Kerry Underwood


with 22 comments


Wonga and the Student Loans Company (SLC) have demonstrated once again that many financial institutions in this country feel free to break the law with impunity, and apparently, immunity. Before-the-Event insurers are amongst the worst offenders and nothing has been done in spite of scathing criticisms by the courts.

Recently NatWest (Home Legal Expenses Department) wrote to a firm of solicitors as follows:

‘The issue regarding freedom of choice of solicitor has been debated for some time now and the Financial Ombudsman Service (FOS) has provided guidance to the industry on this point. In line with this guidance we will allow freedom of choice of solicitor only on claims with complex legal issues, or where there is a considerable history, or high value. Any decision we make regarding legal representation is made with these guidance points in mind, where we consider that the FOS would support our position.

From the information provided to us regarding our policyholder’s claim, we do not consider their case to be one where we would be expected to allow freedom of choice. We therefore would not be willing to agree to your appointment and would insist on appointing one of our nominated solicitors to act for our policyholder up to the point of issue of proceedings.’

The Financial Ombudsman Service’s website, wrongly, states:

‘Legal expenses policies often give the insurer the freedom to choose which solicitors to appoint for advice and assistance up to the time where legal proceedings start – unless there is a conflict of interest.

However, once proceedings start (when the legal “claim form” is issued) – or if there is a conflict of interest – the law (regulation 6 of the Insurance Companies (Legal Expenses Insurance) Regulations 1990 [SI 1159]) allows policyholders to choose their own solicitors.

These regulations are wide enough to include legal proceedings pursued and defended in tribunals – for example, employment tribunals – as well as proceedings in courts.

Insurers usually have panel solicitors whom they regularly instruct. We sometimes see disputes where a policyholder wants to appoint their own solicitor from the start (or have already instructed their own solicitor prior to making the claim).

Insurers sometimes have no objection to using a policyholder’s own solicitor. But for legitimate commercial and quality-control reasons, insurers often prefer to use their solicitors from their own panel.

We look at each case on its own individual merits. However, we are likely to decide that the policyholder should be able to appoint their own solicitors from the start only in exceptional circumstances.’

The law is very different and I set it out here:

In Jan Sneller v DAS Nederlandse Rechtsbijstand Verzekeringsmaatschappij NV, European Court of Justice, 7 November 2013

DAS, the before-the-event legal expenses insurer involved, stated that it was only prepared to provide legal assistance to Mr Sneller through one of its own unqualified members of staff, rather than through a qualified lawyer chosen by Mr Sneller.

The Supreme Court of the Netherlands referred the following question to the European Court of Justice:

“Does Article 4(1) of Directive [87/344] allow a legal expenses insurer, which stipulates in its policies that legal assistance in inquiries or proceedings will in principle be provided by employees of the insurer, also to stipulate that the costs of legal assistance provided by a lawyer or legal representative freely chosen by the insured person will be covered only if the insurer takes the view that the handling of the case must be subcontracted to an external lawyer?”

The answer is no.  Thus the insured person must have the freedom to choose his own lawyer or other person appropriately qualified under national law, although in certain cases limitations may be imposed by the insurer on the level of costs.

In (1) Brown – Quinn (2) Webster Dixon LLP v (1) Equity Syndicate Management Ltd and (2) Motorplus Ltd [2012] EWCA1633

the Court of Appeal examined in detail the law concerning the right to choose one’s own lawyer under a legal expenses policy.

Article 4 of Council Directive 87/344 EEC provides:

“1.   Any contract of legal expenses insurance shall expressly recognise that:

a) where recourse is had to a lawyer or other person appropriately qualified according to national law in order to defend, represent or serve the interests of the insured person in any inquiry or proceedings, that insured person shall be free to choose such lawyer or other person.

b) the insured person shall be free to choose a lawyer or, if he so prefers to the extent that national law so permits, any other appropriately qualified person, to serve his interests whenever a conflict of interests arises.

205 provide for legal expenses insurance in the same terms. The 1987 Directive was transposed into English Law by the Insurance Companies (Legal Expenses Insurance) Regulations 1990 and the equivalent of the old Article 4 is Regulation 6 which provides:

“Freedom to choose lawyer


(1) Where under a legal expenses insurance contract recourse is had to a lawyer (or other person having such qualifications as may be necessary) to defend, represent or serve the interests of the insured in any inquiry or proceedings, the insured shall be free to choose that lawyer (or other person).

(2) The insured shall also be free to choose a lawyer (or other person having such qualifications as may be necessary) to serve his interests whenever a conflict of interests arises.

(3) The above rights shall be expressly recognised in the policy.”

The insurers operated a system of panel solicitors whereby solicitors agreed to charge either a fixed hourly rate or a total fixed fee irrespective of the importance or complexity of the work or of the experience or qualifications of the person carrying out the work.

The insurers also had a system of standard terms of appointment for non-panel solicitors providing for hourly rates of between £125 and £139. If an insured person wished to appoint a non-panel solicitor then the insurer would only agree to that appointment and be responsible for the fees if the solicitor agreed to the standard terms of appointment, including those hourly rates.

The non-panel solicitors sought a declaration that the insurers were bound to pay their fees at their hourly rate up to the limit of the insurance.

In two conjoined cases the clients wished to move from the panel solicitors to the same firm of non-panel solicitors, Messrs Webster Dixon, but the insurers refused to pay them anything and they sought a declaration that the insurers were bound to continue to support their cases. The solicitor at Webster Dixon had dealt with the cases all along as he had moved from the panel firm originally dealing with them.

At first instance the High Court held that the non-panel rates were relevant as a comparator, but not as a starting point and that any assessment should take in to account the availability of other suitable firms of solicitors charging less than Webster Dixon and that the following should also be taken into account:

(a) the location of the chosen solicitors compared to the panel solicitors;

(b) their specialisation and qualification for taking on the claim;

(c) the complexity of the claims;

(d)the importance of the claim to the client;

(e) the substance and strength of the proposed defendant to the claims; and

(f) the nature of the work to be carried out, e.g. whether it was appropriate to be conducted by a senior solicitor or partner of the firm.

Such an assessment would be neither an ordinary assessment taking account of those matters relevant to costs under the Civil Procedure Rules, nor an assessment adopting the non-panel rates as a starting point.

The judge held that a claimant who reasonably instructed a non-panel solicitor in the middle of a case was in the same position as a claimant who instructed such a solicitor from the outset.

The Court of Appeal set aside the High Court order and granted a declaration that the defendants were bound to pay the non-panel rates, but no more.

Thus the law is that a client has freedom of choice of solicitor, but will only recover the non-panel rates determined by the insurer.

Thus the non-panel solicitor must either settle for those rates or charge the insured client the extra, that is the difference between the non-panel rate and their actual charging rate. This can easily be achieved by a no win lower fee conditional fee agreement – see Gloucestershire County Council v Evans [2008] EWCA Civ 21.

The Court of Appeal based its decision on Paragraph 33 of the judgement of the European Court of Justice in

Stark v DAS Oesterreichische Allgemeine Rechtsschutz – Versichergung A.G (2011) Case c-293/10,

which reads:

“ 33. Consequently, freedom of choice, within the terms of Article 4(1) of Directive 87/344, does not mean that Member States are obliged to require insurers, in all circumstances, to cover in full the costs incurred in connection with the defence of an insured person, irrespective of the place where the person professionally entitled to represent that person is established in relation to the court or administrative authority with jurisdiction to deal with a dispute, on condition that that freedom is not rendered meaningless. That would be the case if the restriction imposed on the payment of those costs were to render de facto impossible a reasonable choice of representation by the insured person. In any event, it is for national courts … to determine whether or not there is any such restriction.”

The Court of Appeal held that there was no evidence that the rates offered were so insufficient as to render the insured’s freedom of choice meaningless. The Guideline Rates for Summary Assessment were of no relevance.

The Court of Appeal took the opportunity to launch a savage attack on the before-the-event insurers involved stating (paragraph 8)

“The facts of this case have revealed that the insurers exhibit an insouciance to their obligations under the Directive and the Regulations which leaves one quite breathless”. The Regulations (and the Directive) make it entirely clear that the insured’s freedom to have the lawyer of his choice is to be expressly stated in the contract made with the insured. What the contracts in the present case provide in General Condition 2.3 is almost the opposite…”

At Paragraph 13 the Court of Appeal said:

“It is very difficult to view all this conduct as the conduct of a reasonable and responsible insurers…” and that it viewed the insurer’s behaviour with “distaste”.

And finally at Paragraph 33

“It is quite wrong that, despite the warning shot delivered to legal expenses insurers by this court in Sarwar v Alam [2002] 1 WLR 125 para 44, insurers should many years later be issuing policies which do not comply with the Regulations, General Conditions 2.3 and 5 are in breach of the Regulations in the ways I have explained and must be either deleted or comprehensively re-drafted.”

[Regulation 5 provided, illegally,

“If an appointed representative refuses to continue acting for you or if you dismiss an appointed representative, the cover we provide will end at once, unless we agree to appoint another appointed representative.”

Regulation 2.3 provided, illegally,

“If we agree to start legal proceedings and it becomes mandatory for you to be represented by a lawyer, or there is a conflict of interest, you can choose an appointed representative by sending us the suitably qualified person’s name and address. We may choose not to accept the choice of representative, but only in exceptional circumstances. If there is a disagreement over the choice of appointed representative, another suitably qualified person can be appointed to decide the matter. Before you choose a lawyer, we can appoint an appointed representative.”]

It is time all Ombudsmen were abolished.  They are a waste of space, woefully ignorant and very expensive and are harming this country and the rule of law.

It is also time that insurers who deliberately lie and draft illegal policies are prosecuted for contempt of court.  Imprisoning a few directors of Before-the-Event insurers for a couple of weeks will end the practice.


 Haven might mean a harbour, a shelter, a safe place but everyone in the land, as well as at sea, is well advised to give Haven Insurance a very wide berth indeed.

In the case below Haven contacted the Claimant direct and purported to do a deal specifically providing for no costs to be paid AFTER solicitors acting for the Claimant had submitted a Claim Notification Form which Haven had acknowledged in the portal.

Given the current issues before Parliament and the definition in the Qualified One-Way Costs Shifting rule you may reflect as to whether such conduct is dishonest, fundamentally dishonest, or something else.

In Kukadia v Haven Insurance Company Ltd and

Nord v Haven Insurance Company Ltd

Liverpool County Court, 20 February 2014,

District Judge Jenkinson was hearing applications by the Claimant in each case for summary judgment pursuant to CPR24.

In Kukadia the Claimant was involved in a road traffic accident on 13 December 2012 and a Claim Notification Form (CNF) was submitted on 2 January 2013 and was acknowledged by Haven the same day and liability was admitted on 7 January 2013 and on 16 January 2013 portal Stage 1 costs were paid.

However around 4 January 2013, that is after the Claimant’s solicitor had lodged the CNF and after Haven had acknowledged it, Haven contacted the Claimant direct. Taking the Defendant’s evidence at its highest – which is the rule in a summary judgment application – although highest may be a misnomer here – it agreed to settle the claim on the specific condition that it would not pay costs.

The District Judge decided that the issue before him was whether or not that agreement overrode paragraph 7.37 of the protocol which reads:-

“Any offer to settle made at any stage by either party will automatically include and cannot exclude:

(1)    stage 2 fixed costs in accordance with CPR 45.29;

(2)    an agreement in principle to pay disbursements; and

(3)    a success fee in accordance with rule 45.31(1).”

Unsurprisingly the judge found that the law as passed by Parliament was indeed the law and that the insurance company was bound by it.

It is worth reading and considering the final six paragraphs of this short Judgment as they give a flavour of the contempt shown by insurers to the law of the land, as already seen in relation to Before-the-Event insurers in my blog Insurers At It Again (1).

I set out paragraphs 9 to 14 of the Judgment in the Kukadia v Haven matter.

“ 9.     It is said on behalf of the defendant, represented by Mr Whibley of counsel today, that this was an offer made outwith the protocol.  Contacting the claimant directly and making such an order, Mr Whibley says, evidences the intention of the insurance company to act outside the protocol and, accordingly, to reject its provisions.  He accepts and concedes they would not be able to rely upon any such offer as a proper offer within the protocol.  However, it is said on behalf of the defendant, the protocol does not override the fundamental principle of freedom of contract and there is nothing that prevents the parties agreeing to settle a claim that begins its life in the protocol on terms which are inconsistent with the provisions of it.

10.     On behalf of the claimant, Mr Banks says that the provisions of 7.37 of the protocol are clear and until such time as the claim drops out of the protocol by one of the trigger factors that precipitate its leaving it, any offers automatically include and cannot exclude the offer to pay the liabilities referred to at 7.37 of the protocol.  Mr Banks says that the position is quite different to Part 36, which specifically allows for offers to be made outside of Part 36 but provides that they will not have the costs protection that that particular provision of the CPR imputes.  Mr Banks also says that any reference to offers pursuant to the protocol within CPR Part 36 effectively relate to a different situation, namely stage 3 offers within the protocol.

11.     The claimant brings this application for summary judgment so the claimant must establish on the basis that this application is being approached today i.e. on an interpretation of the law on the assumption that nothing would be required at a final hearing beyond the interpretation of the rules that are available now, that, on a balance of probabilities, the claimant’s interpretation of the rules is correct.

12.     Against that background, I find as follows.  This was a claim that was proceeding pursuant to the pre-action protocol for low value PI claims in RTA cases.  The protocol is and was engaged by the provision of the claims notification form.  In fact, it appears that unless the defendant performs one of the acts that specifically cause the matter to drop out of the provisions of the protocol, then it remains in the protocol for 15 days before dropping out if no response is received.  However, in this case, in fact, the claimant’s notification form was acknowledged by the defendant and if there was any doubt as to whether or not this matter was proceeding pursuant to the protocol, it is removed in my judgment by the admission of liability that was made, it would appear, within the portal, and the payment of stage 1 protocol costs.

13.     I proceed, therefore, on the basis that the protocol did apply. Rule 7.37 of the protocol, which I have already quoted for the purposes of this judgment, is in, in my judgment, clear and unequivocal terms.  It would have been open to the drafter of the rules to add, had it been felt appropriate, “Any offer made pursuant to the protocol procedure will automatically include and cannot exclude” but that is not what rule 7.37 says.  The offer was an offer that was made at a stage of the protocol because none of the triggers which removed it from the protocol had applied.

14.     Referring back to the defendant’s case at its highest, the rules could have said, “Any offer made at any stage by either party will automatically include and cannot exclude,” and added words “unless the parties agree otherwise.”  Again, that is not said.  In my judgment, the logical interpretation of rule 7.37 is that any offer made at any stage by either party will automatically include and cannot exclude the responsibility to pay the additional matters set out within paragraph 7.37 of the protocol.  The acceptance of the offer by the claimant means that what is automatically included by reference to paragraph 7.37 applies and in my judgment the claimant is entitled to summary judgment on the basis of the costs claimed.”

It is time for this sort of behaviour to be made a criminal offence under the Compensation Act and carrying a two year prison sentence. What applies to Claims Management Companies should apply to insurance companies.


Paul Davis

Kerry. Are you saying that you disagree with the FOS statement that, in the absence of a conflict, the freedom to choose a solicitor under the policy can be lawfully limited unless and until proceedings are commenced? If so, what authority do you cite for that. The authorities that you refer to in the blog do not appear to me to state this in terms. Regulation 6 of the Insurance Companies (Legal Expenses Insurance) Regulations does after all state that the freedom to choose the lawyer only arises when he or she is instructed to “defend, represent or serve the interests of the insured in any inquiry or proceedings”.

Kerry Underwood


Yes, I am most definitely stating that I disagree with the statement that, in the absence of a conflict, the freedom to choose a solicitor under the policy can be lawfully limited unless and until proceedings are commenced.

The authority is Article 201 of Council Directive 2009/138/EC, which repealed Article 4 of Council Directive 87/344/EEC, as set out by the Court of Appeal in the case of (1) Brown – Quinn (2) Webster Dickson LLP v (1) Equity Syndicate Management Ltd and (2) Motor Plus Ltd EWCA 1633.

That Directive provides:-

“1. Any contract of legal expenses insurance shall expressly provide that:

(a) where recourse is had to a lawyer or other person appropriately qualified according to national law in order to defend, represent or serve the interests of the insured person in any inquiry or proceedings, that insured person shall be free to choose such lawyer or other person;

(b) the insured persons shall be free to choose a lawyer or, where they so prefer and to the extent that national law so permits, any other appropriately qualified person, to serve their interests whenever a conflict of interests arises.”

Thus 201.1(b) deals with a conflict point but 201.1(a) gives absolute and unrestricted freedom of choice to an insured person. It is not just during proceedings, but rather “in any enquiry.”

How could it be otherwise without destroying nearly a thousand years of Northern and Western European legal principles? Council Directive 2009/138/EC is due to be implemented by UK law in March 2015, but the previous Directive was transposed into English Law by the Insurance Companies (Legal Expenses Insurance) Regulations 1990 and the equivalent of Article 201 is Regulation 6 which provides:-

“Freedom to choose lawyer 6 (1) Where under a legal expenses insurance contract recourse is had to a lawyer (or other person having such qualifications as may be necessary) to defend, represent or serve the interests of the insured in any inquiry or proceedings, the insured shall be free to choose that lawyer (or other person).

(2) The insured shall also be free to choose a lawyer (or other person having such qualifications as may be necessary) to serve his interests whenever a conflict of interests arises.”

I pause there. Note the insertion by Parliament of the word “also” to make it clear that 6(2) gives extra rights, over and above those in 6(1) to an insured. That is not clear from the wording of Article 4.1(a) and (b). It is of course settled law that Member States may give greater protection under domestic law than given under European law, provided of course that in the case of regulations the statute under which the regulations are made gives that power so that the regulations are not ultra vires.

Regulation 6(3) states:-

“The above rights shall be expressly recognized in the policy.”

Note the Court of Appeal’s comment at paragraph 8:-

“The facts of this case have revealed that the insurer exhibits and insouciance to their obligations under the Directives and Regulations which leaves one quite breathless. The Regulations (and the Directives) make it entirely clear that the insured’s freedom to have the lawyer of his choice is to be expressly stated in the contract made with the insured.”

At paragraph 13:-

“It is very difficult to view all this conduct as the conduct for a reasonable and responsible insurer….”

The rest of the case report continues in similar vein.

In Eschig v UNIQA Sachversicherung a.g (2009) C-119/08

the European Court of Justice decided that an insurer could not insist that the litigant should join a group action rather than use a lawyer of his choice.

That clearly takes matters even further.

The matters in the current case were in fact largely dealt with in the case of Sarwar v Alam [2002] 1 WLR 125 paragraph 44 and as the courts says here, at paragraph 33:-

“It is quite wrong that, despite the warning shot delivered to legal expenses insurers by this court in Sarwar v Alam [2002] 1 WLR 125 paragraph 44, insurers should many years later be issuing policies which do not comply with the regulations.”

In paragraph 22 of the case of Jan Sneller v DAS Nederlandse Rechtsbijstand Verzekeringsmaatschappij NV, at paragraph 22, the European Court of Justice said:-

“In that regard, it follows from both the eleventh recital in the preamble to Directive 87/344 and Article 4(1) of that Directive that the interest of persons covered by legal expenses insurance means that the insured person must have the freedom to choose his own lawyer or other person appropriately qualified under national law for the purpose of any judicial or administrative proceedings.”

Note the reference to “administrative proceedings.”

In paragraph 25 the court said:-

“In that regard, it must be borne in mind that Article 4(1) of Directive 87/344, which concerns the right freely to choose a representative, is of general application and is obligatory in nature (see Eschig, paragraph 47, and Stark, paragraph 29).”

In my view the way forward is for Parliament to amend the Compensation Act specifically to provide, in line with Claims Management Companies who fail to comply with the rules, that any attempt to deprive an insured person of freedom to choose their own solicitor should carry a punishment of a maximum of two years imprisonment.



Paul Davis

Hi Kerry. I so want you to be right, but it seems to me that it still comes down to how you interpret “in any inquiry or proceedings”. In the absence of specific authority insurers will continue to argue that it requires that some form of proceedings be active rather than contemplated (and that inquiry means quasi judicial proceedings.) I’m certainly not agreeing with that but when clients are faced with litigation to determine that point or going with a panel firm it is no surpise that they often opt for the latter.

Kerry Underwood

Hi Paul. I take your point and understand the attitude of clients.

I hope that someday soon a court will put that beyond doubt.



But how do you do anything about this sort of behaviour? The Ombudsman is clueless and suing the insurer is likely to be a very expensive exercise: you can pretty much guarantee that the insurer will defend the case. The worst that happens is that a naive Lord Justice expresses his shock at the insurer’s behaviour, while another naive Lord Justice (Jackson) thinks that BTE insurance is the way forward.

A further point arises out of the way the case is conducted once it has been passed to a panel firm. The insurer pays no attention to the fact that it has written (say) £100,000 of cover and immediately starts pressurising the insured to settle for whatever inadequate offer is on the table. The panel firm does not have the guts to point out to the insurer that it (the panel firm) must act in the insured’s best interests, so it recommends acceptance of the inadequate offer. If the insured does not accept that offer, the insurer purports to withdraw funding.

The conduct of BTE insurers (at least, the ones I have seen) has been an absolute disgrace, which bears no relation at all to the law (in the form of Regulation 6) or the insurer’s obligations under the policy. They simply do whatever suits their ends, in the knowledge that it is virtually impossible for the insured to mount a challenge.

Kerry Underwood


I agree that the Ombudsman is clueless but as far as proceedings are concerned I am unaware of any case of where a Before-the-Event insurer has succeeded. Consequently although the process involves a lot of work, remember that that is work at cost and not at sale price. You are likely to earn very considerable fees out of an action against Before-the-Event insurers.

In my experience, and from other firms that I am familiar with, the genuine threat of proceedings normally brings the BTE insurers to heel.

Lord Justice Jackson’s idea that BTE insurance is the way forward has proven to be entirely wrong in relation to existing BTE insurance policies, for the very good reason that BTE insurers made their profits by selling cases to law firms and that is now prohibited under the Legal Aid, Sentencing and Punishment of Offenders Act 2012. The ban on referral fees has clearly not stopped referral fees and many law firms and others are breaking the rules. However, by and large, I do believe that Before-the-Event insurers have stopped selling cases.

Having said that, I do believe that in the future there is a role for Before-the-Event insurance, and I believe that on that point Lord Justice Jackson is right. However this would be a policy costing several hundred pounds a year and more akin to private health insurance, or the legal expenses insurance system that they have in Germany.

I agree with you as to the conduct of BTE panel firms; indeed it is clear that the public have realised this, which is why they seek their own choice of solicitors. BTE panel firms do not generally operate to a high standard in my experience.

I agree that the conduct of BTE insurers is generally disgraceful. The courts have strongly opposed those companies and a legal action against BTE insurers for failing to allow freedom of choice of solicitors is as certain a win as you will ever get in litigation.

In short, sue BTE insurers who will not allow freedom of choice.

The Consumer Contracts Regulations 2013 now prohibit pre-ticked boxes and this has been another nail in the coffin of BTE insurers as they now have to give the insured the choice of opting in for BTE insurance and state the cost, which is now quite significant – generally around £50.00 or so. Previously they included it in a pre-ticked box and lied and said that it was free.

This one is all going our way – it is estimated that the percentage of the population with BTE insurance through motor policies, household insurance and credit cards etc is now only around 15% and falling.

Thank you for taking the trouble to comment on my piece.


In reply to Paul’s post, see this obiiter comment in para 44 of Sarwar v Alam:

“…members of the court made critical observations from time to time about the size of some of the BTE insurers’ panels and the possible inappropriateness in these post-Woolf days of a BTE claimant being denied freedom of choice of solicitor (at any event so far as the members of the Law Society’s or some other reputable panel of approved personal injury solicitors are concerned) at the time the procedures in a pre-action protocol come to be activated.”

See also the “Ken Hogg letter”:

The truth of the matter is that asking “what is the law on this?” is a pretty pointless question in this area, because (i) BTE insurers simply ignore it when it does not suit their business models and (ii) the FOS doesn’t bother with such pertinent questions.

Kerry Underwood


I agree that the Court of Appeal’s criticism of the behaviour of BTE goes back at least to Sarwar v Alam.

However I disagree that asking “what is the law on this?” is a pretty pointless question.

All the regulators and all the ombudsmen and all the other hangers on are subject to the rule of law and to the courts. The courts have consistently, at every senior level, upheld the right of insured people to choose their own suitably qualified lawyers.

The answer is to go to court and win. Unfortunately far too many professionals moan about BTE insurers and complain about the ombudsmen but actually accept their decisions and do nothing.

The old phrase “all that is necessary for evil to triumph is that good people do nothing” comes to mind.

In my experience threatening to sue BTE insurers works and we now have reasonable working relationships with them, although we are not, and never have been, on any panels. It needs to be a real threat – you need to show a track record of bringing such people to book.

It is ironic that it is litigation solicitors, in the form of personal injury solicitors, who seem the most reluctant to take insurers to court!

BTE insurers, and indeed insurance companies generally, rely upon the reluctance of many solicitors to issue proceedings.




I agree with all you say, but clients who are having trouble with BTE insurers do not want to sue the BTE insurer – they want to resolve the problem which they notified to the BTE insurer in the first place. The stress to the claimants in (for example) Brown-Quinn must have been massive: not only did they have to fight an employment case, they also had to fight their BTE insurer.

A piece of paper which claims to provide £50,000/£100,000 of cover in return for a premium of about £20 invites all sorts of questions, to which I think you and I already know the answers. BTE may have a place, but only if the insured genuinely has a free choice of solicitor (without any attempt by the insurer to impose ludicrous “terms of business” on the solicitor). As you indicate, proper BTE insurance of this kind would be a great deal more expensive than the “product” which is currently being offered.

Kerry Underwood


I agree entirely, but if the non-panel firm takes the case over the extra stress for the lay client is very little. I appreciate that it is a self-selecting group – my clients who have come to me and refused to be pushed to the panel solicitors – but I have never had a problem with getting clients to get me to go for the BTE insurers. Most are furious at being treated the way they are by the insurers, to whom they have paid a premium

Most BTE insurance is a scam – it can be nothing else at the prices charged – especially now insurers cannot charge panel solicitors a referral fee for the privilege of doing the work.

The wiping out of this type of BTE – and it has all but disappeared – there is very little BTE left – is a good thing and will allow proper policies to be developed.

In my own firm we are looking at an annual retainer which would give clients all sorts of services within it – effectively our own BTE product, although obviously it would not be an insurance policy but rather an annual retainer.



Well, you have more direct experience of this than I do, Kerry. I am relieved to hear that you think that BTE (in the £20 per policy sense) is dying – I was not aware of that. Perhaps BTE will move towards becoming more like D&O insurance, where the insured typically does choose its solicitors, with the insurer (if it wishes) instructing its own solicitors to deal with coverage issues or keep a watching brief.

When these cases have come before the courts (Pine, Brown-Quinn), the results have (in my view) been only partially satisfactory. I don’t for a moment think that those decisions have caused BTE insurers to change their ways: indeed, that was the whole point of your original piece.

As for Ombudsmen and the other hangers-on, they are indeed subject to the rule of law. But so was Jimmy Savile.

Kerry Underwood

Getting matters to court is the key. Jimmy Savile would have been punished had he been prosecuted! BTE is definitely dying, partly because of the ban on referral fees but also because no solicitor will work for just portal fees, so the model no longer works for BTE insurers as it was predicated on them rarely having to pay legal costs.

I agree that the results have only been partly satisfactory, but I think that that reflects the unclear wording of the Regulations – the courts have done the best they can. No lawyer likes a person being deprived of freedom of choice of lawyer, and Judges are lawyers.



I suppose that my reservations about suing insurers stem from the fact that a client is already going to be worried about the underlying claim, without the extra layer of stress of battling the insurers. If the client is up for the fight, fine; but I wouldn’t want to use a client as a vehicle for a personal crusade against a BTE insurer (and, of course, I’m sure you wouldn’t either).

If BTE does not die, the Law Society is going to have to intervene in one of the litigated cases. I get the impression that it is gearing up to do this: hence the survey which was carried out by the ELA (which, needless to say, was rubbished by some BTE insurers).

There is an interesting discussion here:

Kerry Underwood

I am not sure that ensuring that people are represented by a solicitor of their choice is a “personal crusade” – more a civic duty and a professional duty as an officer of the court in my view. That is what solicitors are for.


Sadly, the Court of Appeal and the Ombudsman do not see it as being quite as clear-cut as that. They are the ones who need persuading, not me.


John Hall

Is there potential for a mis selling BTE insurance scandal bearing in mind the comments about the pre ticked boxes?

Kerry Underwood

Yes, but normally it was free or a few pounds. The problem with BTE was the referring of clients to poorly paid pet panel firms of lawyers, thus depriving the client freedom of choice.


See and

As far as I am concerned, BTE insurance is a scandal full stop. It is routinely missold, because no questions are ever asked by the insurer/broker to establish whether the proposer (who is invariably proposing for some other form of insurance – eg household or motor insurance) actually needs BTE cover. If the consumer tries to opt out of the BTE part of the policy, he is often told that he cannot do so because it comes as part of the package.

The indemnity limits are also misleading: the policy may purport to provide £100,000 of cover, but the consumer is likely to be put under great pressure to settle at an early stage for whatever figure the other side is offering. The extent to which the indemnity limit is being eroded may also be difficult to establish, because the consumer has to take the word of the panel firm that it is actually billing the insurer at the rates which were quoted to the consumer in the client care letter.

And what does the consumer get for his BTE premium? He gets shunted off to a panel firm, perhaps many miles away from him, with the BTE insurer making it as difficult as possible for him to exercise his freedom of choice under Regulation 6. The panel firm may well not understand the consumer’s rights under the policy and may well lean in favour of the insurer (because the insurer is more important to the firm than the consumer, with whom the firm is unlikely to deal more than once). If the consumer wants to use his own lawyer, he is told that his own lawyer must sign terms and conditions, which are frequently of a kind which no lawyer in his right mind would accept.

Kerry Underwood


I agree that BTE insurance is routinely mis-sold.

With effect from 13 June 2014 the Consumer Contracts Regulations make it illegal to have pre-ticked boxes in any type of contract and therefore a consumer would have positively to opt in to take out BTE insurance, rather than opting out.

Insurers are complying with that rule – my own motor insurance fell around £50 as it no longer included the apparently free BTE insurance which obviously I never wanted.

I also agree with your point about indemnity limits and indeed there are very significant question marks about the independence of pet panel BTE insurer firms.

In fact I agree with all of your comments.

The good news is that BTE insurance is withering on the vine as of course the BTE insurers can no longer sell the cases to panel firms without breaking the law, and if they fall foul of the Compensation Act 2006, committing a criminal offence.


See my related blogs:-








Written by kerryunderwood

July 21, 2014 at 10:12 am

Posted in Uncategorized

22 Responses

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  1. Totally agree BUT bearing in mind its closeness to the Insurance Industry will this government enact such a needed law


    December 16, 2014 at 9:05 pm

    • Seems unlikely I agree, but the last I heard was that Grayling had not yet tried to scrap next May’s General Election………….



      December 17, 2014 at 6:46 pm

  2. Hi Kerry. In what seems out of step with insurers’ insistence on low hourly rates, I’ve come across the following situation of a client under legal expenses insurance cover with Direct Line.

    The client has been referred to DLG Services Ltd (“DLG”), part of the Direct Line Group, which is an SRA regulated firm but, according to its website, seems only to accept instructions if the client is covered by a Direct Line legal expenses policy. DLG have by their client care letter accepted instructions from the client at a flat, and rather high, hourly rate exceeding £270 + VAT for each of the partner, supervisor and non-solicitor working on the matter.

    If the client transfers his instructions to me, I would want to agree an hourly rate at a more reasonable £200 + VAT. I wonder if Direct Line still able to limit cover to hourly rates of, say, £150 + VAT for partners and less for lesser qualified fee earners despite having been willing to pay its group practice significantly higher rates?

    If so, it seems odd that DLG is able to write in their client care letter under a paragraph heading “Introducers” that “This firm is appointed by Direct Line. This firm is a member of the same Group of companies as Direct Line. Aside from that your insurer has no financial interest in referring your case to us. The advice we give to you will be independent.” If their is no financial interest and the advice is independent, then how come that Direct Line choose to pay such a high hourly rate to DLG when there are so many competent firms who would gladly work at a lesser rate?


    April 8, 2015 at 3:00 pm

    • Stephen

      Many thanks for this. Please see blog published today- 16 October 2015- Insurers At It Again ? (4)



      October 15, 2015 at 12:20 pm



  5. […] INSURERS AT IT AGAIN (1) AND (2), […]

  6. […] INSURERS AT IT AGAIN (1) AND (2), […]

  7. […] INSURERS AT IT AGAIN (1) AND (2), […]

  8. […] INSURERS AT IT AGAIN (1) AND (2), […]

  9. […] INSURERS AT IT AGAIN (1) AND (2), […]

  10. Kerry may I ask what is the answer to the DLG and direct line problem I have tried to work with both in the defence of my personal injury claim and have now hit a stone wall with direct line telling me if I am not happy I can go to the financial ombudsman I have taken my complaint as high as I can in direct line but it all started when I raised my concerns about DLG legal services and direct line verbalised and put in writing that I could choose my Owen barrister and that they would fund it with out question well you guessed it as soon as I tried to activate this agreement it turned in to a complaint not made by me but by them and was passed from department to department no one accepting responcability and each department saying if you are not happy go to the financial ombudsman am I right in believing that that would be a waste of time as well Kerry your firm of solicitiors do you use independent medical experts or do you subscribe to the insuriance company’s medical experts way of doing things thank you john

    John fairhurst

    April 8, 2016 at 9:41 am

    • Not possible to deal with a query like this as a blog comment. All medical experts must now be independent if their reports are to be used in the proceedings. You refer to defending your personal injury claim, so presumably you chose Direct Line Group as your insurers. Why? Generally in such cases your rights are subrogated to the insurance company. What that means is that, as they are the organisation that has to pay up on any such claim, they have the right to conduct the claim as they think fit, subject to certain restrictions. Generally your choice is to instruct your own lawyers, but then you would have to pay for them and also satisfy any judgment against you, that is to pay the other party damages, if that is what the court ordered.

      Unfortunately when taking out insurance many people just go for the cheapest quote, and like most things in life, you get what you pay for.

      If, in fact you are bringing the claim and Direct Line Group are your legal expenses insurers, then the position is very different.



      April 8, 2016 at 10:07 am

  11. […] INSURERS AT IT AGAIN (1) AND (2) […]

  12. Kerry

    What about insurers that do not make clear that their panel solicitors are engaged under a cfa arrangement?


    John Wood

    September 26, 2016 at 7:48 am

    • John
      In the absence of recoverability of additional liabilities there is no requirement to notify the other side of the method of funding.


      September 26, 2016 at 12:13 pm

      • I don,t understand? If the insured is not aware that the recommended solicitors are working on a CFA arrangement then surely they should be told. You know what they say “you pay peanuts you get monkeys”


        John Wood

        September 26, 2016 at 6:25 pm

  13. Well, obviously the insured will be aware as they will have to enter in to a Conditional Fee Agreement. It is the other side which no longer needs to be informed. I do not understand the reference to peanuts and monkeys. All top lawyers prefer contingency or conditional fees as they are confident in their ability to get a result and a bonus. Hourly rates are the preserve of the mediocre,



    September 27, 2016 at 8:37 am

  14. Kerry – I am having massive problems with a BTE insurer at the moment. I took a PI case on a year ago and liability was unbelievably denied. A year down the line of arguments they have stuck to their guns and told me to issue – something I am more than happy to do. I therefore made initial contact with the clients BTE insurer for cover which would allow me to continue with the case. The BTE insurer rejected the ability of the client to choose his own lawyer and referred it to one of their panel firms who are also chasing me to transfer the file over – something which I am not inclined to do given the amount of work that has gone in to this case and the fact that the client does not want to either. I wonder if you would be able to give me some guidance as to what to write back to the BTE insurer to try and force their hand and agree to allow the client to appoint who he wishes to continue with his case?


    November 1, 2016 at 10:53 am

    • Rob

      Please see my post – Third Party Capture: BTE Insurers: Practical Advice, where I indeed give practical advice on what to do in this situation.

      The relevant scenario is number 5.

      I report the two most relevant decisions of the European Court of Justice in my blog BTE and the Right to Choose one’s Own Lawyer.

      I suggest that you read those two posts carefully and that should give you all the information and ammunition that you need.

      I am surprised at the conduct of the BTE insurers as I thought that all insurers had accepted for some time that once proceedings were issued there was absolute freedom of choice by the client. The battleground has been whether clients have freedom of choice from the outset.

      You will see that where I set out the offending text from the AA in the first of those posts, the AA themselves say:-

      “The Insurance Companies (Legal Expenses Insurance) Regulations 1990 provide the right of choice of solicitor from the time litigation is commenced, until that time we reserve the decision as to the choice of solicitor.”

      As will be apparent from what I have said here and in the various blogs, I disagree with that interpretation but my point is that even the legal expenses insurers accept that once proceedings are issued the client has complete freedom of choice of solicitors.

      I trust that deals with the matter and please let me know if you require any further information and please let me know the outcome.



      November 4, 2016 at 2:04 pm

  15. Thank you Kerry for your advice during the last four years
    Will see you on the motorway of life

    John fairhurst

    November 17, 2017 at 2:25 pm

    • John – hopefully on the main carriageway of the motorway of life and not the hard shoulder! 🙂



      November 20, 2017 at 1:23 pm

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