ATE Insurance – underwriting at the front end


Steve Rowley

Steve Rowley, Business Development Manager, Allianz Legal Protection

There’s a famous saying which I like and which is relevant on many levels, whether it be sport, business or even family life:

‘If you fail to prepare then prepare to fail.’

This got me thinking about the current ATE market and the fact that some law firms are now finding themselves chasing the market for the cheapest ATE premium.

Clinical negligence and serious injury ATE insurance is classed as long tail liability insurance. What this means is that the policy (and the premium) being quoted at the point of inception, needs to be fit for purpose for many years. The idea is to protect the claimant and law firm for however long it takes to reach a settlement, win or lose.

Of the many meetings I’ve had with law firms, the one underlying issue that comes up time and time again is the hard line being taken by some ATE providers. This becomes evident at the point of claim, where law firms are being unfairly challenged on costs incurred, or they are being turned away when any form of top up indemnity is requested, often at a crucial time in the case.

At Allianz Legal Protection (ALP), we call this ‘back end underwriting’; whereby certain ATE companies wrote business for volume and market share in 2013 but  now the inadequacy of their pricing is hurting them and law firms and clients.

This failure to plan and properly understand claims development cycles leads to pressure to try and reduce claims expenditure. This can be through claims handling tactics, the withdrawal of certain delegated authority permissions or at worst ceasing to trade.

Thankfully at ALP, through strong underwriting disciplines we have been able to continually deliver on our promise, and haven’t lost any law firm partners off the back of the LASPO birds coming home to roost (although we’ve picked up many new partners because of unhappy law firms).

Our underwriting excellence provides our business partners and their clients with long term confidence in our ability to meet the claims cost needs as and when a claim arises, no matter how long after the policy is first incepted. This is all underpinned by having the capital strength of one of the World’s largest insurers to ensure our promise can be met, even in the most testing of underwriting years.

Through our portfolio performance management programme, we deliver our firms with meaningful claims experience data and share with them trends in disbursement costs. This can help them to drive efficiency and cost savings through their own claims handling protocols.

This approach means we have many long standing, successful law firm partnerships who place high value on the insight we’re able to share, and which is far more important than just the price of the ATE.

For law firms reviewing their ATE arrangements, it’s important to take a view on long term gain rather than suffer short term pain.

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