Prince Harry's High Court defeat to the owner of the Daily Mail could send legal insurance premiums soaring, experts have warned, after the Duke of Sussex and six other high-profile figures were left facing an uninsured bill of £19m.

The claimants — the Duke of Sussex, Sir Elton John and his husband David Furnish, actresses Liz Hurley and Sadie Frost, campaigner Doreen Lawrence, and former Liberal Democrat MP Simon Hughes — brought a lawsuit against the Daily Mail's publisher in 2022, alleging serious privacy breaches dating back more than 30 years.

The group had purchased After the Event (ATE) insurance, which covers legal costs tied to litigation, to protect against £16.2m of Associated Newspapers' costs in the event they lost the privacy case. However, Friday's costs ruling means the Daily Mail group could attempt to recover the entire £34.5m. ATE policies are widely used in English litigation, particularly in group and privacy claims, because the general rule in England and Wales is that the losing side pays a substantial portion of the winner's legal costs — an exposure that can dwarf the claim itself.

Judge Matthew Nicklin said in the ruling that he had "decided not to impose a ceiling on Associated's recoverable costs" despite their scale appearing "excessive". He added that the amount being claimed had given "rise to real concerns as to whether all of the costs now claimed by Associated were reasonably incurred and are reasonable in amount".

The celebrity claimants were ordered to pay interim costs of £9.5m — almost £5m above the amount originally budgeted by the court — to Associated Newspapers by 4pm on Friday 28th August. Nicklin also ordered the costs to be assessed on an indemnity basis, a more favourable ruling for the publisher that could increase the amount it ultimately recovers. An indemnity basis of assessment removes some of the protections normally available to a paying party — on the standard basis, costs must be proportionate and any doubt is resolved in the paying party's favour — meaning insurers can face payouts well beyond the court-approved budget they priced against.

Nick McDonnell, director and costs lawyer at legal costs firm Kain Knight, told City AM the potential payout may lead insurers to scrutinise future cases more closely before offering cover.

"This case may prompt ATE insurers to factor more heavily into their underwriting the risk of an indemnity costs order, particularly in complex group litigation where that can significantly increase exposure beyond an opponent's approved budget," he said.

McDonnell added that this could push premiums upward. "If that perceived risk translates into higher limits of indemnity or greater pricing for the additional exposure, premiums may inevitably rise, raising a wider question as to whether adequate ATE cover remains affordable for claimants and ultimately, whether some otherwise viable group claims become more difficult to pursue," he said.

That question reaches beyond celebrity claimants. ATE insurance is a cornerstone of access to justice in costly group litigation — from data breach and privacy claims to mass consumer actions — because it allows claimants without deep pockets to litigate without risking personal bankruptcy over the opponent's costs. If cover becomes more expensive or harder to obtain, the pool of cases that reach court at all could narrow.

Rocco Pirozzolo, managing director and underwriting director at City insurance firm Harbour Underwriting, told City AM the decision "will give pause for thought for the market as once cover is in place, the insurer has no control over how a case is run. Given that, perhaps pricing should be increased to reflect the risk of indemnity costs being ordered."

'Insurers will start asking harder questions'

When assessing a case for ATE insurance, underwriters typically weigh the legal risk and the likelihood of winning, and most insurers require an independent assessment showing a 60 per cent or higher chance of success. They will also ask for a formal opinion from the claimant's barrister.

Mark Borkowski, a leading PR strategist and crisis and reputation consultant, told City AM that "insurers will start asking much harder questions" following this case.