Australian claimants looking to protect themselves against a loss at trial can now insure themselves locally instead of sourcing cover from overseas.
Aon has placed the first Australian “After the Event” (ATE) policy through underwriter Ironshore Australia Pty Ltd. ATE insurance protects claimants, whether a client or a law firm, by partially deferring payment of the premium, and payment is contingent on the success of the claim.
Eden Fletcher, National Financial Lines Placement Manager, Aon Risk Solutions Australia said this was a significant step for the Australian legal system.
“ATE insurance has been established in the UK for some time and Australian clients have been able to access the cover by going abroad. However, the overseas policies are not made with the Australian market and legislative system in mind. By being able to now access the product here, it will give clients comfort the product is fit for purpose, and is commissioned by local lawyers,” he said.
Ironshore Australia has a new product to mitigate commercial litigation loss exposure. Learn more: https://t.co/Ng9wJT37DQ.
— Ironshore Insurance (@IronshoreInc) October 24, 2016
Ironshore provides broker sourced specialty property and casualty insurance coverages for varying risks located throughout the world.The ATE cases Ironshore generally underwrote were actions brought by insolvency practitioners, professional negligence actions and commercial contract disputes, IP infringement actions, shareholder disputes, breach of trust or fiduciary duties and contentious probate.
“Australia has become the most likely jurisdiction outside of the USA in which a corporation will face significant class action litigation. The risks and costs of fighting these cases are high, most are settled before they reach the courts. With a local solution now available, this provides solicitors with an opportunity to take on more cases as their client’s representative, given the client will have the protection of this insurance,” Mr Fletcher said.
The intention of this policy is not to encourage litigation, since premiums provide an incentive to settle early rather than progress deeper into trial, with the rate varying according to the stage at which the litigation is settled.
“We believe ATE insurance will be eagerly explored by law firms acting for the claimant, as it will make a higher percentage of potential class actions even more viable than present, subject to the merits of the case. When there is ATE insurance behind the case, it validates the case has a reasonable chance of success given Ironshore’s due diligence and underwriting methodology,” Mr Fletcher said.
Mark Wheeler, Chief Executive Officer of Ironshore International said “ATE legal cover is particularly relevant to insolvency practitioners or other litigants to alleviate the potential risk of significant financial losses.”
To approve an ATE policy, Ironshore assesses a number of items including the following:
- The applicant is commercially minded when it comes to settlement
- The claim is for a monetary award
- The claim has at least a 60 per cent chance of success
- The reasonable settlement value of the claim is sufficient to cover irrecoverable legal costs and expenses and the ATE premium and to enable the claimant to make a reasonable recovery in addition
- The defendant has sufficient assets against which to enforce a judgment or agreed settlement
“We anticipate ATE insurance to be popular in Australia given the growth in litigation and the markets appetite for emerging risks and innovative solutions,” Mr Fletcher said.