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Recoverability; as relevant now as it’s always been

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By David Pipkin – Director, Underwriting Division.

Here we publish one part of our response to the MoJ consultation on the LASPO review Part 2. This extract focuses on the need to preserve the partial recovery of ATE insurance premiums for clinical negligence claims. It seeks to counter the view from certain quarters that perceives this insurance as somehow being less relevant now. As claimant lawyers and their clients well know, the reality is that it definitely is not the case.

One of the questions asked in the Ministry of Justice survey was as follows “Section 46 abolished the recoverability of after the event (ATE) insurance premiums (except in relation to clinical negligence expert reports). Qualified One Way Costs Shifting (QOCS) was introduced in its place in Personal Injury claims. In your experience what have been the impacts of this reform?”

From Temple’s perspective as one of the leading ATE insurance providers, the abolishment of the recoverability of ATE insurance premiums has made little difference to the volume of insurance being purchased by claimants. The introduction of QOCS was of course significant and has reduced the adverse exposure a claimant faces, but nonetheless there is still risk – risks that claimant lawyers consider should be insured.

  • The volume of Personal Injury claims with ATE insurance has increased – despite the fact ATE premiums are no longer recoverable and are now paid from damages.
  • In clinical negligence claims the volume of insured cases remains constant. Without ATE insurance the majority of claimants would not be able to afford the cost of expert reports, the associated costs for medical records, the significant Court fees and Counsel fees (although in the majority of cases Counsel are still prepared to act under a CFA).

There is still a requirement to insure for the failure to beat a Part 36 offer. Our statistics show this is a real and ever-present danger, especially when a medical or other expert changes their mind and Part 36 offers have to be accepted years after the time for acceptance has expired. Adverse costs in such circumstances can wipe out the damages obtained; therefore ATE insurance cover is an absolute requirement for clinical negligence cases.

Access to Justice is being maintained, but only because of the support of ATE insurance. In addition there has been a significant growth in disbursement funding providers as the reduction in law firm’s profits has meant they are no longer able to assist clients in funding disbursements as much as previously.

A funding industry has developed lending directly to the clients by way of Consumer Credit Loan Agreements or by funding to law practices – the cost of which is absorbed by the lawyers. Invariably the disbursement funders require their outlays to be insured with ATE insurance in place. Many funders are regulated by the FCA, but many are not – something that we believe is unsatisfactory and could lead to wrongdoing by unregulated providers.

The legal industry has adapted fairly well to the reforms but I question whether it could survive further change at this time. The uncertainty over fixed costs for clinical negligence work coupled with the possible removal of the partial recoverability of ATE premiums is a big concern. Access to Justice will not be maintained if the reforms go too far. As NHS Resolution themselves confirmed, the effect of the reforms are reducing legal costs. ATE premiums have also significantly reduced and have never been so competitive with new ATE providers entering the market.

Mediation initiatives appear to be working and, if this leads to earlier resolution, this will inevitably reduce legal costs further.

Temple have made the point before in many previous consultations that ATE insurers act as positive gatekeepers who vet insurance risks, and those claims without merit do not proceed.

Whether or not you provided your views to the MoJ, if you’d like to discuss some possible future scenarios with us please email or call 01483 514804.

Alternatively, if you are attending the 2018 APIL annual clinical negligence conference, please do visit our stand to share your views.

David Pipkin

Non-Executive Director
Read articles by David Pipkin

David Pipkin

David was Director of Temple’s Underwriting Division for 14 years during which time he supported Temple’s coverholders with his exceptional knowledge, expert guidance and friendly countenance.

He is now a Non-Executive member of the board supporting the strategic direction of the company and attending key events and meetings with our customers.

David has spent over 40 years as a Legal Executive specialising in personal injury litigation. Initially, he was a claimant litigator pursuing leading industrial accident and disease cases.

As an Associate at Davies Arnold Cooper for over a decade he managed a team of lawyers and acted for defendants in personal injury and general insurance litigation. In this role, he became involved in the early development of the ATE market, assisting the ABI in their involvement in the Court of Appeal test cases such as Callery v Gray.

As the London representative for FOIL he was involved in the liability insurers’ approach to ATE and worked with the government and judiciary in several key consultations. He was a member of the CILEX National Council for over 15 years and was CILEX President in 1995/6.


Read articles by David Pipkin