Short Reads

Correction for fairness applies in full in case of redress by insurers

Correction for fairness applies in full in case of redress by insurers

Correction for fairness applies in full in case of redress by insurers

08.10.2015 NL law

On 10 July 2015, the Dutch Supreme Court ruled that in cases of recourse (regres) by insurers, the correction for fairness (billijkheidscorrectie) applies in exactly the same way as it does for the insured party (Achmea/Menzis). Insurers can thus benefit from ‘subjective circumstances’ particular to the insured party. As a result of this judgment, the Dutch Supreme Court has put a stop to a long-lasting discussion amongst Dutch legal scholars on this issue.

Background

Under Dutch law, a debtor’s obligation to pay damages is decreased by the extent that part of the blame for the damages can be apportioned to the creditor. This does not apply if – in fairness –  the majority of the blame can be attributed to one of the parties or other circumstances involved lead to a different outcome. This is referred to as the correction for fairness.

In 1997, the Dutch Supreme Court ruled that this correction for fairness, in principle, also applies when insurers have a claim on the basis of recourse (Terminus/ZAO). That judgment led to a discussion between Dutch scholars on the scope of such applicability. Some argued that only ‘objective circumstances’ should be taken into account when applying the correction for fairness in cases of recourse by an insurer. Objective circumstances are those circumstances that are equal to all parties.  In their view, subjective circumstances, in other words those that are particular to the victim, should not be allowed to play a part in such cases. Other scholars argued that there is no difference between the circumstances, or that both should be taken into account equally in cases of recourse by insurers.

Case

In this case, an insurer claimed for damages caused to its insured party in an accident between motorized vehicles. In short, a bus driver applied its brakes and a motorbike crashed into the back of the bus. As a result of the accident, the young driver of the motorbike will be bound to a wheelchair for the rest of his life.  The motorbike driver’s insurer paid for all damages and filed a claim for such damages against the bus company’s insurer.

The Court of Appeal had previously ruled that the bus driver was to blame for 40% of the damages and the driver of the motorbike was responsible for the remaining 60%. It then applied a 25% correction for fairness taking into account subjective circumstances on the motorbike driver’s side, including the severity of his injuries and his young age. The bus company’s insurer thus had to pay for 65% of the damages, whilst the motorbike driver’s insurer had to account for the remaining 35%.

Before the Supreme Court, the bus company’s insurer argued that the Court of Appeal had made a mistake by taking into account such subjective circumstances because there is no legal basis for recourse in pitifulness (regres in zieligheid) . It also pointed out that insurers do not include subjective circumstances in their mathematical models used to calculate overall costs and insurance premiums. It argued that if subjective circumstances were to be included in these models, insurance premiums would rise significantly.

Contrary to the view expressed in this case by the advocate general, Mr Spier, the Supreme Court ruled that, in principle, the correction for fairness applies in exactly the same way to insurers after recourse as it applies between the insured parties. It specifically confirmed that this also includes subjective circumstances. The fact that insurers do not take these subjective circumstances into account when they calculate costs and insurance premiums, does not change that principle.

In practice, this judgment implies that insurers will have to assess whether their mathematical models used to calculate costs and insurance premiums include such subjective circumstances. If those circumstances are not included, the models may need to be adjusted accordingly. This could potentially lead to an increase in insurance premiums.

The post Correction for fairness applies in full in case of redress by insurers is a post of Stibbeblog.nl

Team

Related news

16.01.2020 NL law
Wetgever, koester het burgerlijk procesrecht

Articles - Civiele procedures worden waarschijnlijk niet sneller en eenvoudiger met het Conceptwetsvoorstel modernisering en vereenvoudiging bewijsrecht en de Tijdelijke Experimentenwet rechtspleging. De wetsvoorstellen gaan uit van onjuiste veronderstellingen over het verloop van civielrechtelijke procedures en overspannen verwachtingen van de rol van de civiele rechter als alvermogende geschilbeslechter.

Read more

09.01.2020 BE law
Stibbe benoemt nieuwe Counsels en Of Counsel

Inside Stibbe - Brussel, 9 januari 2020 – Het Brusselse kantoor van Stibbe benoemt Delphine Gillet (EU-recht en mededingingsrecht), Jan Proesmans (arbeids- en pensioenrecht) en Sophie Bourgois (geschillenbeslechting) tot Counsel en Elisabeth Baeyens (geschillenbeslechting) tot Of Counsel. De nieuwe benoemingen gaan in vanaf 1 januari 2020.

Read more

15.01.2020 NL law
The Dutch scheme - a summary of the upcoming new restructuring tool

Short Reads - As mentioned in our earlier blog, the Dutch legislator has prepared a bill – the Act on confirmation of private restructuring plans (Wet homologatie onderhands akkoord) – introducing a framework that allows debtors to restructure their debts outside formal insolvency proceedings (the “Dutch Scheme“). We expect this highly-anticipated bill to enter into force by this summer. The Dutch Scheme combines features from the UK Scheme of Arrangement and the US Chapter 11 proceedings. Below, we summarize certain key aspects of the Dutch Scheme.

Read more

09.01.2020 BE law
Stibbe nomme trois Counsels et un Of Counsel

Inside Stibbe - Bruxelles, le 9 janvier 2020 – Le bureau bruxellois de Stibbe a nommé Delphine Gillet (droit européen et de la concurrence), Jan Proesmans (droit social et des pensions) et Sophie Bourgois (droit des litiges) en tant que Counsels. Elisabeth Baeyens (droit des litiges) est, quant à elle, nommée Of Counsel. Les nouvelles nominations ont pris effet le 1er janvier 2020.

Read more

09.01.2020 BE law
Stibbe announces new Counsel and Of Counsel appointments

Inside Stibbe - Brussels, 9 January 2020 – The Brussels office of Stibbe has promoted Delphine Gillet (EU/Competition), Jan Proesmans (Employment, Benefits, and Pensions) and Sophie Bourgois (Dispute Resolution) to Counsel and Elisabeth Baeyens (Dispute Resolution) to Of Counsel. The new appointments have taken effect on 1 January 2020.

Read more

Our website uses functional cookies for the functioning of the website and analytic cookies that enable us to generate aggregated visitor data. We also use other cookies, such as third party tracking cookies - please indicate whether you agree to the use of these other cookies:

Privacy – en cookieverklaring