The Jackson Report - After The Event Insurance

In his final report, Lord Justice Jackson has recommended a number of dramatic changes to the way the civil litigation system works. If passed, these proposals will have a serious knock-on effect for the victims of accidents, whose access to justice may be ultimately denied.

To help you understand how this may affect the future of clinical negligence claims, we have prepared a series of articles which explore the new legislation in greater detail. This article takes a closer look at the changes being made to After the Event Insurance.

After The Event Insurance – The Present Position

At the moment, the victim of clinical negligence can pursue a claim without having to worry about paying the defendants costs, should the claim be unsuccessful. This protection comes in the form of After the Event Insurance (ATE).

With an ATE insurance policy, victims making a claim can rest assured that in the event the claim is:-

Unsuccessful – their ATE insurance company will pay the defendant's costs;
Successful – they can recover the cost of the premiums for ATE policies (which can be thousands of pounds) from the defendant's insurance company.

ATE insurance therefore has a twofold effect. Firstly, it allows the ordinary man or woman who has wrongly been injured the chance to claim compensation, safe in the knowledge that they will not have to pay excessive sums of money should they lose.

Secondly, ATE insurance ensures that only valid cases are taken on. This is because both lawyers and ATE insurers will lose out if the claim is unsuccessful. Indeed, lawyers who work on a no win, no fee basis only get paid if they win the case, while ATE insurers must bear the brunt of unsuccessful claims. Thus it is not commercially viable to run unmeritorious cases.

After The Event Insurance – Proposed Changes

Under the Jackson reforms, victims would not be able to recover the cost of ATE premiums from the defendant's insurance company – that is, except in clinical negligence claims, where premiums would be partially recoverable from the NHS. In all other personal injury claims (such as a whiplash claim), the cost of the premium would be taken from the injured person's compensation. This in turn would leave the injured person with less money than he/she is entitled to.

However, clinical negligence has been made exempt from this rule, as the Government has recognised the need for ATE insurance where expert reports are required. While this may appear be good news for clinical negligence, in reality, it will have a devastating effect. This is because by abolishing recoverability, the ATE market will no longer be commercially viable. While some are set to increase the price of premiums, many ATE insurers have already said it would be uneconomic to remain in the market just for clinical negligence claims, which make up 1% of current ATE policies. This means clinical negligence victims may no longer have access to ATE insurance. Instead, those making a claim would be exposed to thousands of pounds of personal liability.

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