Does a lack of MoD reform proposals mean ATE market will go untouched?
When it comes to the government’s delay in reforming the personal injury claims system, no news is good news for after the event insurers.
More than three months after the government was set to release a series of proposals on tightening the claims process and reducing costs, ATE insurers are hoping the matter will be quietly dropped.
Under the proposals, outlined in a Ministry of Justice's consultation paper in the summer, there may be no need for ATE insurance in the future.
The pattern of recovering ATE premiums from insurers has been blamed in part for the sky-rocketing costs of claims settlements.
Currently claimant solicitors can recommend that clients take out an ATE policy at the outset of a claim if that client doesn’t have insurance.
If the client wins the case, the premium for the policy can be recovered from the at-fault party’s insurer.
Under the new proposals, insurers would be prevented from selling ATE insurance unless parties are unable to reach a decision on cases where the damages exceed £2,500 or if litigation ensues.
ATE insurers have said they are reliant on those premiums to cover the cost of claims in situations where they have to pay out.
Following the publication of the consultation paper, panic swelled within the ATE market with affected insurers saying it would be reckless on the part of government to just usher in the changes without piloting them first.
It’s been estimated such changes could create a loss in revenue for ATE insurers in the tens of millions.
Because the reform would result in a reduction of cases, premiums for ATE policies would have to significantly increase, insurers have warned.
Others have claimed the move could lead to a collapse of the market with insurers pulling out.
ATE has believed to have been one of the main issues stalling the government from releasing its proposals and ATE insurers would be content to see the issue continue to stonewall progress.
Phil Bellamy, operations manager for DAS Legal Insurance, said: “I definitely think they are struggling to come to a conclusion and I’ve got a feeling the ATE side might be left alone.
“We don’t know why it hasn’t been published yet but it’s obviously a lot more complicated than they thought. We are very pleased if this means the dropping of the ATE proposals."
He adds: “I don’t think we’ll see any changes in 2008 anyway.”
