The importance of ATE to commercial LEI customers

Following on from her appearance at the recent Meet the MGA Market event, Carol Parsons, Head of ATE at DAS, talks about the importance of ATE to commercial customers. 

Having spent 6 years on the BTE side of the business, to which a certain amount of allegiance still lies, I appreciate that there are compelling reasons for brokers to advise customers to purchase legal expense insurance as part and parcel of their general insurance portfolio and therefore, in advance of any possible need for the product arising.

Taking legal expenses cover out as part of your customers general insurance portfolio will almost inevitably result in a very modest premium for the customer, essentially where a broker already has a scheme arrangement with the insurer. After the Event insurance can feel comparatively more expensive when compared to scheme premiums, the nature of the risk being very different at the point insurance cover is taken out.

Usually, ATE premiums can be offered on a deferred and contingent basis meaning that the customer is only responsible to pay the premium on conclusion of the case and only in the event that the case is successful. ATE premiums are often staged to ensure that they remain as proportionate as possible with cases settling early attracting a lower premium than those settling at trial.

Whilst recoverability of ATE premiums has all but disappeared over the years, it still remains the case that premiums can be recovered in publication and privacy disputes and for certain disbursements incurred in clinical negligence cases. Standalone BTE policies are also offered, but premiums can be significantly higher than those found on scheme business, and in some respects, simply from a pricing perspective, can be comparable to ATE premiums.

ATE is capable of catering for less run of the mill cases, such as assisting with investment or shareholding disputes, defamation cases, insolvency and large scale commercial disputes.

Indemnity under an ATE policy is tailored to the specific needs of the case as the lawyer will have an informed view on the potential liability to the customer in the event that the case is unsuccessful. Working with the lawyer (who has conduct of the case) to place the insurance at the earliest stage possible and with a realistic view as to potential adverse costs and disbursements, will ultimately help keep the ATE premium to a reasonable and proportionate level to the value of the claim.

Customer choice in terms of which lawyer handles their claim can be of great importance to commercial customers. Working with someone who has either worked with the business before or who has come recommended can alleviate some of the anxiety that comes with litigation. ATE policies place no restriction on a customer’s choice of lawyer.

In ATE, a flexible approach is taken where the lawyer is left to take steps in the proceedings that they consider are reasonable and necessary, enabling litigation to flow unimpeded by the requirements of the insurer. As the lawyers own costs are only paid on a successful conclusion, the interests of the ATE insurer are very firmly aligned with that of the lawyer facilitating this, but with a more ‘hands-off’ approach.

As access to justice becomes more expensive, advising your customers on the availability of legal expenses insurance could mean the difference between the success or failure of that business in the event that they become involved in a legal dispute.

Carol Parsons is Head of ATE at DAS.