Three-quarters of personal injury firms disagree that qualified one-way costs shifting (QOCS) is an alternative to after-the-event insurance, a new survey has found.
The shift to QOCS was a key element of the Jackson reforms to compensate for the abolition of recoverability of ATE premiums.
A poll of more than 500 managing partners conducted by law firm adviser O’Connors found 90% of respondents still advise every PI client on the availability of ATE as part of their standard service.
One in six firms arranges an ATE policy for every client, though the majority (61%) operate a business model where an ATE policy is arranged only if the client specifically requests it or if the firm considers it to be necessary based on the firm’s own assessment of the case. A small minority (5%) never arrange an ATE policy.
When asked if they agreed with the Ministry of Justice view that QOCS is an alternative to ATE insurance, 75% of respondents said they did not, with just 10% agreeing.
Of the clients who decline their law firm’s recommendation to take out an ATE policy, 53% tell their lawyer they are prepared to take the risk and 31% that they feel the premium is too high.
Law firms ranked premium pricing and extent of cover most highly in their choice of ATE insurance provider with ATE insurance expertise, ease of doing business and insurer security close behind.
Most firms (95%) accessed ATE policies direct from an insurer with only 12% ever using an insurance broker. Just over a third (35%) of firms use just one insurer with the majority (59%) using two and a small number (6%) using three or more.
O’Connors LLP partner Nigel Wallis said: ‘These results show the diversity of business models in the market and the lengths to which law firms go to ensure that they act in their client’s best interests.
‘In order to survive, the ATE insurance market has to remain responsive to the needs of firms and their clients and things are likely to remain very fluid as the full impact of the reforms starts to bite.
‘From our own experience of advising many law firms, we see an increasing number of management teams seizing new market opportunities and developing innovative business models that are client centred and, one hopes, financially successful.’
In a speech at the Modern Claims conference in London, Mr Justice Ramsey, who is responsible for implementing the Jackson reforms, said the changes to recoverability had yet to adversely affect the ATE insurance market.
‘There is limited evidence coming through that the ATE market is diminishing,’ he said. ‘The core suppliers are now looking at more realistic premiums than before.’