The importance of full disclosure when sourcing ATE insurance for your client


Authored by ARAG UK ATE Underwriting Manager James Morgan

It goes without saying that mutual trust between solicitors applying for ATE insurance and those assessing/underwriting the risk is of key importance.

Thankfully, incidents of misrepresentation and non-disclosure of information are rare, but they have considerable consequences for all involved.

Such incidents break down this important trust and can leave claimants in the unenviable position of finding that their ATE policy is voided.

Of course, as an ATE insurer we consider a failure to disclose negative counsel’s advice as part of the policy application process a major issue and the Solicitors Regulation Authority (SRA) have recently demonstrated that they agree.

Nigel Martin Kinder accepted that he failed to disclose all material facts when completing an insurance proposal form and The Solicitors Disciplinary Tribunal (SDT) proposed that a fine of £8,000 and costs of £2,000 should be paid as a result. This outcome was agreed with the SRA.

 The material facts in question were that two counsel had not supported the case in their advices provided prior to an application being made to an ATE insurer. In once advice counsel confirmed their assessment of the prospects of success to be less than 50%. In the proposal, made via a broker, to the ATE insurer the Mr. Kinder provided the prospects of a successful outcome as being 65-70%. The advice of counsel, whilst not always a pre-requisite for ATE insurance does serve as a useful guide on the merits of any case to be insured. It is also accepted that two counsel may have differing opinions on the same case. To not alert a potential ATE insurer of the range of opinions already known, severely reduces an underwriter’s ability to make appropriate decisions on whether a risk is acceptable or not.

It is an agreed fact between the SDT and Mr. Kinder that:

“The public would expect solicitors to properly exercise their judgment to make proper and full disclosure when obtaining ATE insurance on behalf of their clients as a failure to do so could lead to the policy being voided for non-disclosure and the client becoming personally liable for the defendant’s costs…”

This is a something I am sure most would agree upon.

In my experience misrepresentation and non-disclosure of information by solicitors in this context is very infrequent, particularly in the scheme relationships we at ARAG seek. In more complex matters our underwriters are keen to understand the history of a case and will try and engage in a conversation with the instructed solicitor prior to issuing a policy. These conversations reduce the chance of non-disclosure, wilfully or accidently.

In the case referred to above it seems quite clear that the advice of unsupportive counsel is highly material to an underwriter’s decision to provide a policy but sometimes it is not quite so clear. Mr. Kinder was of the view that a more supportive opinion, given by a third counsel, superseded the previous two advices. This informed his decision not to disclose the other advice received to the ATE insurer. Given the risk to clients and solicitors alike, to err on the side of caution and pick up the phone is prudent. As they say, it’s good to talk.


About ARAG

ARAG UK is a specialist legal insurance provider and is part of the internationally recognised ARAG Group which serves 14 countries worldwide.

Providing several emergency assistance insurance products and an innovative range of Before-the-Event and After-the-Event legal insurance products and services, ARAG UK prides itself on its client-focused approach. This has been recognised by the industry following the results of the Insurance 360 Legal Expenses Insurers Study in which ARAG UK was voted 'best legal insurance provider'. youTalk-insurance sharing ARAG UK insurance news. 

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