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After the Event Insurance & Holding Harmless Policies

Good break? Very hectic bank holiday for the Morris family so I have come back to work for a rest.

There didn't seem to be many people going to work this morning though. I read somewhere that over 25% of people would be taking these middle 3 days off in order to end up with an 11 day holiday. Now here at Box Legal, I am in obviously, and so is Jon Gouldsmith and Kirsten Arnold. Which means it must be my colleague Alan Whicker who is off. I wondered why I hadn't seen him (with apologies to Tommy Cooper).

Enough of the flim flam, let's talk about something you may not have heard of: 'Hold Harmless' ATE Insurance policies.

Strange name, strange concept. Basically, there are unscrupulous After the Event Insurers out there and some greedy (some would also say foolish) solicitors. The solicitors have agreed to take out After the Event Insurance from the insurer but have also agreed never to claim on the policies (they 'hold' the insurer 'harmless' to claims). How can that be I hear you say? Well, the whole point is that the policy is recoverable at the moment from the defendant. The solicitor agrees to buy the policy for a low sum, say £100 but can then recover £350 or more from the defendant. This gives them a tidy 'profit' of £250 per policy and the insurer makes £100. Everyone's a winner? Well, no. What happens if someone loses? Well the solicitor has agreed to pay out all of the costs from the profit they have made on the policies. Which basically means they are acting as insurers themselves - which is illegal by the way and the SRA aren't happy either.

Solicitors acting in this way are putting profit before their client's best interests as they will always be having one eye on the risk of losing. The insurer is basically defrauding the defendant insurance industry as they are issuing a piece of paper and saying it is an insurance policy when in reality it isn't.

We are aware of a number of insurers and firms who act in this way. The problem is, they are clever and there isn't anything in writing. It is all done with nods and winks.

So how do you stop them? Well, there's no need actually. When Jackson comes in, Hold Harmless policies will disappear. Why? Well, the client is going to be paying and will vote with his or her feet if a solicitor tries to sell them an inflated policy. The SRA is looking to come down very hard on firms attempting to make a profit out of ATE insurance at the expense of client's damages. We believe some may try to continue the con but they will be a dying breed.

Bit like people who actually turn up for work I suppose.

Box Legal Limited: After the Event Insurance Providers
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