Sheriff accuses insurers over caution rules

Companies' requirements "subverting intention of Parliament" over carers

News, 4 January 2008

A sheriff has accused the insurance companies who underwrite bonds of caution of "subverting the plain intention of Parliament" over who should have control of an incapable adult's estate.

Sheriff John Baird was giving his reasons for dispensing with a requirement to find caution for assets of £600,000, to be managed by the wife of a 56 year old man appointed his guardian with welfare and financial powers.

The man, referred to as RL, was bedbound after being the victim of a serious assault in 2004. His "devoted" wife had given up her job to be his full time carer, "and is to be admired for her continuing efforts", said the sheriff.

RL was to receive a substantial award in criminal injuries compensation, and the sheriff considered the size of his estate "too important not to be covered by insurance".

However the two insurance companies issuing relevant policies, the Royal and Sun Alliance (RSA) and the Zurich, each required that the assets be under the join control of RL's wife's solicitors. The solicitors refused, "quite rightly" said the sheriff, as they had no authority to act in this way.

Forced to waive requirement

Sheriff Baird said that he was "forced into the position" of granting the motion to dispense with caution on the ground that RL's wife was unable to find it, despite the result that the large estate was uninsured. He observed that he had previously been forced to make a similar order with an even larger estate.

"I appreciate that insurance is a commercial business, with assessment of risk critical. I wonder however whether the insurers realise that the individuals whom they are unwilling to insure have already been appointed by order of this court which assessed them as suitable before appointment. There is no history of default known to me."

He continued: "It appears to me that the attitude being taken by the insurers is subverting the plain intention of Parliament to empower ordinary members of the public to take control of the affairs of others. Part of the plain intention of this legislation was to get away from the previous practice whereby only professionals, often unknown to the adults or their families, carried out this task."

The sheriff pointed out that the solicitors would in turn be charged much higher premiums by their own insurers if they undertook this role. He concluded: "This is a matter which needs to be addressed. All I can do is add my own voice to the calls for steps to be taken to ensure proper protection for the assets of adults who are incapable of managing their own affairs."

Sheriff Baird's decision can be read at http://www.scotcourts.gov.uk/opinions/RL.html .