Under the new Jackson regime, ATE Premiums will no longer be recoverable in the majority of Civil Litigation. Lord Justice Jackson has declared ATE Premiums “the greatest contributors to disproportionate costs”. Until the implementation of this key objective in April 2013, ATE Premiums still remain recoverable, however this does not prevent paying parties from objecting to paying for them.
What the Paying Party says
The paying party has often objected to ATE Premium amounts and will continue to do so until they are no longer liable to pay for them. Concerns range from the choice of ATE insurance obtained to the level of the premium and whether a certain stage has or should have been triggered thereby increasing the premium paid or should the claim have actually proceeded on the basis that it was heavily defended thereby increasing the premium.
What insurance companies say
In practice and from experience it is often curious that a paying party should object to paying for what one would deem a reasonable ATE Premium. It is less surprising to note an objection when ATE Premiums creep into the tens of thousands. It must be noted however that lesser ATE premiums usually follow on from assessing the potential of a claim on a standard and less bespoke set of factors and therefore the premium is smaller – less focus on the individual risk allows for insurers to spread the risk of multiple claims across the firm. In fact, insurers often protest to any objections and proffer that the Courts are aware that it is often impractical for a firm to ‘shop around’ for shelf style products. It is often said that there is no market for individual risk.
In Rogers v Merthyr Tydfil CBC  EWCA Civ 1134, it was determined that it was not a legitimate practice to compare premiums by cross referencing them to tables containing such information published in the media.
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In Motto v Trafigura  EWCA Civ 1150 the premium was £9.7 million and was vigorously challenged by the Defendant. This case involved approximately 30,000 Claimants in an action arising from the dumping of toxic waste off the Ivory Coast. This ATE premium was calculated on the basis of a 65% prospect of success. The Defendant’s objected to the premium on the basis that the prospect of success was too cautious and a higher prospect of success should have been used therefore attracting a lesser premium. This argument was rejected and the premium was deemed to be recoverable.
One must also consider the recent decision by District Judge Smedley in the Liverpool Test Cases. Where an ATE Premium was taken out within the RTA Portal and was challenged on the basis that it was a single RTA premium and the Defendant contested that a staged premium would be cheaper, DJ Smedley rejected the argument on the basis that the staged premium would become more expensive as the case progressed and fell outside of the protocol. Both premiums eventually worked out the same although the pricing models were different, each of which can be recovered in full. DJ Smedley stated that “a claimant and his solicitor are entitled to choose...a single premium policy or...staged.”
Whether the premium is a single payment or a staged policy, a general policy or bespoke, the likelihood that it will be challenged by the paying party is high. The reality is that the Court is unlikely to interfere with the complex calculations undertaken by the insurance underwriter and the premiums are commonly allowed as claimed.