Allianz Cornhill Legal Protection has warned insurers could be hit by the emergence in the market of 'ghost' after-the-event (ATE) policies.
A ghost ATE policy is created when a solicitor approaches an ATE underwriter for a policy on the understanding that they will never make a claim on it. In return the policy is 'written' at a low premium.
The policy subsequently provides evidence to reassure the client that cover is in force, which can then be used to charge defendant insurers at a
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