AXA has commenced legal proceedings against 78 law firms in England and Wales in order to recover losses associated with after-the-event (ATE) insurance policies taken out on claims it believes were not properly vetted. The sums sought are stated to be in the region of £60million.

This action mirrors The Accident Group (TAG) litigation in which the insurers of TAG's legal expenses policies, led by Winterthur, brought an action against over 600 personal injury law firms after TAG's spectacular collapse in 2003. It was alleged that the law firms referred claims they knew would fail. In January this year, the law firms and the insurers reached an out-of-court settlement, thought to be in the region of £30m.

AXA's dispute relates to ATE policies taken out on personal injury, housing disrepair and industrial disease claims by panel law firms between 2001-2004 with Composite Legal Expenses in its role as ATE cover-holder for underwriter NIG. At that time, NIG was indirectly owned by Winterthur which was subsequently acquired by AXA in December 2006.

InsureReinsure.com will report on developments in this dispute as they unfold.