Abstract

Article

Distribution of Indemnity Funds

If the estimated combined quantum of the claims arising from a covered occurrence significantly exceeds the available cover, as the result of legislation in some jurisdictions an insurer may seek a direction that it call for notification of claims from those claiming to have suffered loss.

The procedure may  be effected by placing cautionary advertisements in suitable publications calling for claims to be notified within a specified period from the publication, and. upon its expiry, the class of claimants who might be entitled to share in the insurance proceeds will be closed, permitting the insurer to distribute the insurance monies pro rata to those who have established their claims.

To facilitate that objective, the Court may direct parties who have already communicated with the insurer to lodge claims within a specified time and to provide it with sufficient information to assess them. Once it has assessed the claims, it will notify the claimants of the pro rata allocation they will receive and, if any third party objects to it, they may do so by seeking further directions from the Court within a specified time of notification.

To assess the validity and quantum of claims, it may be appropriate for the Court  to direct a process for assessing them. Though some already notified may involve subrogated recovery by insurers so that a reasonable assessment is likely to have been made already, there may be uninsured losses which will not yet have received critical assessment.

It may be pragmatic to add to the direction that upon the insurer’s receipt of the claims notified pursuant to the above steps, including full details and supporting documents, its loss adjuster and legal counsel  undertake a desktop assessment of each valid claim, assessing the insured’s legal liability for each and the reasonableness of its quantum. QBE Insurance (Australia) Limited v Gas Unlimited Limited [2021] NZHC 299