Traditionally Commercial Insurance brokers sell, solicit or negotiate insurance arrangements on behalf of their clients. Many entrepreneurial brokers however are using their in-depth knowledge of risks and the insurance market to find and arrange appropriate litigation funding and insurance solutions for their clients. They effectively act as a conduit between their clients who might be individuals, businesses or solicitors and third-party funders that provide the litigation funding solutions. They do this because it allows them help clients managing complex and costly litigation proceedings whilst also creating new revenue streams for their business.
For a pre-negotiated fixed proportion of the eventual claim or an agreed ROI, a litigation funder will take on the risk and expenses related to a claim. This gives the business access to non-recourse financial solutions designed to manage the costs of the litigation. Commercial Insurance Brokers will typically have a wide range of insurance and financial products designed to offer legal protection for unforeseen circumstances. When legal matters arise however it is not uncommon for certain insurance products to have policy restrictions and covenants which may exclude legal cover when it is needed most. Therefore in many instances there is a serious need for flexible and specialist litigation financing and insurance solutions. With a myriad of litigation finance solutions available the acquisition process can be a daunting and time consuming experience for a claimant. A broker has the ability to remove these concerns and facilitate the entire process. They not only provide an invaluable service to clients during a time of need but they also create new revenue streams as they will receive a commission payment from the funder for introducing the business. All parties benefit from this arrangement in more ways that one and that is why brokers are navigating towards litigation funding and insurance services.
There has also never been a better time to make the transition from negotiating insurance policies to brokering third-party funding solutions within the UK. The growth of the UK litigation finance industry currently exceeds the US and Australian markets where litigation funding has been a well utilised financial mechanism for a number of years. A recent survey carried out by a third party funding company amongst law firms and lawyers indicated that 41% of UK professional entities have used commercial litigation finance compared to just 32% in the U.S. and 40% in Australia. As more and more businesses and law firms require litigation funding and insurance solutions brokers across the UK are capitalising on 5, 6, 7 and even 8 figure funding and insurance requirements.
Commercial Insurance brokers will usually work with a wide range of businesses in multiple industries. Whether it’s a small business or a multi national giant the unfortunate reality is that at some point they will have specific litigation finance and insurance requirements. Commercial litigation can be instigated for any number of reasons including partnership or joint venture disputes, breach of contract, breach of fiduciary duties, business torts and shareholder issues to name just a few. By having the ability to provide clients with with bespoke non-recourse financial and insurance products during these times brokers can provide solutions designed to mitigate risks and maintain cash flow during uncertain times.
Commercial Insurance Brokers across the UK are using litigation funding and insurance solutions to strengthen client relationships, establish new revenue streams and create new professional opportunities. If this is something you’d like to explore in more detail please contact us.