Delegated authority arrangements have, to date, been a vital tool in the After the Event (‘ATE’) insurance market. The law firm has the benefit of a fast, efficient and, in some cases, guaranteed method of insuring its cases whereas the insurer has a spread of risk across the book of business and can avoid “adverse selection” as the firm insures all of its cases under the scheme.
This type of facility has been successful in a number of areas of law where there is a portfolio of similar cases, such as professional negligence and clinical negligence. Going forward, post LASPO on 1st April 2013, this type of arrangement is still likely to be available. The current pricing of schemes of this natuyre may however prove prohibitive in the future regime, particularly in relation to those cases where damages are not sufficiently greater than costs. Some existing arrangements are likely to be terminated by the insurer, until a revised structure can be put in place. Other insurers have suggested that there will be a new applications cut-off point in the near future, to avoid an influx of cases which might be logistically impossible to consider prior to the reforms.
It is likely that areas such as Personal Injury and Clinical Negligence will be able to retain methods of delegated authority and online application portals, with new pricing structures (and most likely, cheaper premiums) as long as the ATE insurer feels the new model is a viable prospect. Factors such as a firm’s track record and consideration of new ways the firm can work with their insurer going forward will be vital to the survival of this type of scheme.
There will however be increased focus on proportionality, perhaps with some cases becoming too difficult to insure within a scheme format. We can expect some changes to existing eligibility criteria in respect of the cases which fall “inside” of the scheme and, in addition, there may have to be a degree of adaptability by both the insurers and the law firms, once the real effect of LASPO is seen and understood by the ATE industry.