Scope of authority

An underwriting agent is authorised to write business for its insurer principals. Various terms of the binding authority conferring that authorisation on the underwriting agent will generally be expressed to be continuing beyond its termination, eg, accounting requirements and confidentiality. The question raised by Temple Legal Protection Ltd v QBE Insurance (Europe) Ltd [2008] EWHC 843 (Comm) was whether, on the proper construction of the binder in question, the underwriting agent had retained the authority to conduct claims-handling and other run-off activities following the withdrawal of its authority to write further business.

Temple: the facts

Temple was formed in 1999, largely to take advantage of the introduction of the new arrangements for the funding of civil litigation established by the Access to Justice Act 1999. That Act permitted lawyers to enter into conditional fee arrangements in certain circumstances, and also authorised the funding of claims by means of ‘after the event’ (ATE) insurance. ATE policies vary, but the essence of them is that the claimant is provided with insurance against the risk of a costs order being made against him if his action fails, the premium for that insurance not actually being paid by the claimant but rather loaned to him under a separate arrangement: if the claimant wins his case the amount of the premium is paid by the defendant in the proceedings by way of costs; and if he loses the case amount of the loan representing the premium is paid by the insurers themselves. Clearly, insurance will be issued only if the claimant good prospects of success, and for that purpose ATE insurers appoint solicitors to vet potential claims in order to assess those prospects.