An after-the-event insurer which plunged into liquidation last week was a casualty of a bitter 18-month stand-off over clinical negligence costs, the Gazette can reveal.
LAMP Insurance will hear its application for liquidation before the Supreme Court of Gibraltar next week. Policyholders have been urged to consider alternative protection.
The firm was a significant presence in the ATE market for clinical negligence – the Gazette understands it accounted for as much as 20% of the market – and its demise has highlighted wider issues over costs payments from defendant NHS trusts.
LAMP was one of the parties asked to give evidence earlier this year before the Court of Appeal in the cases of West and Demouilpied v Stockport NHS Foundation Trust, which address issues around proportionality of ATE cover in relation to damages secured.
In both cases, so-called block rated premiums were provided by the ATE insurer, which were assessed for proportionality and reasonableness by the courts. A ruling is expected next month, more than three years since provisional assessment was first carried out.
Lawyers say NHS Resolution (NHSR) has sought to stay the assessment of ATE premiums on all cases for more than 18 months, while West and Demouilpied are decided. The courts have heard a number of applications to stay detailed assessments on this basis, with claimant firms often unsuccessful in opposting them. The result has been a major funding hole for the few insurers left in the clinical negligence market – many having exited after the LASPO reforms – culminating in LAMP’s collapse.
One solicitor told the Gazette: ‘The dogmatic approach taken by NHSR and their instructed representatives in disputing ATE premiums in most cases has undoubtedly put undue pressure on the ATE market. The delay in payment has increased considerably over the past few years and will only continue to increase without policy or judicial intervention.’
A spokesperson for NHS Resolution said it considers all claims for recovery of ATE premiums in a consistent way to ensure they are reasonable and proportionate.
She added: ‘We have a duty to ensure that we only pay those sums which are reasonable and proportionate to protect public funds. We have continued to settle claims from LAMP and others where the premiums are reasonable.’