Hiscox hits out at ‘unfair’ practices in defamation cases

- Insurer supports Lord Justice Jackson’s proposals to end recoverability of ATE premiums and CFA success fees -

London, UK (14 February, 2011): Specialist media and technology insurer Hiscox has criticised some claimant law firms for manipulating and inflating costs in defamation and privacy cases.

Responding to the Government consultation on costs in civil litigation, the insurer says that ‘After The Event’ (ATE) insurance policies can be used to inflate costs and ‘may not offer any real costs protection to defendants’.

‘Some claimant law firms use significant staged but deferred ATE premiums to add to costs so as to force through settlements where defendants have good and real defences but can't run the risk of paying enormous costs if they lose,’ the insurer says. ‘Claimant lawyers can get away with using this tactic because the claimant policyholder usually has no direct interest in the cost or terms of the policy and will never have to pay the premiums.’

Ian Birdsey, Media and Technology Claims Manager at Hiscox, comments: “The broken system in place means that defendants in defamation and privacy claims may well suffer the disadvantages of paying for ATE policies when they lose without any of the expected benefits when they win.”

The specialist insurer, which notes that over half of all media claims it has handled since 2003 have been defamation and privacy, supports Lord Justice Jackson’s proposals to end recoverability of ATE premiums.

It also supports ending the recoverability of conditional fee agreements (CFAs), commonly known as success fees. The principle of recoverability is flawed by the effect it has of separating claimants from an interest in controlling their lawyers' costs, says Hiscox.

“We have no doubt that without CFA success fees being recoverable, claimants would seek better control of their legal costs and this 'weapon', which at present tilts the playing field against defendants, would not be available to claimant lawyers,” says Ian Birdsey.

Suzanne Kemble, Head of Media & Entertainment at Hiscox, added: “With these reforms, our clients in the media and technology industries would be far better able to pursue their defence in the courts and achieve justice.”

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Notes to editors

• After the Event (ATE) insurance can be taken out by parties to insure against the risk of having to pay their opponent’s costs and their own disbursements if they lose.
• Hiscox has over 15 years’ experience in media claims
• Ian Birdsey and Suzanne Kemble are available for interviews

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About Hiscox

Hiscox, the international specialist insurer, is headquartered in Bermuda and listed on the London Stock Exchange (LSE:HSX). There are three main underwriting parts of the Group - Hiscox London Market, Hiscox UK and Europe and Hiscox International. Hiscox London Market underwrites internationally traded business in the London Market - generally large or complex business which needs to be shared with other insurers or needs the international licences of Lloyd's. Hiscox UK and Hiscox Europe offer a range of specialist insurance for professionals and business customers, as well as high net worth individuals. Hiscox International includes operations in Bermuda, Guernsey and USA. Hiscox Insurance Company Limited, Hiscox Underwriting Limited, Hiscox Europe Underwriting Limited and Hiscox Syndicates Limited are authorised and regulated by the Financial Services Authority.

For further information, visit www.hiscox.com