A Manchester firm of personal injury lawyers has become the first in the UK to issue proceedings against legal expenses insurers for non-payment of after-the-event (ATE) policy costs.
Amelans' senior partner Andrew Twambley said that it had decided to take a tough line against insurers after they resisted payment in 21 cases.
He declined to name the insurers involved in the legal action, but said that CGNU, Equity Red Star and Zurich had generally been reluctant payers, though he stressed not all were involved in the action.
He said his firm had been forced to take action after certain insurers argued they should not have to pay costs for ATE policies issued prior to proceedings.
Twambley said that this argument did not make sense because his firm had delegated authority from insurers to issue legal expenses insurance for straightforward road traffic and accident at work cases for a non-commission premium of £350.
He believed the insurers' action was partly explained as: “Insurers simply do not like paying damages but what they dislike even more is having to pay solicitors.”
The firm took the disputed cases to Macclesfield County Court last week, using a fast-track measure available under Lord Woolf's civil justice reforms.
Twambley explained that this measure required a claim to be paid within 14 days otherwise court action would be triggered.
The legal action led the insurers to settle all but six of the 21 cases, and the judge ordered they should settle the rest, although they are now under appeal.
Amelans' issued ATE policies to 1,000 personal injury clients on April 1, 2000, following the access to justice reforms.