What is after the event (ATE) insurance?

Are you a lawyer asking what after the event insurance is and how and when is it used, then read on? 

After the event (ATE) insurance is cover purchased after a specific type of event and usually when a legal dispute arises.

At the outset of the claim, it is the solicitor who will purchase an after the event ATE insurance policy on behalf of their claimant if the claimant does not already have a suitable or alternative before the event (BTE) or legal expenses insurance (LEI) cover in place.

Unlike traditional insurance policies, which many people have experience of buying for themselves, such as car or travel insurance directly with either an annual or monthly payment plan, an after the event ATE insurance policy premium is only paid if, and when your claim is successful, and you have received your compensation payment.

There is no legal requirement to have a legal expense or an ATE insurance policy in place to pursue a claim for compensation. However, it is advisable to have one, as without it, a claimant may potentially be exposed to unnecessary financial risk if the claim being pursued is ultimately unsuccessful.

ATE insurance is an arrangement between the claimant who is bringing the claim, and the ATE insurance company which has been arranged by their handling solicitor. The claimants’ solicitor will usually be working on what it is called a conditional fee agreement (CFA) which is more commonly known as a ‘no win no fee’ arrangement.  It is the solicitors’ responsibility to make sure that their claimant is fully aware of the terms of their CFA arrangement and what it covers, together with the after the event ATE insurance to limit their potential financial exposure going forward regarding their claim.

After the event ATE insurance is traditionally associated with personal injury claims associated with incidents such as a road traffic accident (RTAs) or accidents involving slips, trips or falls (EL PL). However, over the many years, the after the event ATE insurance market has developed and branched out into other areas such as medical negligence, industrial disease, housing disrepair (HDR) and data breach (privacy) claims to name but a few. ATE insurance can also offer cover for businesses or individuals involved in disputes of a more commercial nature such as professional negligence, insolvency and bankruptcy, breach of contract, defamation, etc.

A typical ATE insurance policy will usually include and cover the following aspects – the claimants own disbursements incurred, such as medical reports or court fees, and their opponents’ costs and disbursements (otherwise known as adverse costs). The ATE insurance policy premium is also usually fully deferred until the case concludes, meaning nothing is usually paid up-front and the premium is only payable if the claim is successful. If the claim is unsuccessful, then the claimant does not have to pay the ATE policy premium, as it is fully self-insured. Each ATE insurance policy will also carry its own limit of indemnity (LOI) which is the amount that the claimant is usually insured up to for their claim.

It is recommended that an ATE insurance policy be acquired at an early stage of the claims proceedings where the associated risk with the case is deemed as being relatively low. In some circumstance, this may not always be appropriate and sometimes may be more prudent to ATE insurance further down the line once the claims journey or process has already started. Premiums in this regard will traditionally differ, as if insured earlier, will tend to be lower than those offered once a case has been progressed or proceedings have already been issued on.

After the event insurers are guided by the solicitors’ views on the claim’s prospects of success which the market average benchmark is 51%+ and is typically for a claim to be progressed and handled by a solicitor under a CFA.

The actual payment of the after the event insurance policy premium was changed following the introduction of the LASPO or Jackson reforms back in 2013. Pre 2013, the ATE policy premium was able to be recovered from the defendant in full. However, post these reforms and to date, the ATE policy premium is now payable out of the claimants recovered damages which the solicitor will arrange. There are, however, certain circumstances/claim types though, where the ATE policy premium or at least part of it, can still be recovered from the defendant, such as in medical negligence or in privacy cases.

ATE insurance is usually also limited only to the courts and laws of England and Wales. It cannot cover matters in other jurisdictions because of recoverability, regulatory, or licence requirements.

Regardless of the type of legal dispute, there is no doubt that people and businesses have become more aware of their own legal rights and the society in which we live has become a lot more litigious, which will mean that the ATE insurance sector will continue to develop and evolve.

Contact us

If you are a solicitor or law firm and would like to find out further information or to arrange a face-to-face meeting or a video or telephone call to discuss your firms ATE insurance requirements, then please contact our Business Development team via any of the following channels; 0800 524 4235, email info@prosperityinsurance.co.uk or complete the enquiry form on our contact page.

This is not legal advice; it is intended to provide information of general interest about current legal and ATE insurance issues.