QLP are pleased to announce the launch of our clinical negligence disbursement funding facility, ‘QLP FUNDING’

A key point is that this facility is “off balance sheet”, this  should please the financial bods within the firm as the often considerable cost for firms funding these disbursements will no longer have to be carried or be a drain on the overdraft facility.

So what are the main points to consider?

• A suitable After The Event (ATE) policy must  be in place before funds are drawn down
• Backed by the ATE policy, the claimant pays nothing if the case loses
• The interest is insured
• Nothing to pay until conclusion
• All interest rolled up until conclusion
• Interest is charged on a simple basis, and not charged as “interest on interest”
• No time limit on case duration
• Unlimited number of drawdowns (each carries a charge)
• The ATE premium is deferred and conditional upon success

You, as the solicitor, are in charge of the case AND the funding, drawdown as often as you like (there is a fee payable each time) and as much as you require.  The drawn down funds are used to pay the on-going disbursements of a case and are recoverable from the losing defendants.  Simple interest on the amount drawn down, charged is rolled up until the end of the case and is paid from damages.

Should the case be lost the insurance policy covers the funded disbursements and interest thereon.  There is no cost to your client.

So why use QLP, as a broker?  Arranging funding and insurance involves a lot of time (and therefore cost) for solicitors.  Using QLP can  dramatically reduce this burden, one application to QLP can be presented to the funder and insurer simultaneously.  We then act as a filter for the inevitable queries generated.

QLP are independent and experienced brokers and can usually select funders and insurers who have an appetite for a particular case, reducing time for obtaining offers of funding and insurance.

For the moment, this plan is only suitable for larger damages cases.

The professional indemnity insurance season for 2013/14 was been one of the most difficult renewals for many a year for everyone, solicitor, insurers and brokers (even!).  Over 100 firms had to close as they could not find cover or could not afford the premium.

So what has caused this?  Stepping back and looking at all things it is apparent that we have had a perfect storm.  We are 5 years into a recession and finally emerging through the other side (fingers crossed).  With signs that some areas are pulling through (the UK!), for insurers and legal firms money is still tight and claims are rising.

A little bit of background may help understanding.  In insurance economics if premium monies are not needed now, insurers aim for a balanced portfolio of long term investments, monies on deposit and premium income.  Surplus premium income has therefore been put aside in good times to maintain premium levels in bad times.  This can only work for so long.

At the moment investment returns are low and interest rates are virtually non-existent.  Insurers are ever more relying on recent premium income alone to fund claims and costs.  At the same time clients are increasingly cost conscious and looking for the best price from the participating insurers.

At the moment there is excess capacity in the insurance world and in recent years a number of insurers have looked at the solicitor’s professional indemnity market and decided to have a go.  The simplest way to gain market share was to cut prices, with concomitant downward pressure on premiums (always welcome) but also causing the larger and more mature insurers to look at their business models and consequently some are reducing their exposure.

More insurers in the market forcing down premiums looked to be a good for firms but has turned into a perfect storm.  Some of the newbies have withdrawn from the market for various reasons, other insurers are seeking to reduce their exposure so creating a sellers’ market.

So what can we do?  It is an old saying but relationships do count, brokers know both their clients and the insurers, we like to build information on both and use it to everybody’s advantage.  With the relaxing of renewal dates we can start the process earlier and proceed at a more organised  pace.  This will allow a more measured approach to an application.  Brokers will have time to consult their clients and help with the presentation of an application.  Working together we will not have to condense a years’ worth of work into a few months as has happened in recent years.