West & Demouilpied – What now for the ATE market?

David Brown

DAS UK Group

Underwriting Manager, ATE

In the recent Court of Appeal decision of West & Demouilpied, the court addressed the issues of reasonableness and proportionality, and the ‘proper’ approach to the assessment of costs – including ATE premiums.

It was a potentially huge moment for the ATE market, so I thought it might be useful to share my thoughts on the outcome, and break it down to its key elements; Demouilpied for Dummies, if you like.

The Background

Significantly, this was the first time an ATE premium had been scrutinised by the higher courts since Rogers v Merthyr Tydfil CBC in 2006. And whilst the decisions in West & Demouilpied focused on ARAG’s underwriting methodology, given the direct involvement of both DAS and LAMP in the Assessor’s hearing prior to the Appeal, this decision was always going to have wider ramifications for the market – and of course for the NHS.

It was anticipated that the decision would provide lower courts with much needed guidance on how to deal with the future assessment of ATE premiums in the post LASPO costs landscape.

The Decision

The bottom line is that ARAG was successful in recovering the ATE premiums associated with these cases in full, and there are a number of useful points to highlight that I think will assist the ATE market at large. The court:

• Agreed that it is unacceptable for lower courts to make ad hoc, case-by-case decisions on cases if the premium has been block-rated;
• Maintained that defendants cannot argue a premium is unreasonable by relying on photocopies of competitor premiums; expert evidence is required;
• Conceded that they lacked the expertise to address whether a premium is reasonable, and to make that decision would put the whole market at risk;
• Made it clear that block rated premiums – commonplace within the ATE market – cannot be reduced by referencing the value of the claim on a case by case basis; and
• Acknowledged that if claimants are truly to be granted access to justice, then the continued existence of an ATE market to support this type of claim is of paramount importance.

The Impact

The impact of the decision remains to be seen, but here is what I think we can expect to see:

• Greater certainty around how courts should approach premiums in the future, since judges in lower courts must have regard to this decision now;
• Quicker resolution of costs and premium on future won cases;
• The ATE industry having greater confidence around underwriting decisions in the future; and
• Insurers who have considerable amounts of won but unpaid premiums now taking steps to encourage settlement of these premiums.

Whichever way you look at it, this will all be good news for access to justice, and a sustainable ATE market.