Posted by Lesley Attu, product development manager at ARAG
Last December the government announced its intention to apply sections 44 and 46 of the Legal Aid, Punishment and Sentencing of Offenders Act 2013 (LASPO) – which prevent winning claimants recovering their lawyer’s success fees and after-the-event (ATE) insurance premiums from defendants – to mesothelioma cases with effect from July 2014.
This position was confirmed in March this year; however, LASPO also provided that sections 44 and 46 could not be brought into effect until ministers had carried out a review.
A justice select committee report released at the beginning of this month revealed starkly opposing views on this matter. While representatives of mesothelioma victims, claimant lawyers and trades unions argued that special characteristics of mesothelioma claims made it necessary to maintain their exemption from sections 44 and 46, the government, defendant lawyers and insurers considered that it was not justified.
The select committee noted that debate in both Houses on LASPO showed that the package of reforms was controversial, and especially so in relation to mesothelioma cases.
The government’s cost-benefit analysis assumed that ATE policies would no longer operate and suggested that there would be a net overall benefit to claimants whose 10% increase in compensation would outweigh the cost of success fees and ATE premiums. The select committee described this as “an exercise in premature conjecture”, since insufficient time had elapsed to assess what the likely effect of the proposed reforms will be.
The analysis was not accepted by the select committee as being reliable and it was recommended that the government commission an independent review of mesothelioma claims outcomes.
The process of the government’s review was found to be poorly timed and “maladroit” as it had been “shoehorned” into a wider consultation on the claims process. The committee expressed concern that by entering into a ‘heads of agreement’ with the Association of British Insurers, representing the interests of defendant insurers, the government had not been transparent and open and the agreement had shaped government policy.
The committee’s overall conclusion was that the government review had not been approached in an even-handed way and it recommend that a further review by means of a consultation framed unambiguously and centrally on the question of whether the LASPO provisions should be brought into effect for mesothelioma, and only when sufficient time has elapsed for the effects of the LASPO changes in non-mesothelioma cases to have been assessed.
The committee also recommended that the government commission research to evaluate trends in the ATE insurance market in relation to personal injury claims since the provisions of LASPO came into force.
So, with regard to ATE insurance for mesothelioma cases, it’s business as usual, with premiums remaining recoverable for the foreseeable future.
We will be announcing some interim changes to ATE premium rates shortly, but it could be some considerable time before post-LASPO models apply to these cases, compressing the risk and causing rates to tumble significantly.