Harbour Underwriting’s managing director and underwriting director, Rocco Pirozzolo, was recently interviewed by Insurance Business UK on how underwriters assess commercial cases and the challenges of doing so at an early stage of a dispute.
The piece, titled “Underwriting the unknown”, explores the tension between the legal and underwriting thresholds when assessing whether a case is meritorious, some of the challenges faced when insurers are typically first asked to insure a case, and the role solicitors and brokers can play in helping clients understand the financial risks of litigation.
Rocco explained that insurers typically look for stronger prospects of success than the balance of probabilities standard that applies in court. While claimants must prove their case to a 51% threshold, insurers tend to require a higher level of confidence before agreeing to provide cover, often around 60%. As Rocco put it: “It is not a mathematical formula. What we are trying to articulate is that we feel confident the case is going to win.”
That assessment is usually made before proceedings have commenced , often confined to a barrister’s opinion, pre-action correspondence and perhaps a preliminary expert report, with witness statements and a fuller evidential picture yet to emerge. In practice, that means insurers are often assessing disputes that will continue to evolve as the litigation progresses.
Rocco also addressed the question of how litigation risk is communicated to clients. A 60% chance of winning, he noted, is equally a 40% chance of losing, a 40% chance of paying adverse costs and a 40% chance of losing the fees already spent on the claim. He expressed the view that brokers and solicitors have a meaningful role to play in helping clients understand those exposures, and that where solicitors are not comfortable having that conversation directly, a broker should be brought in.
The interview also touched on the evolution of the dispute insurance market. Rocco observed that after the event (ATE) insurance was originally conceived for cases without litigation funding, but now is often only considered once a funder is involved.
He expressed concern that in many commercial disputes, insurance is either not considered or dismissed without proper exploration. “The number of times I hear solicitors say, ‘my client would not be interested’ or ‘my client does not need it’ makes me wonder whether that has really been explored,” he said.
The full interview is available on the Insurance Business UK website.
