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PLEASE READ THE FOLLOWING BEFORE COMPLETING AN APPLICATION FORM.
Answering these questions may prevent you from spending unnecessary time preparing a proposal, and will ensure that your approach to sourcing ATE for your client is done in the most efficient way possible.
Is the case really economically viable?
Is the estimated recovery at least double the costs to a fully contested trial?
Does the case have sufficient prospects of “success”?
Is there 60% or above prospects of achieving a sufficient recovery to pay the premium, discharge legal costs incurred and ensure the claimant(s) receive a worthwhile net outcome?
What do we mean?
The costs involved in bringing even a relatively low value claim to trial can be quite high, leading to disproportionate costs to damages ratio. As a consequence of the abolition of recoverable ATE insurance premiums, following the implementation of the Legal Aid, Sentencing & Punishment of Offenders Act 2012 (LASPO) it is now virtually impossible to arrange insurance for cases where the costs outweigh the recovery (with the exception areas where recoverability remains, like insolvency proceedings).
Where the cost to damages ratio for a case is less than 1:2, it is best to contact our broking team with the details of the costs to damages ratio before taking the time to prepare the application package. We can quickly advise on whether such an application will be viable under current market conditions.
Why do Insurers assume the case will go to trial and not consider the probability of the case settling early?
It is a standard ATE underwriting approach to evaluate the economics of a case based on the costs of a fully-contested trial. While a high probability of settlement will be considered by the underwriter, Insurers will conduct calculations on a full trial basis as they cannot fully rely on a settlement, and will not risk a case being discontinued because it has become uneconomic when it fails to settle.
Prospects of Success
What do we mean?
When assessing a case for ATE insurance, in addition to the underlying merits, the underwriters will evaluate the case based on the following criteria:
- Prospects on establishing liability,
- Prospects of settlement,
- Prospects of achieving any award of damages,
- Prospects of obtaining a recovery, and
- Prospects of achieving an amount of damages (or greater) by way of award or recovery
In post-LASPO market, insurers need to know that a case is not only likely to succeed on liability but that it is likely to produce a sufficient recovery. The single most important criteria for ATE is the prospect of recovering damages sufficient to pay the premium, discharge the legal costs incurred and ensure the claimant receives a worthwhile sum in compensation in remainder.
In light of this, please provide as much as possible on the legal representatives views on:
- Prospects of success on liability
- What would constitute an acceptable offer of settlement and the prospects of receiving that
- Expected value of the claim (or range) if it were to proceed to trial
- Prospects of enforcing an award for the expected value of the same
Is it essential for the prospects of success to be given as a percentage?
The prospects of success can be difficult to reduce to a probability or percentage value and this is understood by everyone in the ATE industry. However, insurers rely on numbers, thus a view expressed as a percentage is extremely helpful for brokers when presenting the case.
The market threshold is 60% or above. Anything less would need to be accompanied by wider commercial incentives - in isolation it would be perceived too risky.
To discuss any of the above in more detail please contact one of our brokers on 0845 257 6058 or email@example.com.
Please note: Application Fees - Company Policy. Please be aware that, as of 1st January 2013, TheJudge changed its policy in respect of the application fees payable when submitting a proposal for ATE insurance and/or litigation funding. Please click here for details of our application fee policy.