Last week the Law Society said it was considering legal action because of some comments made by legal expenses insurer DAS about drawbacks to the new Accident Line Protect Scheme (ALPS). Now that the Law Society has entered the commercial game they should learn to take criticism without throwing their dummy out of the pram.
The Law Society and Abbey Legal Protection started an after-the-event insurance scheme back in 1995. The premiums were about £95 for £100,000 of cover and all personal injury panel solicitors had access to the scheme. Most people know that the underwriting results of the scheme have been awful – like the disastrous results of the Solicitors Indemnity Fund.
ALPS' insurer, Lexington, wrote directly to all the ALPS solicitors and advised that the scheme was to be cancelled – this was a very strange move – why didn't the insurers trust Abbey or the Law Society to do this on their behalf?
The Law Society then wrote to the ALPS Solicitors advising them not to sign up with any rival schemes until they had seen the new one from ALPS – this new scheme was not available at the time and was still some weeks away from being ready to offer. It was very odd that a scheme was being cancelled and a replacement was not yet sorted out.
When the new scheme finally became available, it was really more of the same but with much higher premiums and a new annual charge of some £3,000 to £4,000 for each firm which wanted to carry on with ALPS – only a very small charge of about £175 was previously made to solicitors on the panel.
While most after-the-event insurers are actually providing cover for less than £400 for road traffic accidents and less than £800 for other personal injury cases, the new ALPS charges £350 for road traffic accidents, £650 for trips and slips and £850 for accident at work cases. With the ALPS premiums being so much higher than most other premiums in the market it is questionable as to whether they will be seen as reasonable by courts and therefore recoverable in full.
This, surprisingly, compares very badly with the £95 that Abbey told everyone about five years ago with little or no competition in the market – why did they get it so wrong?
The other point on the level of cover is that this new scheme provides £100,000 of cover whatever the track. Is it really reasonable for someone to buy that much cover for opponent's costs when the amount being claimed must be less than £15,000?
Another important point for all Law Society solicitors to consider is the ownership of the ALPS brand. The new scheme has been set up as a rival service to Claims Direct – whereas solicitors had only to pay a small fee before now, they will have to help Abbey provide a marketing service to encourage claimants to use them. The Claims Direct brand must be worth millions of pounds – if ALP gets anywhere near this, who is the brand owner, Abbey or the Law Society? Is it all members of the Personal Injury Panel or only those who will now pay the annual subscription? I have asked the Law Society this question – they are not prepared to tell me. Vast sums of money may be put into this venture – someone will want to cash in their chips someday, who will be the lucky one? Above all, where is the transparency that we should expect from the Law Society?
Chris Wait is underwriting director at Temple Legal Protection, Guildford.