Partially upheld: unfair claim decline; procedural deficiency in assessing prospects of success complaint against AmTrust Specialty Limited

Decision detail

Summary

Mr P complained that AmTrust unfairly declined his legal expenses insurance claim for constructive dismissal proceedings following his dismissal and refusal to accept reinstatement. AmTrust initially declined the claim without proper legal assessment, then stated it would reconsider if Mr P obtained a solicitor's assessment showing 51%+ chance of success. Mr P obtained such an assessment, but it concluded only a 50% chance of success. The ombudsman found AmTrust's initial process was flawed but its ultimate decision to decline cover was fair, as the 50% assessment did not meet the policy's requirement of more than 50% chance of success. The complaint was partially upheld and £150 compensation awarded for poor communication and handling.

The Ombudsman's reasoning

While AmTrust's ultimate decision to decline cover was fair because the solicitor's assessment showed only 50% (not 51%+) chance of success, the process was flawed. AmTrust's initial reliance on an assessment from a non-legally-qualified member of its Prospects Assessment Team, without proper reasoning or legal professional review, was inappropriate. However, when Mr P obtained a properly reasoned assessment from a qualified solicitor, AmTrust was entitled to rely on it. The distinction between 50% and 51% is critical—50% means the court could decide either way, whereas 51% means more likely than not to succeed. The settlement negotiation costs were properly excluded under the policy terms. AmTrust should not be required to obtain a further assessment or pay for Mr P's assessment, as no assessment has concluded the claim has reasonable prospects of success.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website