Department of Constitutional Affairs to be warned of ATE 'abuse'

Norwich Union (NU) has declared war on 'after-the-event' (ATE) insurers who fail to pay costs on cases they lose.

The insurer is preparing to sue ATE insurers who renege on claims, which costs the company hundreds of thousands of pounds. It will also contact the Department of Constitutional Affairs (DCA) about this 'abuse'.

NU director of technical claims Dominic Clayden said: "In my view the whole ATE market has problems in it. They do not pay out if there is an adverse costs order. I regard this as an abuse or an act of bad faith.

"Where there are ATE policies issued, insurers are avoiding paying by claiming there is a material non-disclosure of fact, so we are not getting our costs in these cases."

Clayden said the vast majority of non-payment instances are those with high costs that go to trial and lose.

NU is proposing to fight these cases by supporting the claimant in suing the ATE insurer over breach of contract.

Clayden said: "What can we do? We do not want to go after the claimant and get them to sell their house or bankrupt them, so we will pursue the ATE insurer."

"This is something for the DCA to take a look at as I believe it is undermining access to justice. It costs us hundreds of thousands of pounds. It is a material issue for us."

The view was supported by Peter Dobie underwriting manager of Allianz Cornhill Legal Protection, one of the country's biggest ATE insurers. He said: "If people are doing this and getting away with it I would understand Norwich Union's stance. The policy is there to indemnify the policyholder."