For many firms, after the event (ATE) insurance has long been a familiar and embedded part of litigation strategy, often arranged through established relationships and trusted intermediaries. However, in the context of evolving regulatory expectations, particularly under Financial Conduct Authority (FCA) Consumer Duty, what once felt operationally sound may no longer meet the standards now required around transparency, suitability and demonstrable client outcomes.
Today, the challenge is that ATE arrangements rarely fail in obvious ways, but instead, they drift out of alignment over time to create subtle but material compliance risks that only become visible under closer scrutiny.
In practice, this means that many firms may already be operating with provisions that no longer fully support either regulatory expectations or client outcomes, without even realising it. That’s exactly why the following signs are so important to recognise, as they highlight where that misalignment most commonly begins to surface, and where closer attention may now be needed.
When you can’t clearly explain the value to your client
One of the clearest indicators that an ATE provision may no longer be fit for purpose is an inability to confidently articulate its value in a way that is both accurate and accessible to the client, particularly when considering how premium structures, deferred costs and scope of cover interact with the wider funding arrangement.
Under Consumer Duty, it’s no longer sufficient for a product to be technically sound, it must also be communicated in a way that enables informed decision-making. This means that if explanations rely too heavily on legal or insurance jargon, or if clients are unlikely to fully grasp the financial implications without significant interpretation, the risk is falling short of regulatory expectations around clarity and fair value, rather than simply ‘misunderstanding.’
When your provider relationship lacks transparency and accountability
Another important consideration is the level of visibility and accountability within your ATE provision, particularly in relation to who’s ultimately responsible for underwriting the risk and how decisions are made throughout the lifecycle of a policy.
For example, if there’s limited transparency around the individuals, processes or governance structures behind the product, it becomes significantly more difficult to evidence oversight, challenge assumptions or demonstrate that appropriate due diligence has been carried out.
As such, in an environment shaped by Consumer Duty whereby firms are expected to understand and stand behind the products they recommend, any lack of clarity in the supply chain can quickly translate into a compliance gap, especially if issues arise and there is no clear line of sight to those responsible for resolving them.
When regulatory change outpaces your current approach
As the regulatory landscape surrounding litigation funding and insurance continues to evolve, ATE provisions that were structured even a few years ago may not reflect current expectations around customer outcomes, product governance and ongoing value assessment.
This is because Consumer Duty has introduced a requirement not only to ensure that products are appropriate at the point of sale, but also to monitor whether they remain suitable over time. This means that static or legacy ATE arrangements may no longer be defensible without periodic review.
As a result, where firms are relying on long-standing structures without reassessing how they align with current guidance, there’s now a growing risk that those arrangements are no longer operating in a way that meets the Duty’s standards, even if they continue to function operationally.
When cover doesn’t meaningfully protect against foreseeable harm
At its core, ATE insurance is intended to mitigate adverse costs risk. However, not all policies deliver protection in a way that is proportionate to the realities of the claim, particularly where cover limits, exclusions or conditional triggers restrict the policy’s responsiveness in practice.
In fact, Consumer Duty places a clear emphasis on preventing foreseeable harm. This means that the presence of a policy alone isn’t enough, and that it must instead provide meaningful, reliable protection in scenarios that could reasonably arise.
Then, if there’s any uncertainty as to whether a policy would respond as expected, or if the level of cover doesn’t align with the potential exposure, the provision may be creating a false sense of security rather than genuinely safeguarding the client’s position.
When ATE is treated as a process rather than a considered recommendation
Finally, a common but often overlooked sign that an ATE provision is no longer working effectively, is when it becomes a routine or transactional element of the litigation process, rather than a considered and tailored recommendation based on the specific needs of the client and the claim.
Consumer Duty requires firms to demonstrate that products are suitable for their target market and aligned with individual circumstances. In other words, this means that a one-size-fits-all approach to ATE is increasingly difficult to justify. Where policies are selected out of habit, or without a clear link to the client’s risk profile, financial resilience and litigation objectives, there’s a high risk of being unable to evidence that the right decision-making process has taken place, ultimately leading to poor client outcomes.
Reassessing ATE through a Consumer Duty lens
Taken together, these signals point to a broader shift in how ATE insurance must be approached by moving away from a purely functional role within litigation funding towards a more actively governed component of client care and regulatory compliance.
The question, however, is no longer around whether ATE is in place at all, but it’s whether it can withstand scrutiny across the full scope of Consumer Duty expectations, from fair value and transparency through to suitability and harm prevention.
For firms unsure whether their current provision meets that standard, a proactive review can provide valuable clarity, not only in identifying potential areas of risk, but also in strengthening confidence that client outcomes are being properly supported.
If you would like an informed, independent view on whether your ATE provision is still working as it should, amberis offers this support on a free, no-obligation basis. Our team here at are here to support that conversation, so feel free to contact us today for expert advice.