The new after-the-event (ATE) insurance market is taking shape after Temple Legal Protection and Burford Capital became the latest to unveil details of their revised product ranges.
Both have also reported receiving as many applications for ATE in the first quarter of this year as they did in the whole of last as firms scramble to sign clients up before the 1 April reforms.
Temple’s personal injury (PI), industrial disease and clinical negligence products will still have deferred, contingent and self-insured premiums. Premiums start at £35 for cases that settle in the RTA portal, and £65 for other PI and industrial disease cases worth less than £100,000 that settle pre-issue. Post-issue fast-track premiums start at £160 for RTA claims.
In clinical negligence, there is a £5,680 premium, for a £10,000 limit of indemnity, for expert report fees. The premium to cover disbursements and opponent’s costs is £750 (where damages are up to £25,000) or £2,400 (where damages are £25,000 to £100,000).
For cases worth more than £100,000, Temple will provide a bespoke quote.
Director of underwriting David Pipkin revealed that Temple is also piloting premiums as a percentage of damages, meaning that the cost will be lower to the client if they are awarded less than expected. In clinical negligence, the company will in time look to reward firms that have low claims frequencies with lower premiums.
He added that commercial ATE will be largely unaffected by the changes as users had in any case struggled to understand that they didn’t have to pay the premium, he said.
Initially a third-party funder, Burford now offers ATE following the acquisition last year of FirstAssist. New UK chief executive Andrew Langhoff – who is also the company’s global chief operating officer – said Burford’s research showed that “solicitors are eager to explore taking greater financial risk/reward through damages-based agreements, which should fit quite well with funding.
“And despite the fact that ATE premiums will no longer be recoverable, we believe that new pricing models will allow this critical component of litigation finance to continue and thrive.”
He said a package of all three of our products – the funding of lawyers’ fees, the funding of disbursements (including counsel fees) and the provision of ATE insurance – would allow a claimant to effectively transfer all of its litigation risk to Burford.
“Where the merits of a case are generally clear – such as in a cartel matter – such an approach may have significant appeal,” he said.
Putting together disbursement funding with ATE insurance “ideally supports a case where the solicitor has chosen to take on a conditional fee agreement or damages-based agreement”, while Burford will continue to provide standalone ATE on a deferred and conditional basis.
Mr Langhoff continued: “In the post-Jackson era we have three different pricing models – our traditional [Pursuit] pricing, monthly accrual pricing, or the provision of funding to finance an upfront premium.
“In addition to arrangements with claimants, we are also able to structure our products to develop packages for law firms – most immediately to allow them to finance their own WIP or disbursements. We have found a keen interest for such arrangements.”
Mr Pipkin said the reforms would mean “significantly less profit” for ATE insurers, although the impact will not be felt for a couple of years because of the run-off of pre-1 April work. It will also depend on the take-up of new ATE products. “Research indicates that people will buy [ATE],” he said. “They still want to transfer the risk.”