Our managing director and underwriting director Rocco Pirozzolo was on an expert panel put together by the Litigation Finance Journal to discuss issues at the intersection of litigation insurance and litigation funding
The event took place online on 14 June, and Rocco’s fellow panellists were Stephen Kyriacou, Jr, Managing Director and Senior Lawyer, Aon; Boris Ziser, Partner, Schulte Roth & Zabel LLP; and Ross Weiner (RW), Legal Director, Certum Group. The panel was moderated by Rebecca Berrebi (RB), Founder and CEO of Avenue 33, LLC.
The evolution of dispute insurance
Rocco kicked off the discussion by explaining that dispute insurance evolved as a product of the legal system in England and Wales, saying: “It is now a product used around the world, but its origins stem from a change in the law in England and Wales in April 2000, where the purpose of the legislation was to save public money on certain types of cases. It was originally being used for personal injury and clinical negligence cases but then started to branch out into insolvency disputes and commercial disputes.”
Rocco continued: “In the early years, the limits were quite modest. With the growth of the litigation funding market, the dispute insurance market was being asked to respond to the types of cases they were backing. So the limits of indemnity started creeping up, and now dispute insurance is known as being available for big-ticket litigation.”
Other litigation insurance products
Regarding other products, Rocco explained that litigation insurance is available for disbursements in litigation and arbitration and now a litigant’s own lawyers’ fees as well. Previously, insurers wanted lawyers to have ‘skin in the game’, but now some insurers will insure a significant percentage of lawyers’ fees.
Rocco then explained how adverse costs policies are also used to satisfy security for costs orders either by an anti-avoidance endorsement that entitles a defendant to claim under the claimant’s insurance policy or by the insurer giving the defendant a deed of indemnity (which is a separate contract between the insurer and the defendant under which the defendant can claim adverse costs awarded in its favour).
The panel then talked about other types of insurance that have evolved, in particular, judgment preservation insurance in the US, which insures against the risk that a judgment will be reversed or damages reduced on appeal. Another is contingent fee or work in progress insurance for law firms who take cases on where they would be paid their fees on a successful outcome from the recoveries.
Pricing of insurance policies
There was then some discussion about the pricing of policies and how premiums are structured, and Rocco said: “One thing we need to very mindful of in insurance is that the pricing is right and the market is sustainable. There’s a danger of having a race to the bottom in pricing; you have to make sure it is sustainable.”
A listener then asked whether insurers offer better pricing if capital protection insurance is in place for the funder. Rocco replied: “Whether a case is funded or not, it is the claim that is being assessed. The fact that a ligation funder is involved might give comfort, but that is all it is. Ultimately the underwriter will make their own assessment independently as they are focusing on the case and the risks in the case.”
You can read a summary of the discussion on the Litigation Finance Journal’s website here (login required) and hear the full panel discussion here.
