Category: Claims handling · Reviewed by Simon Temme, Account Executive · Last reviewed 2026-06-11
Panel solicitor instruction is the formal appointment by an insurer of a firm of solicitors from its approved panel to act in the defence of a claim against the insured — usually on agreed rates and terms of engagement.
Most UK insurers maintain a panel of approved defence firms across each line of business — separate panels for PI, EL/PL, motor, property/BI, D&O, cyber, marine, construction and so on. Panel arrangements provide rate certainty, quality control, capacity management and conflict screening. Instruction is the formal step that engages the panel firm on a specific claim.
The instruction document typically sets out: the claim reference and policy details; the matter the firm is to handle; the scope of work; the rates and any cost cap; the reporting cadence; the authority limits (settlement authority, expenditure approval); the conduct expectations; and the firm’s obligations on conflicts and confidentiality.
The insurer-policyholder-defence solicitor triangle has well-developed conflict-of-interest rules under the SRA Code of Conduct for Solicitors, RELs and RFLs (rules 6.1 and 6.2) and the SRA Code of Conduct for Firms (rules 6.1 and 6.2). The panel solicitor is treated as acting for the policyholder, even though instructed and paid by the insurer. Where the policyholder’s and the insurer’s interests diverge (a coverage dispute, a settlement disagreement, a reservation of rights), the panel solicitor must consider whether it can continue to act and whether independent advice is needed.
The Civil Procedure Rules govern the litigation; Solicitors Regulation Authority rules govern the solicitors’ conduct; the panel agreement and the instruction letter govern the commercial relationship between insurer and firm.
Under ICOBS 8 the insurer remains responsible for the conduct of the claim regardless of who is instructed; delays, mistakes or unfairness by the panel firm are imputed to the insurer for FOS purposes.
Where the claim is large enough to engage the FCA’s Consumer Duty (for consumer policyholders) or contentious enough to attract regulatory scrutiny, the instruction letter is examined as part of any thematic review of claims handling.
Panel instruction proceeds through five stages. First, the handler identifies the appropriate panel firm — based on subject-matter expertise, geographic coverage and current workload. Second, conflict clearance is run by the firm against its central client database; conflicts are reported back within hours. Third, the instruction letter is issued, attaching the relevant policy, FNOL documents, letter of claim and any earlier correspondence. Fourth, the firm acknowledges, names the partner with primary responsibility and the supporting team, and confirms the budget and reporting plan. Fifth, the firm begins substantive work.
Panel rates are typically agreed in a master panel agreement covering all instructions. Rates may be hourly, capped by phase, or fixed for defined activity types. Senior insurers also use blended rate cards (junior associate, senior associate, partner, supervising partner) with discounts off the firm’s published rates.
Reporting cadence is usually monthly for active claims and quarterly for dormant or run-off matters. Reports include progress, expenditure, key risks, and any settlement opportunities.
Settlement authority is delegated within stated limits. A partner may have authority to settle up to £25,000 without insurer approval; £100,000 with handler approval; above that with claims manager and (for very large settlements) head of claims approval.
For large claims, the panel firm acts as project manager — instructing counsel, instructing experts, managing disclosure, coordinating with the broker and the underlying insured’s in-house team. The insurer’s handler is the strategic decision-maker; the panel firm is the executor.
Where the panel firm and the policyholder’s preferred firm differ, the policyholder may request its own firm. The insurer’s panel arrangements do not always require panel-only instruction; many policies allow the policyholder to instruct its preferred firm at panel rates, subject to insurer approval.
“Co-counsel” arrangements appoint a panel firm and the policyholder’s preferred firm jointly. The panel firm runs the defence; the preferred firm advises the policyholder on coverage and on its commercial interests.
“Cap and collar” arrangements set a maximum and a minimum fee for the matter, sharing cost risk between insurer and firm.
“Phase-billed” arrangements break the work into stages (pre-action, pleadings, disclosure, trial) and fix a fee for each phase.
“Bench” arrangements appoint a panel firm to multiple matters at standardised rates, with volume discounts.
“Strategic” or “lead” panel firms handle the firm’s largest exposures across multiple lines, with a single relationship partner and direct lines into the firm’s most senior practitioners.
A FTSE 250 company’s £8m D&O claim is notified following an FCA enforcement action. The insurer instructs its lead D&O panel firm within 48 hours of acknowledgement. Conflict clearance returns positive within four hours. The instruction letter sets out: claim scope (defend the underlying enforcement and any parallel civil claims); the partner team (a senior litigation partner with a junior partner and three associates); rate card (panel rates approximately 18% below the firm’s published rates); budget £400,000 for the first phase to pleadings; reporting monthly with quarterly steering committee meetings; settlement authority delegated up to £250,000 to partner, above to insurer; conflict and confidentiality undertakings; and a reservation that the panel firm acts for the policyholder, not the insurer, and that any conflict must be promptly notified. The firm accepts the instruction and starts work the next morning, instructing leading insurance counsel for a coverage opinion and engaging the policyholder’s in-house team in a kick-off meeting within five working days.
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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