Insurance regulatory updates

Hong Kong

Insurance Authority consults on the proposed Insurance (Special Purpose Business) Rules

Insurance Authority extends the validity of temporary facilitative measures to 31 December 2020

Circular providing Interpretation Notes relating to the Guideline on Cooling-off Period (GL29)

Singapore

MAS Enhances Access to Liquidity Facilities to Strengthen Banking Sector Resilience

Malaysia

Anti-Money Laundering, Countering Financing of Terrorism and Targeted Financial Sanctions (AML/CFT and TFS) for Designated Non-Financial Businesses and Professions (DNFBPs) & Non-Bank Financial Institutions (NBFIs) – FAQs and Guidances

Anti-Money Laundering, Countering Financing of Terrorism and Targeted Financial Sanctions (AML/CFT and TFS) for Financial Institutions – Frequently Asked Questions (FAQs) and Guidances

China

CBIRC Issues the Three-Year Action Plan for Improving Corporate Governance of the Banking and Insurance Sectors (2020-2022)

CBIRC Holds Meeting of the Solvency Supervisory Committee


Insurance cases

Asset co Plc v Grant Thornton UK LLP [2020] EWCA Civ 1151 – 28 August 2020 – English Court of Appeal

Audit negligence – loss of a chance – SAAMCO principle – Grant Thornton appealed against an order awarding £22.36 million in respect of its admittedly negligent unqualified audit of a fraudulently run company. The company had incurred losses in funding its loss-making subsidiaries. It was accepted that such losses would not have been incurred had the audit been correct. Grant Thornton argued that the losses did not fall within the scope of its duty and that its negligence was not the legal cause of the losses.

Held:

SAAMCO principle – that the principle in South Australia Asset Management Corp v York Montague Ltd [1996] UKHL 10 (20 June 1996) (SAAMCO) applied – that there was a difference between a duty to provide information to enable someone to decide on a course of action and a duty to advise someone as to what course of action to take. The effect of the principle was to distinguish a negligent audit that was merely the occasion for the loss from a negligent audit that gave rise to a liability to make good the loss. It was capable of being effectively applied to most types of loss that could be claimed in respect of a negligent audit.   In this case, Grant Thornton’sfailure to detect the dishonest concealment had deprived the respondent of the opportunity to call the senior management to account and to ensure that errors in management were corrected. That was a principal purpose of the audit. By failing to detect that the accounts were deliberately prepared by management on a wholly false basis, presenting an insolvent company and group as successful and profitable, the appellant had deprived the respondent of the very information that would have caused it to cease its loss-making activities and to take the steps necessary to regain its solvency. The appellant’s negligence was not therefore merely the occasion for the losses which the respondent continued to incur, but was a substantial cause of those losses.

Loss of a chance: The judge assessed the likelihood of the plaintiff not incurring the losses – in the absence of the negligence – was 90%. However, the judge treated this as a certainty i.e. did not discount the damages by 10%. There was no basis to interfere with the judge’s finding on this point. In the context of judicial decision-making, 90% did amount to a certainty.

Insurance news

Hong Kong extends non-face-to-face distribution until end-2020

Berkley Insurance Asia appoints Hong Kong CEO

QBE strives for stability after Regan’s sudden departure

Aon spearheads coalition to help Singapore economy’s recovery

UK: Insurers need to prepare for psychological effects in COVID-19 claims

Chubb boosts business package insurance for Hong Kong SMEs

Zurich announces significant changes amid global digital roll-out

CBIRC steps up motor market reforms, supervision