national supervisors to undertake all necessary efforts for the collection and assessment of insurance data in order to recalibrate the calculation done in 2010-2011 and revoke the huge mismatch between the standard formula and the actual risk situation.

At the same time, RIAD stresses the importance to maintain the possibility to develop, authorize, and use undertaking-specific-parameters. Otherwise, those legal protection insurers that have invested substantial human and financial resources to obtain authorization would be at a competitive disadvantage.

Read the RIAD position


  • 08/03/2017 - Greece
  • New Institution for Promoting Alternative Methods of Dispute Resolution (OPEMED) in order to exchange best practices among stakeholders representing the Greek economy and the scientific community
  • Insurance companies agreed to increase their contribution to the Supplementary Social Security Fund for employees in the insurance sector
  • New code of civil procedure in force since 1 January 2016 aiming to reduce length of court proceeding
Read more:

1. The new Code of Civil Procedure

The Code is effective since 01.01.2016, but due to the strike of the lawyers in Greece, started to be applied since September 2016. The new Code aims to accelerate the civil procedure and diminish the time required for a case to be heard before the Court.

If the new Code succeed these initial goals, then it would be a significant reform of the Greek justice system.

2. The Institution for Promoting Alternative Methods of Dispute Resolution (OPEMED)

Twenty significant stakeholders of the Greek economy and the scientific community have joined their forces and founded this Institution in order to promote alternative methods of dispute resolution. OPEMED, through successful cooperations and focusing on innovation and new technologies, attempts to maximise its effectiveness.

OPEMED has already developed many actions and the establishment of alternative methods of dispute resolution will change dramatically the way civil claims are handled in Greece.

3. Agreement between the Hellenic Association of Insurance Companies and the Supplementary Social Security Fund of Employees of Insurance Companies.

Recently, the Hellenic Association of Insurance Companies agreed that the insurance companies will increase their social security contributions to the Supplementary Social Security Fund for their employees. In this way, the financial sustainability of the Fund, as well as the future of the employees in insurance companies are ensured.

This agreement between these two important stakeholders of the Greek insurance market constitutes a milestone for the employees in the insurance sector.

4. The European Law & Governance School

A higher education institution is created by the European Public Law Organization (EPLO) and started operating in Greece, choosing to have its headquarters in Athens. Its goal is to provide students with qualifications, knowledge and skills in the fields of European and International Law and Governance that are recognized across national borders and to promote the European integration.  Honorary President of the European Law & Governance School is Professor Giuliano Amato, Former Prime Minister of Italy.

For further information: http://www.elgs.eu/

The foundation in Greece of such an institution, which results from an international initiative of distinguished representatives of European legal thinking, is considered as an important upgrade of the educational landscape in Greece.

  • 07/03/2017 - France

New rules and projects for the justice sector in France:

  • New rules for mediation in consumer issues have an impact for legal protection insurance since it legally obliges insurers to transmit the contact details of the mediator (Article L616-1 and thereafter of the Consumer Code)
  • Group litigation: since 28 September 2016 a group litigation is available in the health sector. The rules are similar to the procedure for consumer group litigation. 
More information in French:

1. Projets en matière de justice

  • Mise en place de la Médiation à la consommation :

    • Articles L611-1 & suivants et R.612-1 du code de la consommation,
    • Ce nouveau process de règlement amiable des litiges impacte la gestion des dossiers de protection juridique : à la fois pour les assurés consommateurs et pour les assurés professionnels (désormais soumis à une obligation légale, notamment de communication des coordonnées du médiateur: L616-1 du code de la conso ).

  • Développement des actions de groupe :

    • Entrée en vigueur depuis 28 septembre 2016 de l’action de groupe en matière de Santé (sur le même modèle que l’action de groupe en matière de Consommation, en vigueur depuis 2014),
    • Surveillance par les acteurs de la protection juridique des impacts des actions de groupe sur l’activité de PJ.

2. Evolution du secteur des services juridiques

3. Projet des autorités nationales de surveillance

  • Projet de règlement européen sur la protection des données personnelles ( GDPR : General Data Protection Regulation) :

    • https://www.gdpr-expert.eu/#textesofficiels
    • Cette évolution de la réglementation européenne (en vigueur le 25 mai 2018)  concerne toutes les entreprises qui collectent des données personnelles, elle impacte donc également les assurances de PJ.

  • 06/03/2017 - Gibraltar

On 21 November 2016 the Gibraltar Financial Services Commission (GFSC) consulted on how to assure the quality of Solvency II reporting http://www.fsc.gi/download/consultation/QA%20consultation%20paper.pdf

Responses supported the proposed option of engaging a single provider to review the whole insurance market and of the three firms which were shortlisted to present their approach the GFSC selected PricewaterhouseCoopers which has now started the process: http://www.fsc.gi/download/insurance/DearCEOQAonSolvencyIIReturns.pdf


  • 22/02/2017 - Slovakia

On 1 January 2017 Slovakia changed its insurance law: all insurance companies and branch offices of insurance companies are obliged to pay to the government an 8% fee on all collected non-life premiums for contracts which have been concluded after 31 December 2016. In principle this is a hidden tax which has to be included in the price for non-life insurance product and subsequently results in an increase in premiums.


  • 06/02/2017 - Czech Republic

The Ministry of Finance plans to table a draft law for insurance distribution by the end of April which should be passed by the end of the year. Until then some areas of concern, for instance, how intermediaries of supplementary insurance should be regulated or the question of proof for professional qualification, must be resolved. Czech consumer protection law is presently under scrutiny and the government is expected to start negotiating a revised and more coherent set of rules by the end of June 2017. The goal is to clarify consumer rights and merge them in one set of rules while sectorial specific legislation would remain separate. The insurance industry partakes in the consultation process. The Czech government prepares to apply the General Data Protection Regulation by May 2018. According to this EU Regulation, companies, processing large quantities of data, will face high fines for violations of the new rules and they have to establish an independent Data Protection Officer to assure compliance and report data losses or violations.

Read more:

3. Februar 2017: Geplante Gesetzgebung in der Tschechischen Republik

1. Gesetz über Vertrieb im Versicherungswesen

Aktuell befindet sich im Einwandsverfahren ein Entwurf des Gesetzes über Vertrieb im Versicherungswesen, womit die Richtlinie IDD (Insurance Distribution Directive) implementiert wird. Zu den grundsätzlichen Einwandsbereichen gehören z. B. die Frage der rechtlichen Regelung der Kategorie Vermittler von Zusatzversicherungen, die rechtliche Regelung der sog. „Flottenversicherung“, Vergütung von Vermittlern, die aufgrund eines Vertrages mit dem Kunden handeln, Bedingungen für Erlöschen der Tätigkeitsberechtigung des Vermittlers, Verantwortung des Vertretenen und mögliches Schuldzuschreiben von Verwaltungsdelikten des Vermittlers dem Vertretenen, Nachweis der fachlichen Qualifikation, Thema Informationspflichten und Erbringung von Ratschlägen und Empfehlungen. Laut den aktuell vorliegenden Informationen plant das Finanzministerium, den Gesetzesentwurf der Regierung im April 2017 vorzulegen. Bis Ende des Jahres könnte das Gesetz verabschiedet werden.

2. GDPR Richtlinie

Die GDPR Verordnung (General Data Protection Regulation) wurde im April 2016 verabschiedet und tritt erst im Mai 2018 in Kraft. Sie bringt die umfangreichsten Veränderungen im Bereich Datenschutz mit dem Ziel, die Rechte der EU-Bürger gegen gesetzwidrige Verwendung ihrer Daten und Personalangaben zu schützen. Die GDPR führt hohe Geldstrafen für Verstöße gegen die neuen strengeren Regeln ein und schreibt den größeren Datenverarbeitern die Errichtung einer unabhängigen Kontrollfunktion DPO (Data Protection Officer, d.h. Datenschutzbeauftragter) vor. Die Aufgabe der DPO besteht darin, eine ordnungsgemäße Datenverwendung zu überwachen und eventuelle Datenverluste oder gesetzliche Verstöße zu melden.

3. Revision des Verbraucherrechts

Durch das Industrie- und Handelsministerium (IHM) wurde eine Analyse – Revision der Verbraucherpolitik („Revision“) erstellt, auf deren Grundlage die bestehende inkohärente Rechtsregelung im Bereich Verbraucherschutz klarer gefasst und der entsprechende Umfang der Durchsetzung der einschlägigen Rechte sichergestellt wird. In diesem Rahmen sollten ausgewählte Verbraucherschutzregeln in einem Gesetz zusammengefasst werden. Man würde die Regeln sowie die entsprechenden Sanktionen in eine rechtliche Vorschrift inkorporieren, die eine essentielle Rolle im Bereich Verbraucherschutz spielen würde. Die rechtlichen Sonderregelungen würden nachbevor in separaten Vorschriften ihren Platz haben. Die Unterlagen dazu wurden an die Versicherungsgesellschaft zwecks Stellungnahme gesendet. Wird die Revision durch die Regierung verabschiedet, schlägt man vor, das IHM mit der Erstellung des sachlichen Vorhabens eines neuen Verbraucherschutzgesetzes im Zusammenwirkung mit dem Justizminister, dem Finanzminister sowie der Ministerin für Regionalentwicklung zu beauftragen und dieses der Regierung bis zum 30. Juni 2017 zur Verhandlung vorzulegen.