Now that the dust has settled on Ken Clarke's announcement, let's do some crystal ball gazing to see what is going to happen to After the Event Insurance post Jackson implementation.
First, let's look at the (likely) rules:
- After the Event Insurance won't we recoverable from the defendant
- Adverse costs won't generally be payable except:
- Where the claimant has acted unreasonably (we shall ignore fraud as ATE Insurance wouldn't cover this anyway)
- Where the claimant is wealthy
- Where the Defendant has made a Part 36 offer and the client fails to beat it.
- The client will get an uplift of 10% on their general damages to pay for their success fee and any ATE insurance policy.
- There may be a fixed sum payable if a case is lost to put off 'silly' claims - the amount being banded around here is £1,000.
So, why would anyone need an After the Event Insurance policy (I am being facetious)?
Well, here goes:
- To cover the claimant's own disbursements which can run into 5 figures
- To cover the risk of the claimant being found to have been 'unreasonable' which will be decided at the end of the case by the Judge.
- To cover the risk of the claimant being found to be sufficiently wealthy (no definition yet) to pay costs
- To cover adverse costs should the claimant fail to beat a Part 36 offer which can be made at any time (we think defendants will make it very early)
- To cover fixed adverse costs should the claimant lose (£1,000?)
So, basically, pretty much the same as the current regime save for some part of adverse costs which may be restricted but may not be - and the claimant won't know which it is until the end of the case anyway.
It appears that the defendant insurance industry has managed to pull the rabbit out of the hat. They have left the claimant facing almost the same risks as before but have made them pay for the premium. Brilliant.
Now the good news is that premiums will have to fall as adverse costs are definitely going to be less. Also, those 'hold harmless' cowboy insurers won't be able to operate any more and inefficient insurers will disappear so only proper insurers will remain operating on a level playing field.
I know this sounds strange but I am actually looking forward to it.
Box Legal Limited: After the Event Insurance Providers
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