Posted by Michael Wildy, senior business developer at Legal Futures Associate Allianz Legal Protection
Wildy: the financial standing of insurers should be certain
What are our considerations when looking to buy home or car cover? I would imagine price would certainly be amongst the considerations, but I’m confident that we would each weigh up whether or not our chosen insurer could meet any claims we might bring, and perhaps as importantly, whether they’d provide us with a hassle-free claims process were the worst to happen.
Legal expenses insurance should be no different. When we are faced with making a claim at an already stressful, perhaps even emotional time, we should not have to worry whether the insurer will make us jump through hoops to claim or whether they’ll be able to meet our claim at all. When we need certainty as policyholders, the financial standing of our insurer should also be certain.
Reflecting on Mr Justice Snowden’s ruling in Premier Motorauctions Ltd & Anor v Pricewaterhousecoopers LLP & Anor [2016] EWHC 2610 (Ch), it is apparent that in a “substantial and mature” legal expenses market there will be experienced, well-capitalised insurers, and as is often the case within the insurance industry, new entrants attempting to benefit from this rapidly evolving marketplace.
However, there is “a public interest in permitting ATE (after-the-event) insurance on appropriate terms to provide access to justice,” but the insurer providing the cover must be able to satisfy the jurisdictional test under CPR 25.13.
Effectively the question to consider is; “is there any reason to believe that the insurer will not pay under the policy when called upon to do so?”
As purchasers, or for those professionally advising others to obtain insurance, it is crucial that the chosen insurer can meet its obligations. If there were to be some doubt as that provider’s financial standing then, as Mr Justice Snowden noted, it is likely “the jurisdictional threshold under CPR 25.13 had been crossed”.
This means that the more traditional requirements for the provision of security, i.e. a ‘first class’ bank guarantee or, the provision of cash, may be required where security for costs is ordered. This places not only an additional burden on the original purchaser of the insurance, but also raises the possibility that those arranging the protection in the first place had not ensured that their clients were as fully protected as they perhaps might.
The litigation market is in a constant state of flux, with economic, regulatory and governmental factors all impacting those operating within it. The stability and security of an AA-rated insurer, such as Allianz Insurance Plc, ensures that the challenges addressed by Mr Justice Snowden are satisfied.
The client can then be the focus of attention, ensuring that their needs are met, claims are paid and the learnings always reflected in future product or service design and delivery.
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