Lockton Hong Kong Launches ‘After-Event’ Insurance Product

June 26, 2009

Lockton Companies (Hong Kong) Ltd. announced the launch of the first “After-the-Event Insurance product (ATE) in Hong Kong.”
Lockton HK is working in partnership with UK broker TheJudge, a long established broker in Litigation Risk Transfer Solutions.

“ATE Insurance is a type of legal expenses insurance policy that provides cover for the costs incurred in the pursuit or defense of litigation. The product allows litigants (individuals, corporate or unincorporated entities) to minimize the uncertainties and financial risk,” said the bulletin.

“The policy is purchased after a legal dispute has arisen (which is why it is called “‘After-the-Event Insurance’). This type of insurance has been available in the UK for more than a decade and has enabled tens of thousands of litigants to offset a considerable portion of their litigation costs risk.”

Greg McCoy, Managing Director of Lockton Greater China commented: “Litigation is a costly business. In fact, potential legal costs can be so daunting that they prevent a financially stressed party from pursuing or defending his legal rights. ATE Insurance exists to provide access to justice for cases with genuine merit. The current economic and financial environment is likely to spawn many such cases.”

Loctkon HK explained that, “typically, a policy will cover an insured’s liability for his opponent’s legal costs should the case fail. It will also cover his disbursements. It is possible to obtain some cover for solicitor’s [lawyer’s] fees. As the policy exists to indemnify legal costs, it will not cover any other liabilities which may arise from the litigation.

“Types of cases that are typical for this insurance are: commercial litigation, professional negligence cases, insolvency cases and civil litigation cases.”

James Delaney, Director of TheJudge Limited added: “There are two other unique features of this product: Insured and Deferred Premiums.

“Premiums are usually insured under the policy. If an insured pays for a policy and his suit is unsuccessful, not only do the insurers pay the insured’s adverse party & party costs, they also reimburse the insured for the cost of the premium.”

Usually the insured has a nominal premium to pay upfront and nothing further in the event that the case is unsuccessful. The insured is only liable to pay the full premium in the event that the case succeeds.

Premiums are individually assessed for each case depending on the financial exposure faced by the insurers and their view of the prospects of success.

Delaney explained further: “Because insurers recognize that early settlements will often occur, there are normally staged discounts in the premium. Like the Courts, the insurers wish to encourage early mediation or resolution of a case where it is in the interest of the parties.”

In response to questions of whether such insurance would serve to encourage litigation, he replied: “Despite the attractiveness of this form of insurance for litigants, its availability has not resulted in any significant increase in litigation in the UK despite a 10-year existence. One principal reason is that at the end of the day, it is the insurer who will carry the exposure and they are naturally commercially selective as to which types of cases they choose to support.”

Source: Lockton – www.lockton.com/asia

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