By Neil Rose


Proposals to restrict after-the-event (ATE) insurance in personal injury cases could lead to a huge hike in premiums and undermine access to justice, the Ministry of Justice was warned last week.



The Law Society, Association of Personal Injury Lawyers (APIL), Motor Accident Solicitors Society (MASS) and Legal Expenses Insurance Group were among those who said the suggestion that ATE cover should not be taken out until liability is denied could destabilise the market, with the last group saying premiums for remaining cases could go up by 'several hundred percent'.



'We are very concerned that ATE premiums, which are already high, will reach disproportionate levels if these proposals are introduced,' the Law Society said, in its response to the government consultation on case track limits and the claims process in personal injury, which closed last week. 'We also have serious concerns about the impact of taking the vast majority of claims out of the market on the ability of insurers to provide adequate cover for remaining cases.'



APIL's response said the best-case scenario was that premiums for those cases that still need to be insured 'will go up very dramatically indeed'; the worst case was that the ATE market will not survive in the long term, reducing access to justice.



MASS said the government may misunderstand that there is no obligation on solicitors to fund claims this way. 'The market could change dramatically, with solicitors once again requiring their clients to pay for their services and extracting unrecoverable costs [from them],' it said.



However, defence interests backed the proposal. The Association of British Insurers' response said: 'Most insurance markets are about identifying, assessing and mitigating risk, rather than a "many paying for the few" approach. These reforms may enable the ATE insurance market to move towards a more risk-based approach with individual premiums reflecting individual risk levels.'



Lea Brocklebank, president of the Forum of Insurance Lawyers, said it is a 'nonsense' to take out ATE cover before it is known whether there is any risk.



While the overall package of reform has been broadly welcomed on all sides, the Law Society said the new streamlined claims process should only apply to smaller cases worth up to £5,000 - APIL said it should only be for road traffic claims of up to £2,500 - rather than the proposed new fast-track limit of £25,000. The Society said this was because such claims tend to be more straightforward, proportionality is more of an issue for them and are more amenable to fixed costs.



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