Now the dust has settled after the implementation of Section 2 of the Recoverability of Costs Insurance Premiums in Clinical Negligence Proceedings Regulations 2013 the first satellite litigation is starting to wind its way, slowly through the courts.
Just to recap, following the Jackson reforms in April 2013 part of an ATE Insurance policy for a Clinical Negligence claim obtained by a Claimant can still be recovered from the losing the party. The intention was to enable Claimant’s to protect themselves against the initial policy cost of experts’ reports on causation and liability and so this part of the policy premium was to be recoverable from the defendant.
But under this new regime the cost of After The Event Insurance remained significantly higher than for other PI claims, such as motor accident claims and it was only a matter of time before these policy premiums were challenged by Defendants.
In Ms Emily Nokes -v- Heart of England Foundation NHS Trust (2015) Master Leonard had to consider whether or not the policy was compliant with the Regulations (yes it was and in two parts, the Defendant recoverable part and the client non-recoverable part) and also to determine whether or not the premium applied to the recoverable element was reasonable and proportionate.
The premium specifically allocated to cover the cost of these reports was £5,680 plus Insurance Premium Tax for an indemnity of £10,000. In addition it was "self-insuring” ie; there was no premium to pay if there was a claim on the policy.
The Defendant challenged the amount of the premium, but did so with no real evidence to dispute the level of premium that was applied. All rather surprising when the decision to challenge the premium must have come from an insurer backed Defendant? ATE Insurance policy premiums have of course been challenged before by the big insurers but have any of them come forward to enter the After The Event Insurance market and offer competitively priced ATE Insurance policies? Of course they have not as the reality is perhaps that they could not offer cover any cheaper than those in the ATE Insurance market already.
In this instance, Master Leonard found the policy was fully compliant with the statutory requirements and the premium of £5,680+IPT was reasonable and proportionate and therefore recoverable in full. This was unaffected by the fact that it covered its own premium (it was "self-insuring”).
This is an important benchmark decision on the level of premiums for this type of cover and Claimants can now pursue these actions with the comfort that if the claim is successful then they should be able to recover a substantial policy premium if they obtain an early medical report on liability and/or causation.
Box Legal offers a premium well below this figure with a similar indemnity of £10,000.
However, under Section 2.2 of the above regulations, you cannot recover a premium if you never obtain a report on liability/causation. You may, perhaps, not need a report because the issues are clear, or the defendant admits liability/causation. This may leave you in difficulties if you have incurred a substantial premium to cover this risk. Fortunately the ClaimSafe policy brokered by Box Legal permits you to cancel this "recoverable” element of the policy in this situation, so your client will not be liable for this sum.