Singapore24th June 2009– Lockton Companies (Singapore) Pte Ltd has launched the first After-the-Event Insurance product (ATE) in Singapore, which will be underwritten by First Capital Insurance Limited.

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

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.

Tony Mitchell, President of Lockton Singapore said: “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”.

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 also possible to obtain cover for solicitor’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.

Mr. Mitchell 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.

Mr. Mitchell 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, Mr. Mitchell 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.”

Lockton Singapore will be working with Law Firms on applications for ATE insurance.

About Lockton

More than 3,800 professionals at Lockton provide more than 15,000 clients around the world with insurance, benefits, surety and risk management services, offering an uncommon level of client service. From its founding in 1966 in Kansas City, Missouri, USA, Lockton has grown to become the 10th largest insurance broker in the world. You can learn more at www.lockton.com.

At Lockton, we are passionate about serving our clients, developing our people and giving back to our communities.

Lockton Companies (Singapore) Pte Ltd is licensed and regulated by the Monetary Authority of Singapore.

For more information, please visit: www.lockton.com/asia

Enquires:

Tony Mitchell

(65) 6326 9211 (Direct)

Tony.Mitchell@asia.lockton.com

K. Sarogenei

(65) 6326 9216 (Direct)

sarogenei.k@asia.lockton.com