Claims handling agent ordered to disclose correspondence in a recent decision from the Norwegian Court of Appeal

Authors: Trainee Tarek El-khatib, Associate Benjamin Berg Bentele, Associate Ingvild Nordtveit and Partner Christian Kjellby Nesset. 

1   A Summary

The correspondence between a claims handling agent’s in-house attorney and the insured seller under a policy covering sale and purchase of real estate is not covered by attorney-client privilege, according to a recent decision by the Eidsivating Court of Appeal in Norway (LE-2020-125081). The decision concerns the buyer’s request that the claims handling agent shall disclose certain parts of its correspondence with the seller and policyholder. It is common practice in the insurance industry and a common insurance policy requirement that the insured seller of property submits his comments on an underwriter-form when taking out insurance.

In this case, the buyer and claimant called for the seller’s comments to be submitted as evidence to the court. The claims handling agent acting for the insurer argued that this information was inadmissible and protected by attorney-client privilege. The Court of Appeal found that the correspondence was admissible as evidence. The decision is not yet legally binding as the parties have not decided on further appeal.

2   The Law

According to the Norwegian Dispute Act sec. 21-4, first para., cf. art. 21-5, a party to a dispute is obliged to provide access to evidence. However, this duty is limited by the prohibitions and exemptions governed by Chapter 22 of the Dispute Act, of which one is attorney-client privilege. Section 22-5, first para. of the Dispute Act sets out a prohibition against submitting evidence entrusted to attorneys in the capacity of their position – often referred to as attorney-client privilege. This prohibition includes any testimony from a lawyer, documents or other material that must be considered entrusted to the lawyer in its capacity as legal adviser. 

3   The Case

The District Court characterised the correspondence in question as “…containing factual information of probative value…” between the seller and the claims handling agent in the latter’s review of the insurance claim. The evidence in question was subsequently specified to only be the comments from the insured seller to the claims handling agent. This distinction may imply that correspondence from the agent to the insured may still be protected by attorney-client privilege.

Both the Court’s reasoning and the result may be of interest to insurance companies. The Court reviews how the claim handling agent presents and markets its services on its website. The agent stated that it is an independent claim handling agency and an impartial intermediary between the insurer and the policyholder. Furthermore, the agent will ensure that the policy holder receives an independent and impartial assessment of the claim. These statements made on the agent’s website is taken as evidence by the court that the agent is not acting in the capacity of attorney to the policyholder. To the contrary, the agent was found to be the ordinary claims handler for the insurers in Norway and corresponded in its capacity as the representative of the insurance company. This understanding of the position of the agent led to the conclusion that the correspondence was not covered by attorney-client privilege.

However, the Court made a reservation for the event that there is a dispute between the policyholder and the buyer and the insurance company considers that there is no liability. In such a situation, the relationship between the policyholder and the agent’s in-house attorney can be characterised as privileged.