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As one of our recent blogs showed, there are still cases out there where a receiving party is entitled to seek to recover an ATE insurance premium (see ATE premiums – The Pursuit of Happiness? 12/2/16) but gradually the landscape is changing. In general, policies effected after 1st April 2013 do not give rise to recoverable premiums between the parties and now only limited cases qualify for any sort of recoverable premium.

A recent case on Appeal in the County Court at Chester before HHJ Pearce (Axelrod v University Hospitals of Leicester NHS Trust) is a case where the level of the premium in a clinical negligence matter was in issue. The policy was taken out in July 2014. When reading the details of the case, one perhaps may be forgiven for thinking that there has been some sort of time-warp back to the days of the “costs wars” where extremely technical arguments were raised in order to try and defeat the validity of CFA’s. The Judge however seems to have enjoyed the argument, given that his Judgment runs to 22 pages.

As noted above, whilst ATE policies effected after 1 April 2013 do not generally give rise to a recoverable premium between the parties, there is an exception in clinical negligence matters to be found in Section 58C of the Courts and Legal Services Act 1990 (such being an amended version of Section 58 inserted by the provisions of LASPO 2012) and in the regulations flowing from that provision, being the Recovery of Costs Insurance Premiums in Clinical Negligence Proceedings (No 2) Regulations 2013.

The effect of these provisions is that such part of the insurance premium which covers the risk on costs arising from the obtaining of an expert report on liability and/or causation remains recoverable between the parties.

The relevant policy wording referred to a total premium £6042 and went on to say “£5088 (inclusive of IPT) is recoverable from your opponent while the remainder is to be paid out of your damages”.

The thrust of the paying party’s objections were that there was a failure to state the amount of the recoverable premium, in that the policy documentation should state how much of the premium related to experts reports on liability and/or causation. The policy wording could have been much clearer and various inconsistencies and ambiguities were identified. All of this was easily remediable by simply stating quite clearly and precisely the amount of the premium relating to this aspect.

In great detail, the Judge considered all of the arguments and found that there was no requirement in the Regulations for the wording which the Defendant said should be present. Whilst the wording could undoubtedly have been clearer, he felt that it was sufficiently clear that the sum of £5088 was the figure which related to the recoverable premium under the auspices of the Regulations. He found that there was insufficient evidence before him to challenge the amount of the premium sought and having determined that a premium was recoverable in principle, it followed that the full amount claimed should be allowed.

To be fair, our brief summary here probably does not do full justice to the arguments raised by the paying party, but when looked at from a distance, given that the Regulations do not require the wording which the Defendant sought and where there was a fairly clear indication of the amount which was being sought as a recoverable premium, it is surely hard to think that the Judge has done anything other than come to the correct conclusion.

There seems to be a palpable sense of disquiet that insurance premiums are not realistically and proportionately capable of rigorous challenges upon assessment, particularly given the findings in cases such as Rogers v Merthyr Tydfil CBC [2006] EWCA Civ 1134 and Kris Motor Spares v Fox Williams LLP[2010] EWHC 1008(QB), where the onus is very much on the paying party to advance expert evidence to challenge the premium. Even with the passing away of the vast majority of recoverable premiums, it seems that even those premiums which remain recoverable may still be the subject of vigorous challenge in the future.

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