Judge allows return of only half premium to claimants
Claims Direct claimants can recover £621 of their £1,250 after-the-event (ATE) premium from liability insurers, the High Court's senior costs judge has found.
But the claimants did not rule out fighting the decision at the Court of Appeal, in a bid to recover the full premium from the insurers.
Senior Costs Judge Hurst stuck strictly to the middle ground in his decision on the significant ATE test case.
A test group of 20 Claims Direct claimants had brought the case against seven insurers, including Norwich Union (NU), AXA and Groupama, to recover their £1,250 ATE premiums after successfully making claims against the insurers.
Although their claims were settled, the insurers disputed the level of premium, offering up to £200 to cover the premium instead.
The test cases were brought to the High Court from a number of local courts in an agreement between the insurers and the claimants' solicitors Colman Coyle.
Up to 100,000 claimants' cases have been held up pending the case's outcome.
Judge Hurst released his 112-page judgment on 19 July, setting £621 as a reasonable premium.
He said no ATE premium would be allowed where the liability insurers had admitted liability before the policy was taken out.
Beachcroft Wansbroughs acted for NU.
Litigation partner Andrew Parker said that the firm was pleased to have definitive guidance on the recoverability of Claims Direct's premiums.
"In broad terms, sums paid to underwriters for insurance services are recoverable, but sums paid, even if described as premium, to claims management companies for claims handling services are not," he said.
Colman Coyle joint senior partner Howard Colman said the £621 was more than the claimants would have recovered any other way, but still left them £700 to £1,000 out of pocket, as the full £1,250 premium had already been taken out of their damages.
Colman said the claimants would decide in the next three weeks whether to appeal the decision.
Parker said an appeal would delay settlement of cases, causing more uncertainty.
Colman said this was "absolute rubbish".
"There's no stay on settlement of the cases in the meantime," he said.