I am not sure if you know this but we allow free cancellation of After the Event policies for a number of different reasons - 7 to be precise namely:
- Lack of client instructions
- Poor propects of success
- Low quantum
- Admin error
- BTE Insurance discovered
- MIB Untraced matter (RTA only)
- New Solicitors instructed
We keep a track of these so we can see what causes most policies to fail. If you are a Personal Injury practitioner then I am sure you would not be surprised to discover that, for motor claims, the biggest reason for cancellation is lack of client instructions. You may be surprised however to find out that our figures show this is running at 38.6% i.e. of all the 7 reasons we permit for cancellations, over a third relate to the client failing to continue their claim.
For non-motor claims (slips and trips, accidents at work etc) the figure is only a little better at 29.5%. The biggest reason for non-motor cases is however poor prospects of success which you would expect (46.1% of cancellations). For industrial disease ATE Insurance policies, the biggest reason is also poor prospects (66.6%) whereas no instructions reason is only 17.8%. Note though that these figures only show cancelled policies where no disbursements need to be claimed under the insurance. If these claims were also included then the percentage would be higher.
So what can we learn from this information? Well, it shows us that a lot of work is done for nothing by solicitors who are then left high and dry when it transpires that the client either can't be bothered to continue or solicitors discover the case is not as good as first thought. This is of course the reason for the success fee which Lord Jackson is trying to abolish. One of the arguments for this is that defendants have to pay for failed cases as well as successful ones through the combination of success fee and After the Event Insurance. He says this does not happen anywhere else in any other industry. Looks like he has forgotten about the er, insurance industry where claims by some people put the premiums up for everyone else.
The figures also show that solicitors should perhaps put additional resources into retaining clients, particularly with RTA claims as there are an awful number of claims disappearing due to the client simply giving up. If success fees are abolished or even reduced, there won't be any money for doing this work so it is important that solicitors get their retention rates up and cancellations down.
Box Legal Limited: After the Event Insurance Providers
| 0870 766 9997