A number of test cases were selected to decide issues of principle. The main question was: Which of the elements which had been included in the premium of £1,312.50 (inc of IPT) could properly be categorised as a legitimate part of an After the Event insurance premium (within the meaning of s.29 of The Access to Justice Act 1999), and therefore which of those elements was recoverable?
(1) Claimants could only recover the insurance element of any purported ATE Insurance premium, not the cost of other bundled services which were included in the Claims Direct "premium”. (2) The elements which were nevertheless part of the ATE premium and therefore recoverable, were naturally, payments to underwriters and IPT, but also Claims Direct commission, and a modest payment for insurance services, giving a total premium of £621.13. The £621.13 was made up as follows:
- £451.55 payment to underwriters (£311.55 risk bearing element and £140 brokerage and commission)
- £110 Claims Direct Commission
- £30 fee for MLSS for insurance services
- £29.58 IPT
The Court confirmed that commissions were part and parcel of any insurance policy.
Dicta of Master Hurst also suggested (para. 231) that it might be unreasonable to purchase an ATE insurance policy following an admission, except where causation was a live issue (although the issues do not appear to have been fully argued or considered). See however Avril v Boultby
(2008), where it was decided that an ATE insurance premium taken out following an admission of liability is indeed recoverable, since in particular there remained a continuing risk of an adverse costs award e.g. a failure to beat a Part 36 offer.
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