Insurers may attempt to recoup Claims Direct cash

UNDERWRITERS: court rulings set to hit panel firms

Concerns are growing among Claims Direct panel firms that the insurance underwriters involved are trying to reduce liability and recoup money already paid out on unsuccessful claims by taking advantage of 'technicalities' thrown up by the test cases on the issue.

In a letter last week sent to all panel firms on behalf of underwriters at Lloyd's, Litigation Protection - which provided the insurance for Claims Direct - said fees for Medical Legal Support Services (the referrer), Poole & Co vetting and Mobile Doctors were not indemnified under the policies after recent Court of Appeal and senior costs judge rulings.

It said premium recoverability was only relevant to firms that had taken out deficiency in recovery coverage, but only 621 would be paid out.

It added: 'Lloyd's underwriters remind panel solicitors that, to the extent that claims for such disbursements have been indemnified under the Claims Direct policies, Lloyd's underwriters are fully subrogated to every client's right to recovery, and all such rights are reserved.'

Graham Cooper, partner at Norfolk-based panel firm Hawkins, complained that if the situation continued, such policies would be worthless, and panel firms and clients would lose out while insurers gained a windfall, and those responsible got off scot free.

'In return for the vast sums they made, we had expected...

that it would be possible for all of these cases to be disposed of as quickly as possible,' he said.

'We had not expected them to try to [query] their liabilities on technicalities.'

Litigation Protection managing director Brian Raincock admitted that the test cases would work to the detriment of some panel firms.

But he argued: 'This situation is not of anyone's making - it has arisen out of the evolution of the access to justice procedure, and these unfortunate events have conspired to make it difficult for all the parties involved.

No one feels good about any of this.'

Paula Rohan