Burford Capital launches adverse costs insurer in Guernsey

Burford Capital is to launch an insurer to address adverse costs risk. Burford Worldwide Insurance will be based in Guernsey and will offer Burford Capital’s legal finance clients a new insurance product to address adverse costs risk in commercial litigation and arbitration globally. Burford Worldwide Insurance is awaiting final licensing by the Guernsey Financial Services Commission. It has already received outline approval. Its directors will include Callum Beaton, who has served as chief executive of Thomas Miller Risk Management (Guernsey) and president of the Insurance Institute of Guernsey, and Charles Parkinson and David Lowe, two of Burford Capital’s current non-executive directors. Marsh Management Services Guernsey Ltd will act as insurance manager, and Marsh’s Guy Carpenter & Company has placed the reinsurance. Burford Capital is a global finance and investment management firm focused on law. It said the insurance product will meet a need in the marketplace for significant levels of adverse costs cover for major cases in cost-shifting jurisdictions around the world. Burford said it has extensive experience in providing adverse cost insurance, having written more than 50,000 such policies in its English insurance business. This was focused on the middle market (with most policies providing less than £3m) and was built on a longstanding agency relationship with Munich Re. According to Burford: “While demand for mid-market English adverse cost insurance has declined in light of regulatory changes, adverse costs risk remains a key issue for larger, complex litigation and arbitration, Burford’s core business focus. Today, it is difficult to find a path forward on litigation claims once the adverse costs exposure approaches £20m as there is presently limited capacity for such claims in the insurance market.” Christopher Bogart, Burford Capital’s CEO, said: “Burford has extensive experience in providing adverse costs insurance. We brought our prior business to an end as its agency structure and its increasing platform costs were undesirable, but we see considerable demand for adverse costs coverage in the large dollar claims in which we specialise, and it makes eminent sense for us to meet that demand through our own insurance provider.” Adverse costs protection is often a prerequisite in large cases as individual defendants are typically unwilling to take on the kind of joint and several adverse costs exposure that can exist in such cases, Burford explained. There is also growing demand for such protection in large arbitration matters. Burford said the insurer will have significant capital available through Burford’s balance sheet and extensive reinsurance arrangements that have been negotiated with leading reinsurers. Craig Arnott, managing director of Burford Capital in London, said: “The added risk of adverse costs exposure has the potential to dampen the ability of clients to pursue significant litigation in cost-shifting jurisdictions like the UK, particularly in high-cost areas such as competition, and with particularly harsh consequences for law firms. Burford is pleased to offer a product that specifically mitigates that risk for the clients and law firms.”

Burford Capital launches adverse costs insurer in Guernsey

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