Successful negotiations with ATE and liability insurers could slash claims costs

Insurers could save millions of pounds in claims costs if negotiations to introduce predictability into the pricing of after-the-event (ATE) premiums are successful.

Insurance Times has learned that the Civil Justice Council (CJC) is seeking to broker a deal between ATE providers and liability insurers on ATE premium structures.

It has established an executive committee to create a strategy which would bring a proportionate cost structure to the ATE market.

CJC chief executive Bob Musgrove said following the committee's first meeting in November it would examine how ATE policies were constructed and priced ahead of the next meeting at the beginning of 2006.

Insurers said the introduction of a fixed fees structure could reduce the costs of satellite litigation.

Graham Plumb, AXA technical claims manager, said: "One of the big problems which insurers have has been the huge uncertainty over what the premium is going to be. There is certainly no proportionality in costs."

He said if successful the CJC could "cut out satellite litigation costs around ATE premiums".

Zurich said it would also welcome a proportionate costs system.

In a statement it said: "The addition of this [ATE insurance] has added to our costs, particularly in employers' liability and professional liability, where premiums can add as much as £800 to £900 to the costs on each case."

The insurer said it would also like to see increased transparency around how ATE premiums were priced. "There has been test litigation on premium levels due to a lack of transparency and layering of premiums.

"A structure and guidelines would help reduce this, along with the number of disputes around costs."