Category: Claims handling · Reviewed by Chrissie Anderson, Client Executive · Last reviewed 2026-06-11
The defence strategy memo is the document by which the defence solicitor sets out, for the insurer’s approval, the proposed approach to defending a claim — covering the merits, the litigation plan, the timetable, the budget, the expert strategy and the settlement posture.
The defence strategy memo is the operational counterpart of the coverage opinion. Where the coverage opinion addresses whether the policy responds, the strategy memo addresses how the policy should respond — what defence to run, what costs to expect, what settlement opportunities to pursue, what risks to manage.
A good memo is forward-looking, concise and decision-oriented. It is not a recitation of facts (those are in the file); it is an analysis of options and a recommendation. It allows the insurer’s claims handler and senior management to take an informed view on the strategic direction of the claim and to allocate reserves and management time accordingly.
There is no statutory or regulatory requirement to produce a defence strategy memo. The discipline is operational. It supports the insurer’s duty under ICOBS 8 to handle claims fairly and promptly, the insurer’s section 13A duty to pay within a reasonable time, and the insurer’s audit-trail discipline under SYSC 9.
For Lloyd’s syndicates, claims oversight bodies expect strategy memos on material claims as part of the file. For PRA supervisory reviews of large-loss claims, a coherent strategy memo demonstrating considered defence is a positive indicator.
The memo is privileged. It is created in contemplation of litigation, comprises legal advice and analysis, and is shared between the insurer (as the entity controlling the defence) and its panel solicitor (who acts for the policyholder). Privilege is held by the policyholder primarily, with the insurer entitled to access through the joint-interest principle that operates where insurer and policyholder share the defence. Winterthur Swiss Insurance Co v AG (Manchester) Ltd [2006] EWHC 839 (Comm) addresses the joint-interest principle in the insurance context.
The memo is shared selectively with reinsurers under the cession-disclosure provisions of treaties. Where reinsurers are entitled to claims information above a stated threshold, the defence strategy memo is one of the principal documents shared.
A typical defence strategy memo has eight sections.
First, an executive summary. Two or three paragraphs setting out the claim, the principal coverage and merits issues, and the recommended approach. Senior management should be able to take a view on the strategy from the executive summary alone.
Second, the merits analysis. Liability, causation and quantum each addressed. Counsel’s view if obtained. The range of possible outcomes with rough probabilities.
Third, the procedural plan. The litigation timeline, the key milestones (pleadings, disclosure, witness statements, experts, PTR, trial), and the directions sought or agreed.
Fourth, the expert strategy. Which experts will be instructed, who they are, what they are expected to address, and how their evidence fits with the merits theory.
Fifth, the budget. The estimated cost of defence to trial, broken down by phase and reconciled with any Precedent H budget filed.
Sixth, the settlement posture. The current settlement value (best, central and worst case), the planned use of Part 36 offers, the proposed mediation timing, and the recommended commercial range.
Seventh, the risks. The principal risks — adverse witnesses, new disclosure, late-emerging quantum, adverse judicial decisions on overlapping points of law — and the mitigation plan.
Eighth, the conclusions and recommendations. The defence direction, the immediate next steps, the approvals being sought from the insurer.
The memo is reviewed by the insurer’s claims handler and (for material claims) the claims manager and head of claims. Approval is recorded; departures from the approved strategy require fresh memo and approval.
The memo is updated at each material event — a coverage opinion, a Part 36 offer received, an expert report, a counsel’s conference, a judgment on a procedural matter. The updated memo carries forward the prior reasoning and explains the change.
“Initial strategy memo” — issued shortly after panel instruction, on incomplete information, setting out the preliminary approach.
“Pre-trial strategy memo” — issued shortly before trial preparation begins, addressing trial team composition, exhibit strategy, witness preparation, opening submissions outline and judicial deployment risk.
“Post-event strategy memo” — issued after a procedural or substantive event has changed the posture (an adverse summary judgment ruling, a strike-out, a successful set-aside application).
“Settlement strategy memo” — focused exclusively on the commercial settlement range, the negotiation tactics for a JSM or mediation, and the post-JSM contingency.
A defendant solicitor’s firm faces a £2.4m PI claim alleging negligent advice in a 2022 commercial property transaction. The defence panel firm issues a strategy memo to the insurer twelve weeks after instruction. Executive summary: liability arguable (counsel rates defence as 60% likely to defeat the claim on a Hedley Byrne causation argument); quantum (if liability is established) £1.6m to £2.0m on the claimant’s case, £900k to £1.3m on the defence’s case. Procedural plan: budget filed at £390,000; CMC awaited; six-day trial estimated October 2027. Expert strategy: a chartered surveyor on valuation impact; counsel’s preliminary view does not require an additional expert. Budget: £390,000 to trial. Settlement posture: current commercial value approximately £700,000; recommend Part 36 offer at £750,000 inclusive of costs to engage Part 36 incentives; aim for JSM at month 18. Risks: client witness availability uncertain; recent Court of Appeal judgment on related issue may strengthen claimant’s argument. Recommendations: approve filing of Precedent H at £390,000; approve panel firm to prepare Part 36 offer at £750,000; approve mediation timing for month 18. Insurer’s head of claims approves; the strategy is followed; the matter settles at JSM at month 19 for £820,000 plus £190,000 of costs.
By Matt Bartlett, Director, on 2026-06-11. Next review: 2026-12-11.
This entry is part of the Apex Insurance Wiki. Last reviewed by Matt Bartlett on 2026-06-11. Apex Insurance Brokers Limited, FCA FRN 724952, Companies House 07014570. Not regulated advice — consult your broker on your specific position.
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