Litigation finance firm Burford Capital has applied for a licence to establish an insurance business.
The new business will offer insurance cover for clients involved in litigation who may face significant costs orders in the event of losing a case.
Burford, which is backed by investors including star fund manager Neil Woodford and Invesco, previously offered so-called ‘adverse costs’ insurance via an agency relationship with MunichRe.
However, the majority of those policies were for less than £3m and aimed at the mid-market.
The new business, which will be registered in Guernsey, is aimed at more complex litigation and arbitration cases.
Burford’s London managing director Craig Arnott said: “It is to fill a hole we perceived in the market, because adverse cost insurance wasn’t available for many of the matters we were dealing with such as big chunky commercial matters, competition matters and big arbitration matters.”
Arnott said that Burford’s clients were finding that they needed cover ranging from £15m to £25m which the market was struggling to provide.
He anticipated that Burford’s new insurance business would initially write up to 20 policies a year, focusing on cases Burford had already provided funding for.
The new business will be called Burford Worldwide Insurance and is backed by Burford’s balance sheet and reinsurance arrangements which have been placed by Marsh & McLennan subsidiary Guy Carpenter & Company.
Lianne Craig, a partner at specialist litigation firm Hausfeld, said: “There is a gap in the market, many insurers don’t want to insure in excess of £10m per case and this can lead to complexities where you are looking for cover in excess of that. There is also increasingly an appetite for funders to deal ‘in house’ so to speak with the insurance aspects of a case. This feels like a natural next step to me from Burford.”
Burford has backed Hausfeld, which is pursuing claims related to the Volkswagen emissions scandal, to the tune of €30m (£27m).