Choosing the right After The Event (ATE) insurance provider is one of the most important decisions a law firm will make. Personal injury and clinical negligence is often life changing for those involved.
The impact is felt by many, but none more so than the claimant themselves. So, solicitors need to ensure they’re partnering with providers who will protect their clients throughout their legal action – no matter how long it takes.
Only c.50% of cases have settled within three years, with some clinical negligence cases taking 10 to 15 years.
Even if a law firm changed ATE providers every year, they’d still be required to work with old providers for several years. So, when deciding who to work with, it’s important to consider more than just “price”. It’s no good having a cheap product if the provider is insolvent when a claim is made. It’ll also be tricky justifying to the client (and maybe the regulator) why the selected product isn’t suitable.
So, what questions should law firms be asking potential ATE providers? Due diligence is essential for law firms, so we’ve put together a list of questions to help:
1) “How can you demonstrate your financial stability and commitment to the market, so I know you’ll be there for our clients in the future?”
We’re currently seeing the impact of inflation and the pressure it’s putting on insurers. But solicitors need to be confident that their chosen provider will be there when they’re needed. Financial health checks are one thing, but also ask about how much business they’ve written in the last 3 years, and their future plans in your sector of business.
2) “Who’s responsible for making claim payments and what is the adequacy of their solvency margin?”
The provider a law firm chooses to partner with isn’t always the business responsible for paying claims. That’s because not all ATE providers are insurers. So, it’s important to get a clear understanding of who’s responsible and establish whether they have a suitable solvency ratio to meet their obligations, which can sometimes be three or four years after the policy was taken out.
3) “What level of indemnity will the ATE policy provide and can additional indemnity be provided if required?”
Some providers offer a top-up facility if the initial ATE cover has reached its indemnity limit. But some don’t. It’s important to understand this, otherwise you could be scrambling to find another ATE provider when a case is about to go to trial.
4) “Can you help with our law firm’s disbursement spend?”
This could be providing funds or working seamlessly alongside a medical agency to provide a solution. Like many businesses in this financial climate, law firms are feeling the pressure. So, a suitable solution which assists with cashflow could set an ATE provider apart. Consider all options carefully without compromising on the ATE product for the sake of additional funding.
5) “Does the ATE facility work well alongside our operational needs and does it provide a digital solution?”
There should be clear operating instructions that outline how you’ll work together. This should cover what permissions the provider is prepared to give to place cases on cover, provide case updates, make claims and any referral triggers. Solutions should be simple.
6) “How can you demonstrate your expertise in the market, alongside your credentials and values?”
You’ll be recommending the ATE products to your client, so you need to have trust and confidence that your ATE provider is equal to your own standards.
7) “What management information can you provide?”
It’s important to understand what’s expected in terms of case selection and case outcomes, but also for ATE providers to share data with you. Having key performance indicators agreed in advance by both parties will provide a positive structure for future account reviews and allow for early intervention and resolution should challenges arise.
8) “Will you help provide solutions when/if problems arise?”
This is the true acid test of how adaptable an ATE provider is and whether they’re truly working in partnership with you. It always helps to have a dedicated account handler for your firm and to meet with them before any contract is signed. Ask for examples of how the partnership will work in practice and how they approach solving difficult problems.
We’re seeing that solicitors are becoming more sophisticated buyers of insurance. This is excellent news for clients who can be confident their solicitor and ATE provider are working together to develop better products to suit their needs. And for solicitors, it’s clear the future will see more change in the legal environment which will affect the ATE market. So, it’s more important than ever to have a provider who will always be behind you for what’s ahead.
