Well I have been banging on about this for a while now - hate to say I told you so but...
A study by O'Connors LLP who surveyed 500 firms concluded that 9 out of 10 Senior Partners believed that Qualified One Way Costs shifting did not do away with the need for After the Event Insurance. This is our experience too with policy numbers continuing to climb back close to our Pre-Jackson figures.
Why essential? Well, firms are now down on cash and so it is important that they close off risks which could sink them. One such risk is lost disbursements. They may not seem like much on a single case - perhaps £500 or £600 but if you are taking on 50 cases a month, just 10% being abandoned would mean disbursement right-offs of £3k per month - £36k a year. Can you afford that?
When you add written off marketing fees (which you can get back on our policies by the way) of say £400 per case, you could be looking at £60k going down the drain each year on lost disbursements.
That's not to mention of course costs lost on failing to beat Part 36 offers (and having to deal with the complaints from your client for taking their compensation) as well as failed application costs and adverse costs.
Our statistics show that the total average loss per file is £1,200 so a 90% success rate (which, let's face it, is pretty good) would still mean you have to cover an average of £133 of losses across the successful cases. Isn't that your profit down the drain?
'I can't insist on ATE Insurance as my clients will go somewhere else' has been quoted back to us - well where will they go? 90% of firms are now insuring so the odds are the client will only pitch up at a firm who insists on ATE cover anyway. Why do you think 90% of firms are insuring? They have done the maths. They can't afford to shell out £133 per case to cover losses.
Of yes - one final thing. If you have a loan covering disbursements or WIP, have you told the bank that you don't insure the cases? If not, check the small print. They might be concerned that their lending is not backed by ATE cover.
I would suggest you get your calculator out...