Insurer wins ATE case, but is forced to reduce premiums
FirstAssist has claimed victory in the test case challenge to its Pursuit after-the-event (ATE) policy.
But the insurers who brought the action claimed the court's decision to reduce premiums justified their case.
Norwich Union, AXA, Allianz Cornhill, Ensign, and the NHS Litigation Authority, brought five test cases against FirstAssist over the legality of the recoverability of Pursuit premiums.
Senior Costs Judge Hurst ruled in favour of FirstAssist on eight of the nine challenges to Pursuit, with the company claiming the ruling "leaves a clear path for the future growth of Pursuit".
But Beachcroft Wansbroughs partner Andrew Parker said the court's decision to reduce premiums in four of the five test cases supported the insurers' decision to challenge the policy.
The ruling states that the "premium rating methodology is inherently and seriously flawed, in that it assumes a constant relationship between costs and risk and own costs".
But Master Hurst also ruled that the ATE contract was "not void for uncertainty", and "not unlawful on the grounds of champerty" (a sharing in the proceeds of a lawsuit by an outside party who has promoted the litigation).
FirstAssist technical director Peter Smith said Master Hurst's decision to reduce premiums in the majority of the cases would form the basis of the company's pricing strategy for Pursuit in the future.
"The judgment contains suggested methodology for pricing premium which we have already used in other cases.
"It needs some fine tuning to deal with all the ways in which litigation can develop but broadly that's what we will be using in the future," said Smith.
