Legal expense providers Arag and ATE have teamed up in an attempt to take on the contract dispute after-the-event market.

The tie-up paves the way for Arag to lead the market in offering unique legal expenses cover, said underwriting manager David Haynes.

ATE came on board with a panel of 50 solicitors and Haynes said the goal was to add another 25 companies interested in purchasing the contractual dispute product.

ATE has plans to write £250,000 of business within the next 18 months.

Haynes said: “We have put very few of our eggs in the personal injury market basket. We still do it but not in any great volume. The market is getting saturated.”

Contract after-the-event insurance was still quite new and Arag saw opportunities to expand within the market after many of ATE’s existing clients began asking for the product.

“We definitely want to lead the market.”

Arag and ATE’s partner-ship comes amid looming reforms to the personal injury claim system.

Haynes said under the new system, those companies which failed to expand after-the-event product from just personal injury would find the volume of cases dropping significantly.

“They are going to have to change their business model very quickly. Personal injury has been around so long and we believe there is an inherent risk as you don’t notice losses until years later. Everyone has jumped on the bandwagon thinking there are no risks.”

Although some changes proposed under the Claims Reform Bill have been welcomed by the industry, legal expenses insurers have warned that after-the-event premiums could rise by as much as 12 times leading the market to collapse.

The Ministry of Justice published its consultation paper in April. It is expected to come into effect next year.