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Single After The Event Premiums are fully recoverable

As many of you may know, since the introduction of the MOJ portal for low value RTA claims some motor insurers and their costs draftsmen have been saying that a fixed ATE premium is too expensive if the case has settled in stages 1 or 2 of the new RTA claims process.  Why, well they argued that that there are some staged ATE policies available with premiums that are apparently very reasonable if the case settles before stage 3 of the new motor claims process.

This argument came as a slight surprise for those trying to recover the same staged premiums on cases that had not settled in stages 1 or 2 of the MOJ portal, because these were often challenged by motor insurers for being too expensive.

The problem is that although some staged policies do offer very low premiums if the case concludes in the very early stages of a low value motor claim, the premiums tend to increase quite quickly if the case goes to stage 3 or drops out of the MOJ portal.  Therefore if the case settles early then it can be cheaper for the claimant to arrange a staged ATE policy, but if it doesn’t then it is probably cheaper to have used a fixed premium policy.

This is great if you can predict the future, as you simply pick the right type policy for where you know the case will end.  And it seems motor insurers were becoming quite annoyed by claimants lack of psychic abilities.  But with some figures suggesting that anything up to 40% of cases are dropping out of the new motor claims process with presumably a proportion of those that stay in going on to stage 3, it is in fact impossible to know for certain at the beginning of a claim how long it will take or where it will finish.

The problem however, as with most challenges we have seen over the years, did not go away and because of the amount of cases being issued on this issue in the Liverpool County Court, District Judge Smedley (acting as a Regional Costs Judge) decided to pick a number of them to treat as test cases.  The cases have been heard and DJ Smedley handed down his decision on 24th May.

Unsurprisingly, and very sensibly, DJ Smedley has recognised that defendants are trying to have their cake and to eat it by very often making contradicting arguments in different cases depending on what type of premium was being claimed and where the case has settled.  He said:

"So, the claimant and his solicitor dealing with funding at the outset know that their particular claim may or may not resolve within the Protocol. If they choose a single premium policy and the case settles within the Protocol, it will be said on assessment that they should have chosen a staged, reduced-premium policy.  If they choose such a policy and the case exits the Protocol and goes to trial, it will be said they should have chosen a single premium policy – in each case because the choice made was unreasonable.  I accept Mr. Finn’s evidence on this point.  There is no "right” or "wrong” decision to be made.  Both single premium and staged premium policies are legitimate.”

It was held that:

  1. It is reasonable to arrange an ATE policy at the very beginning of a claim, on the claimant first giving instructions

  2. It is reasonable for the claimant to choose either a single premium or a staged premium policy

Will this see the end of these challenges?  If I could see into the future I’d tell you, but if I could do that.......

Jon Gouldsmith
Head of Legal Support

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