What are the origins of ‘After the Event’ insurance and what sort of claims is it intended for?
In 1999, the Access to Justice Act was bought into force. The Act bought about huge change in the legal landscape, and was intended to offer an alternative to the traditional way of funding litigation, which up to that point had solely been Legal Aid.
The Act did three main things:
It introduced the use of ‘Conditional Fee Agreements’, or ‘no win no fee’ agreements in most civil court cases.
It replaced the Legal Aid Board with two new schemes: the Criminal Defence Service for criminal cases, and the Community Legal Service to fund civil and family cases.
The Act created a limit on the amount spent on Legal Aid.
The Act also introduced ‘After the Event’ insurance often shortened to ATE insurance.
Many people often mistakenly think that a ‘No Win No Fee’ agreement means that they do not have to pay any legal fees, regardless of the outcome of the case.
This is incorrect.
The ‘No Win No Fee’ Agreement itself is simply an agreement between a client and their solicitor, which states that if they lose their case, they will not have to pay their Solicitors Legal fees.
However at that time, it was likely that if you lost your case, you would be responsible for the legal costs of the Defendant, which could run into thousands of pounds. The Access to Justice Act allowed client’s to insure against the risk of having to pay the Defendant’s costs, should their case be unsuccessful, with an ATE insurance policy. At that time, the cost of an ATE insurance premium was recoverable from the Defendant as part of the client’s legal costs. And so the market for After the Event Insurance was born.
The market in legal expenses insurance, including Before the Event (‘BTE’) insurance and After the Event (‘ATE’) insurance, has grown substantially in the UK in recent years. The market grew by in 2009, the latest year for which figures are available, with a combined premium income of €654 million (€583 million). This still represents only a small fraction (less than 2%) of the total non-life insurance market, although on average the legal expenses insurance sector has grown faster than the insurance market as a whole.
Types of claims covered
The most common ‘After the Event’ insurance policy being offered is for clients who have been involved in a road traffic accident.
Other ATE claim types:
- Housing Disrepair
- Financial Mis-selling
- Cavity Wall Insulation
- Knotweed Cases
- Dental Negligence
- Cosmetic Claims
- Solar panel Claims
- Tenancy Deposit Claims