Posted by David Vine, business development manager at Legal Futures Associate Allianz Legal Protection
LASPO! There I’ve said it. I believe everyone has now crawled out of their Jackson proof bunkers and realised that there life out there and there is a continuing need for personal injury lawyers, but it just isn’t quite the same as it was pre April 2013.
New challenges arise and one of those facing PI lawyers is that of having to now explain what an after-the-event insurance (ATE) policy does, why it is right for the client and how much it is going to cost the client at the end of their legal case.
This has now given rise to the cry, “We have to act in the client’s best interest and give best advice, that means we have to look for the cheapest premium”. If I’ve heard those words tumble from a solicitor’s mouth once, I’ve heard it a thousand times. So is price the main consideration when talking to a client about an ATE policy?
Let’s consider the following:
Certain case types can take years to settle. What if that insurer or cover holder is no longer around when you come to call on the policy? Well, they were the cheapest at the time. Is that best advice?
The cover holder has changed insurer since you took out the policy now there is no relationship and they are playing hardball on the claim. Well, they were cheapest at the time. Is that best advice?
The insurance policy you recommended at the time is nearing its limit of indemnity and the insurer is unable or unwilling to ‘top up’ the policy but they were cheapest at the time. Is that best advice?
I could go on…
Best advice around an ATE insurance policy should consider a number of factors, price being one. Other considerations include:
- Does the insurer have a long term commitment to the ATE market?
- Does the insurer control their own capital and capacity?
- Does the insurer have the financial backing to meet their long-term commitments?
- Is the insurer consistent in their pricing?
- Are those premiums really sustainable?
- Does the old adage ‘If it looks to be too good to be true, it probably is’ apply?
- Is the policy wording clear, transparent and unambiguous?
- Is the policy limit of indemnity really suitable?
- Does that insurer ‘top up’ their own cases?
If you can answer yes to all of those questions and price is competitive but not the cheapest, aren’t you providing best advice?
A friend of mine says “You get what you don’t pay for”. This can be true of the ATE policy you are recommending to your client. Make sure it is fit for purpose and will be there when called upon
Price is certainly a part of the game but surely it is only part of the answer.