THE LAW AND PRACTICALITIES OF BEFORE-THE-EVENT (BTE) INSURANCE

AN INFORMATION STUDY

November 2017

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TABLE OF CONTENTS

Members of the Working Group ...... v Terms of reference ...... vi Preface ...... viii Executive Summary ...... x List of abbreviations ...... xv Acknowledgements ...... xvi

A. Why BTE matters ...... 3 1. Reasons for the study...... 4 2. The interplay with legal aid ...... 9 3. The interplay with other forms of funding ...... 14

B. A ’s obligations re BTE insurance ...... 17 1. Enquiring about BTE ...... 17 (a) The Code of Conduct ...... 17 (b) Professional negligence suits ...... 18 (c) Relevant case law ...... 19 (d) Further publicity ...... 22 2. The BTE insurance limit of indemnity ...... 23 3. Disclosure of BTE insurance ...... 24

C. The scope of coverage of BTE insurance ...... 25 1. Consumer BTE policies compared ...... 25 2. Those covered by the BTE policy ...... 42 3. The money paid out under BTE insurance ...... 42 (a) Own costs and disbursements ...... 42 (b) Adverse costs ...... 43 (c) Damages ...... 45 (d) Communication costs ...... 47 (e) Income foregone ...... 48 (f) Fines ...... 48 4. The limits of indemnity ...... 49 5. The insurable events ...... 50 (a) An international snapshot ...... 50 (b) The areas of law typically covered by consumer BTE policies ...... 51 6. Exclusions from BTE insurance...... 58 (a) Common exclusions ...... 58 (b) Group litigation ...... 59 7. BTE insurance for businesses ...... 62

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D. Assessing the BTE claim: Relevant factors ...... 64 1. Initial merits assessment of the claim ...... 64 2. Grounds for declining to fund the claim at the outset ...... 66 3. Grounds for withdrawing or terminating BTE cover ...... 69 (a) The general grounds ...... 69 (b) The ‘TCF’ obligations upon insurers ...... 70

E. Legal helplines ...... 74 1. Legal websites ...... 74 2. Legal helplines ...... 76 (a) Coverage ...... 76 (b) Usage ...... 77 3. The Irwin Mitchell legal helpline: A case study ...... 81 (a) The staffing of the helpline centre ...... 81 (b) The hours of operation ...... 82 (c) The areas covered ...... 83 (d) The media used to handle queries ...... 85 (e) The ‘client’ relationship ...... 86 (f) Payment operations ...... 87 (g) Quality assurance ...... 88 4. Conclusion ...... 89

F. The distribution and take-up of BTE insurance ...... 90 1. How BTE is sold in the ...... 90 2. Impact of distribution channels on transparency and awareness ...... 96 3. The extent of market penetration ...... 97 4. Stand-alone BTE insurance policies ...... 102 (a) Business policies ...... 102 (b) Consumer policies ...... 105 5. The Federation of Small Business (FSB) package ...... 107 6. Affinity groups and BTE insurance ...... 110 7. Employer-provided BTE insurance ...... 118 8. Union membership ...... 118 9. BTE for the low socio-economic demographic ...... 123 10. Mandatory BTE insurance ...... 125 11. The ‘block insurance’ proposal ...... 127 (a) The proponents’ views ...... 129 (b) The opponents’ views ...... 131

G. Awareness of BTE insurance ...... 134 1. The importance of awareness ...... 134 (a) Existing cover ...... 134 (b) Available products ...... 135 2. Potential measures to increase awareness ...... 136 (a) An advertising campaign ...... 136 (b) Policy wording ...... 137 (c) ' obligations re BTE insurance ...... 138 iii

(d) Other measures ...... 139 (e) Individual responsibility ...... 139

H. The pricing of BTE: Some relevant issues ...... 141 1. Observations about the BTE premium ...... 142 (a) An international comparison of pricing ...... 142 (b) Pricing the premium ...... 143 (c) Filing fees ...... 144 2. The impact of the Jackson reforms on pricing ...... 145 3. The potential impact of fixed recoverable costs on BTE ...... 146 (a) The impact of fixed recoverable costs ...... 147 (b) ‘CPR