Issue 20 July 2016 ISSN 2051-6495
Linking the industry together
James DALTON “A well functioning system is not about people’s business models, it’s about what’s right for the customer”
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Editorial BOARD Aaron Pearson Director and Solicitor Three Graces Legal Adrian Coupland Managing Director - Data and Distribution SSP Adrian Hurst Head of Strategic Projects Zurich Financial Services David Williams Managing Director Underwriting AXA Insurance Donna Scully Partner Carpenters Gordon Healiss Commercial Director Accuro Transcription Solutions Ltd Leigh Jones Key Accounts Manager Laird Assessors
Nicola Klimkowski Head of Business Control and Development LAMP Services Limited Oliver Smith Marketing Manager SlicedBread Rob Smale Claims Director Ageas Scott Whyte Managing Director Watermans Stephen Ward Managing Director Clerksroom & Clerksroom Direct Steve Turner Managing Director EDAM Group Tara Shelton Chief Executive Officer i-Cog Claims Management
Lesley Graves Managing Director Citadel Law
Tim Wallis Mediator and Solicitor Expedite Resolution and Trust Mediation
Mark Hewitt Managing Director Rebmark Legal Solutions
Zoe Holland Managing Director ZebraTD
Mark Ledger Principal Prosthetist Blatchford Clinic
WELCOME elcome to the latest edition of Modern Claims Magazine. In this issue Donna Scully, Editorial Board member for Modern Claims and Partner at Carpenters, spoke to James Dalton, the Director of General Insurance Policy at the Association of British Insurers (ABI), to ask about collaboration between claimant solicitors and insurance companies, and why he thinks a well functioning system should not be about business models but about customers. Read the full interview with James on pages 13-15.
Identifying innovative solutions for clients is certainly top of the agenda for DAC Beachcroft’s Claims Solutions arm, and I caught up with the Chief Executive, Craig Dickson and the new Chief Operating Officer, Brian Pearse, to find out about their Innovations Lab, the firm’s new research and development hub (pages 18-19). I also spoke to the CEO of Lloyd’s of London, Inga Beale, to find out about Vision 2025, how they are approaching global risks and whether the insurance industry is still lagging behind other professional sectors when it comes to diversity. Read the full interview on pages 16-17. Also in this issue, we have full coverage from the recent Doctors Chambers Modern Claims Conference, which took place on 15th June at Old Trafford, Manchester United. Full coverage from the conference appears on pages 44-47. I would also urge you to keep an eye out for details of upcoming Modern Claims Events in 2017, which will be announced soon. Since the last issue, Modern Claims also held a Fraud Roundtable in conjunction with Carpenters. The roundtable brought together leaders in the industry from the claimant and insurer contingents and proved to be a lively debate, which resulted in a remarkably united front in relation to how the industry can come together to stamp out insurance fraud. Read the full article on pages 48-51. I hope you enjoy this edition of Modern Claims and if you have any feedback about this issue, or ideas for a future edition, please get in touch with me via the details below. Happy Reading!
Charlotte Parkinson, Group Editor, Modern Claims Magazine.
Issue 20 July 2016 ISSN 2051-6495 Group Editor Charlotte Parkinson
Production/Editorial Assistant Brendan Gurrie
Project Manager Rachael Pearson
Events Sales Martin Smith
@modernchar email@example.com 01765 600909
Modern Claims Magazine is published by Charlton Grant Ltd ©2016.
All material is copyrighted both written and illustrated. Reproduction in part or whole is strictly forbidden without the written permission of the publisher. All images and information is collated from extensive research and along with advertisements is published in good faith. Although the author and publisher have made every effort to ensure that the information in this publication was correct at press time, the author and publisher do not assume and hereby disclaim any liability to any party for any loss, damage, or disruption caused by errors or omissions, whether such errors or omissions result from negligence, accident, or any other cause.
Modern Claims 03
07 Ant Gould talks news
The Director of Faculties at the Chartered Insurance Institute (CII) asks why consumers are often bewildered and frustrated with the claims process, and considers what will happen to the proposals to increase the small claims track limit, now that Britain has voted to Leave the European Union (EU).
13 James Dalton
At the annual Doctors Chambers Modern Claims Conference on 15th June, Donna Scully, Partner, Carpenters sat down with the Director of General Insurance Policy at the Association of British Insures (ABI), to ask whether now is the time for true collaboration between insurers and claimant solicitors. Charlotte Parkinson, Modern Claims, reports.
16 Inga Beale
Charlotte Parkinson, Modern Claims, spoke to the CEO of Lloydâ€™s of London about their unique position in the market, the challenges they face, both nationally and internationally, and the diversification of the insurance sector.
18 Craig Dickson and Brian Pearse
Charlotte Parkinson, Modern Claims, spoke to the Chief Executive, Craig Dickson and Chief Operations Officer, Brian Pearse at DAC Beachcroft Claims Solutions, about identifying innovative solutions for clients and collaborating with insurer partners.
23 Internet Insurers
David Williams, AXA Insurance
23 What does it take to stay sustainable? Steve Turner, EDAM Group
25 Protecting vulnerable customers Rob Smale, Ageas
25 The Future? Google It!
Stephen Ward, Clerksroom & Clerksroom Direct
27 Collective protection, individual risk
Adrian Coupland, SSP
27 Brexit Complications Scott Whyte, Watermans
29 Them and us
Aaron Pearson, Three Graces Legal
29 M&A: the risks
Zoe Holland, ZebraLC
Editorial Board contributors
the single platform for all legal
04 Modern Claims
MODERN CLAIMS Issue 20 July 2016 ISSN 2051-6495
30 Novice Litigants and Expert Witnesses
Mark Ledger, Blatchford Clinic
31 Technology: leading the way
Leigh Jones, Laird Assessors
33 Google, the Game Changer
Nicola Klimkowski, LAMP Services Ltd
33 Technology: reducing frictional costs
Mark Hewitt, Rebmark Legal Solutions
56 Fixed costs: driving arbitration
42 Doctors Chambers Modern Claims Conference 2016
57 Rehabilitation – the most challenging but rewarding aspect of injury litigation?
48 Fraud Roundtable
Tara Shelton, i-Cog Claims Management
35 Vulnerable customer care 37 Going by the guidelines
Lesley Graves, Citadel Law
37 McKenzie Lawyers?
Donna Scully, Carpenters
39 Smart phones are for businesses
Tim Wallis, Expedite Resolution & Trust Mediation
39 To outsource or not? Gordon Healiss, Accuro
Peter Staddon explains why some Managing General Agents (MGAs) are looking to take back some control of claims functions.
The third annual Modern Claims Conference took place on 15th June 2016 at Old Trafford, Manchester Utd F.C. Charlotte Parkinson, Modern Claims, summarises the event.
35 Identifying Opportunistic Fraud
Sophie Timms, Zurich UK
41 A role for MGAs connection claims and underwriting
31 What’s that coming over the hill? Is it a disruptor? Oliver Smith, SlicedBread
Fraud has always been high on the agenda in the Claims industry, and now more than ever, with looming government reforms, innovations in technology, and a new generation of fraudsters, it is necessary for the sector to come together to tackle the issue. Brendan Gurrie, Modern Claims, reports.
53 How to win the Battle against Claims Fraud
As insurers drive consumers online and to mobile apps to service their insurance needs, the likelihood that fraud will seep into their books will inevitably increase. Tristan Prince explains how to shut potential fraud out at the front door.
55 Modern Claims Conference: The Claimant side
Dr Victoria Handley explains why she thinks the only truth that came out of the Doctors Chambers Modern Claims Conference was the confirmation by David Williams (AXA) that dodgy insurers fuel fraud by making pre-med offers, and argues this is the headline that should be in every newspaper showing the public why premiums have risen.
Andrew Ritchie QC outlines the potential costs penalties for refusing to Arbitrate Clinical Negligence and Personal Injury claims.
Amanda Stevens considers why personal injury practitioners should engage with the revised Rehabilitation Code, and explains why rehabilitation in clinical negligence litigation should take centre stage.
58 Sector Soapbox
Modern Claims’s panel of resident industry associations BIBA, MASS and FOIL consider the burning issues impacting the claims industry at the moment.
61 Case Study: Eclipse
Compensation specialist selects Proclaim Practice Management Software solution to enhance personalised client service.
61 Case Study: Simpson Millar
How Simpson Millar’s LPC benefits the Claims Industry
10 MINUTES WITH 62 10 minutes with…
Ben Fletcher, Insurance Fraud Bureau (IFB)
Modern Claims 05
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Ant Gould TALKS NEWS The Director of Faculties at the Chartered Insurance Institute (CII) asks why consumers are often bewildered and frustrated with the claims process, and considers what will happen to the proposals to increase the small claims track limit, now that Britain has voted to Leave the European Union (EU). t the recent Doctors Chambers Modern Claims conference in Manchester I was asked about the insurance industry’s reputation – and what could be done it improve it. I said I believed the key issue was not in fact just claims, but also underwriting and the overall lack of understanding by the general public about how insurance actually works. To put it bluntly I said that whilst insurers continued to “drop their trousers in terms of price when challenged over premiums”, then insurers would not be trusted.
Why did I say this? Because underwriting is often portrayed as a science to the public, with prices based on a set of fairly standard questions about them, their driving record, their car, where they live and what job they do. This results in a premium – often higher in year two with no explanation given. Yet this scientific approach seems to disintegrate, as insurers will often drop the premium price if faced with losing a potential customer – or, as has happened to me, a premium for the same insurer you are renewing with, but via an aggregator site, will come in much, much lower. To put if frankly, this does not look good to the consumer, who just assumes the first price was the insurer trying their luck.
Why don’t the public understand?
Another issue is that whilst personal lines insurance is mostly sold on price, even when claims are used as a differentiator, the industry shies away from spelling out that most of the money paid out for claims relates to personal injury. Direct Line deserve praise for their recent advertising which is focused on claims, yet once again this focuses on the car and customer convenience – yet their biggest claim last year was just over £19m for one car crash – almost all for personal injury damages/care. That is why the public do not understand why it costs more to insure an old car that is not worth very much, than a brand new expensive shiny one. Is there any evidence supporting my personal views? About two years ago now, the Chartered Insurance Institute (CII) carried out research with a firm that specialises in listening to the discussions and debates that take place online - specifically in areas such as Twitter, online forums and blogs around home, motor and travel insurance – for a 12-month period. If you were to ask most of those working within insurance what they think would show up as dominating online comments about insurance you would expect, based on national media coverage, for it to be gripes about insurers failing to pay genuine claims and trying to wriggle out of them altogether by using the small print. However, based on online conversations monitored in 2013, this was not the case at all. The research showed that almost threequarters of the commentary was actually related to confusion about premiums and the associated cost of insurance. Most individuals were, in fact, uncertain of even the most basic aspects of insurance and took the opportunity to go online to seek guidance and reassurance from their peers or consumer champion-style brands such as MoneySavingExpert.
Whilst personal lines insurance is mostly sold on price, even when claims are used as a differentiator, the industry shies away from spelling out that most of the money paid out for claims relates to personal injury
Modern Claims 07
The suddenness of the announcement has certainly helped erode the already fragile trust between the claimant sector and the insurance sector but the only way forward has to be collaboration Addressing the concerns
So why is at that three-quarters of the conversations those customers were having related specifically to them being confused by insurance? Yes insurance is complicated, but it can’t be right that customers are often unable to understand the products that they are actually buying, do not understand the processes around how claims are settled and have to struggle with a lot of the jargon and language that is being used. One of the reasons why they are so confused is because the language the insurance profession uses is specific to the industry, which then wonders why customers do not understand the terms. Journalists in the national media – who are hugely influential in terms of public perception of the insurance and financial services sector - say they also struggle to understand why the profession continues to use this language and is then surprised when customers do not understand it. So we looked at how the CII might help, as a professional body which exists to serve the public interest, and we launched our Made Simple campaign. It addresses the genuine concerns of the general public, as many of them seem very confused about what they are buying and the claims process that services them.
Not all policies are the same
Made Simple is essentially about trying to work with the insurance profession to encourage it to communicate in a way that customers can understand and which is simple, easy to digest and engaging. At the heart of Made Simple is a website www.askciindy. com which is a free information service with a growing library of content created with the help of the CII’s subject matter experts and industry bodies and specialists. The website features a variety of different guides and videos on products such as motor, home and travel, in addition to looking at specific topics – such as flooding. One of the first guides we produced was ‘Your motor premium Made Simple’ – which specifically addresses the misconception that insurance companies make sizeable profits from personal lines motor. It articulates where a customer’s premium goes and where is it spent. The website is available on tablets and on mobile phones – as well as an app. The guides themselves – while important – are not everything – and we have created an avatar, Ciindy, who the public can ask questions of. Ciindy is a librarian and can answer an evergrowing range of pre-set questions. If someone wants to learn more about car insurance premiums, they could read a guide, ask a question or watch an animation.
Personal injury changes
The issue of communication also arose during the Modern Claims Conference over the issue of the proposed changes to whiplash compensation and the increase in the small claims limit. It was clear from the comments from both panellists and delegates that the government’s announcement earlier this year had come out of the blue and that many claimant solicitors were suspicious that the insurance industry had had a hand in this announcement. The suddenness of the announcement has certainly helped erode the already fragile trust between the claimant sector and the insurance sector but the only way forward has to be collaboration and it was pleasing to see a vote of hands by delegates in support of working with the Association of British Insurer’s to find a way forward. Clearly the result of the EU referendum and the subsequent political fallout with both major parties searching for new leaders may well impact what happens to these proposed reforms. The reality is nobody knows, but it is safe to say that a lot of legislative and parliamentary time is going to be taken up with the Brexit negotiations as the UK looks to unravel over 40 years of rules and regulations. In addition, it is not clear if the proposed reforms have wide cross-party support. Other questions that Brexit will pose for claims are the potential increase in costs for imported vehicles’ parts and materials, the future of cross-border claims investigation and anti-fraud collaboration, and impending changes to the legal framework such as the recent Supreme Court of Justice ruling in the Vnuk case concerning insurance and motor vehicles on private land. Ant Gould is Director of Faculties at the Chartered Insurance Institute (CII).
www.askciindy.com • • 22,978 visitors since launch • • 17,933 unique visitors (78%) • • 3.0 pages viewed per session • • Average session duration: 3 minutes 3 seconds
The website is free and open to all, and we actively encourage others to embed or link to the site for the benefit of their customers. The CII is independent and acts in the public’s interest, and we are producing all of this material, which is freely available to any individual or firm that wants it. This is free, independent information and it negates the need for individual firms to create their own content. We recognise that not all insurance companies deal with claims in the same way and not all insurance policies will be the same. We are not suggesting that companies should rewrite the wordings of their policies – we are simply providing people with information that sits above the policy, which is generic but simple, clear, transparent and independent.
08 Modern Claims
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James Dalton At the annual Doctors Chambers Modern Claims Conference on 15th June, Donna Scully, Partner, Carpenters sat down with the Director of General Insurance Policy at the Association of British Insures (ABI), to ask whether now is the time for true collaboration between insurers and claimant solicitors. Charlotte Parkinson, Modern Claims, reports.
DS: How can the reforms (as proposed by the government in the Autumn Statement), be shaped in terms of how they will work on the ground?
JD: There will be a consultation at some point in the near future regarding the proposed reforms. In the context of car insurance being compulsory, the government wants to deliver reduced premiums for consumers and insurers have a track record of passing on savings from previous reforms (£1.1 billion passed on to consumers in lower premiums from savings made from the LASPO reforms). A lot of consumers will value those savings more than not being able to make a claim for whiplash. The 60 million motorists will benefit more than the number of people who make whiplash claims (genuine or otherwise). Whether that is right is a political and philosophical discussion that needs to take place in the context of the Government’s forthcoming consultation. DS: The reality is that we need to focus on the greater good for the customer, but the problem is that we don’t know what the consumer thinks, and are second guessing them. JD: And that criticism would be better directed at the government than at me.
DS: I am concerned about Legal Expenses Insurance (LEI). Does the ABI have a sense of how this might look post reform?
JD: The broader question here is about how much of their damages a claimant will ultimately get, as opposed to paying for the provision of legal services out of their damages. In a changing market, claimant law firms and Claims Management Companies (CMCs) will adapt and innovate, and insurers will need to adapt and innovate with new products as well. Everyone will need to change what they offer customers and the way they do business and legal expenses insurers will be no different to that.
DS: Three years ago, the small claims limit was not increased because the Transport Select Committee (TSC) were concerned about safeguarding genuine claimants. Are there safeguards in place if the increase is made this time, and do insurers have a plan?
JD: The TSC is a select committee of parliament and are not the ultimate decision makers on whether the Small Claims Track limit should be increased. At the time, the TSC said that increasing the small claims track limit wasn’t the right thing to do, but the government issued its own response to both the TSC report and its own consultation exercise. The Government concluded that increasing the small claims track limit was the right thing to do, but “not at this time”. That wording is extremely important and some people seem to have forgotten it.
I am not totally convinced that the claimant sector wants to deliver the change that is necessary James Dalton
Modern Claims 13
The reason the government said it wasn’t right to increase the [small claims track] limit last time was because there were no safeguards in place. Three years later, I still don’t see any safeguards Donna Scully
DS: But looking back on the report, the reason the government said it wasn’t right to increase the limit at that time was because there were no safeguards in place. Three years later, I still don’t see any safeguards. What is your view on that?
JD: There is definitely an onus on us as an industry (brokers, insurers, claimant lawyers, legal expenses insurers, etc), to make sure those safeguards are developed so that consumers and accident victims get the compensation they are entitled to in a framework where money from their damages is not siphoned off by CMCs. The onus is on us to sit down, collaborate and stop the fighting. I accept that some people don’t support the reforms, but if the reforms go through we have to do a lot more work very quickly to agree some principles about how the reforms will work in the best interests of customers. DS: I totally agree with you, at the Modern Claims and Carpenters Roundtable1 (which took place a week prior to the Modern Claims Conference), the outcome was in favour of cross-industry collaboration. The one thing that unites the industry is that we don’t want to be feeding CMCs and helping the enablers. JD: That’s the challenge for the claimant solicitors. The ABI’s position has been public and consistent for the last four years around one of the safeguards we are in support of; a regulated predictable damages framework. We have been down this path before and disputed the types of cases that went into the regulated predictable damages framework. Do you take a very small number of court ordered settlements for whiplash, or do you take the hundreds and thousands of cases that are settled outside the court framework? Claimant lawyers have missed an opportunity to understand how this might work in practice and for us to work together to deliver a system that works for claimants.
DS: I was around when they discussed automated damages and damages based assessment tools, and the divide was around how the levels of damages were set. Do you think there should be a degree of flexibility when assessing damages?
The one thing that unites the industry is that we don’t want to be feeding CMCs and helping the enablers Donna Scully
JD: Yes. Although there may not be agreement on the cases to be included in a predictable damages framework, allowing some flexibility means you are talking about the detail, not the principle. We should sit down and have a much more intelligent discussion than took place previously, about how we can work together to make the system work. The ABI have done a lot of thinking about this and we will be presenting it to the government as part of our overall submission to the consultation.
DS: You clearly see this tool being used by insurers to deal with clients directly in the new world, is that right?
JD: Yes. The argument from the claimant sector is that insurers will undersettle claims where there is no legal representation. My argument is that to address that concern we should put in place a framework where there is little flexibility for insurers over the level at which they can settle claims.
DS: Isn’t that going to cost the insurers too much in terms of staff and money, and wouldn’t that defeat the object of any savings on policies for consumers?
JD: Each insurer knows what money is coming in and what money is going out and exactly how much money is being spent on each head of claim. I have no doubt that insurers will need more staff but the net impact of a predictable damages framework will be substantial savings, that insurers will have to pass on to consumers through lower premiums. Although insurers would control this, they are heavily regulated by the Financial Conduct Authority (FCA). At the moment, the FCA is a very wellresourced and highly staffed regulator that supervises insurers and their interactions with customers. Indeed, one of the fundamental philosophies of the FCA is the need to treat customers fairly. But, if there is a need for more independent regulation, we would be happy to have that conversation. DS: The rule of natural justice is you shouldn’t be a judge in your own court. What you are suggesting flies in the face of natural justice. The reason insurers feel like they need to control the situation is because of the bad people in the market. The lawyers will be pushed out and some CMCs will be waiting in the wings and will swoop in because the Ministry of Justice (MoJ) haven’t got the resources. The system can be reformed in a reasonable way and in a reasonable timeframe to not make that necessary. Starting with the Fraud Taskforce report, there are some very quick, easy wins in there. The SRA should be tougher with lawyers if they are misbehaving and I have heard this is the case. Similarly, if insurers are not acting reasonably, the FCA should come down on them like a ton of bricks. I feel frustrated that we have delivered certain things, but MedCo hasn’t gone how either of us would have liked, but we are doing things to make it better. The Claims Portal is broadly a success and we have made a good start with askCUE PI. There are things we should be looking at, and I would happily disclose the referral source of our claims to insurers – anything that would stop the enablers. JD: We have done a lot of work together over the last number of years in collaborating to try to improve the system, and the government have supported us in that. The government has also delivered a number of other initiatives to improve the environment for consumers and to take out unnecessary money in the system
14 Modern Claims
There are people in Whitehall who are sick of trying to get us as an industry to collaborate James Dalton that is driving up premiums. There is still much more that we could do but I am not totally convinced that the claimant sector wants to deliver the change that is necessary. There is a desire to fight the reforms rather than make them work. We have seen that time and time again and MedCo is a classic example of it. Medical reporting agencies, claimant lawyers and insurers all sitting around the table for months and months on end with the MoJ to deliver a system that would improve the claims environment for everyone, has been fundamentally undermined. That is a bad advertisement for collaboration and it is a bad advertisement for the claims industry with Whitehall. There are people in Whitehall who are sick of trying to get us as an industry to collaborate when they see these sorts of behaviours. DS: Because MedCo was rushed, there were loopholes and people took advantage of them - it is difficult afterwards to close those loopholes. It has added on more time and people haven’t benefited from it as they should have done because of this. JD: I agree that MedCo was rushed and the time taken trying to plug the breaches costs time and money. The real prize from MedCo was obtaining much richer data around who is filing which claims at which point. Because MedCo is being undermined by so many disreputable people, the attention of the Board has rightly been focussed on fixing the loopholes, but not focussing on better analysis of the data is a really unfortunate outcome.
DS: MedCo was also an opportunity missed. Do you think rehabilitation should have been included in it?
JD: Rehabilitation is an interesting example of the potential for displacement from the Autumn Statement reforms. One of the things we have worked together on is updating the amendment of the Rehabilitation Code. The Association of Personal Injury Lawyers (APIL) and the Motor Accident Solicitors Society (MASS) have been sitting around the table with insurers and the low value component of the Code was amended to prohibit the referral of a claimant to a rehab provider, by a claimant solicitor who has an interest in that firm. However, the rehabilitation providers started suing, claiming that their business models were being undermined. Actually, a well functioning system is not about people’s business models, it’s about what’s right for the customer. What is right for the customer (motorists) is removing conflicts of interest between those that are producing
medical reports or providing rehabilitation and the person acting for the claimant. DS: I see a massive conflict and a financial interest here. Calibrated damages will not protect that situation. We need checks and balances and to focus on the client. There is a bitterness between both sides, but the sensible people do not want to go down that road; the bitterness must be left at the door. JD: There are some things that I am never going to agree with you on, and there are some things that you will never agree with me on. There may be press statements back and forth that are potentially inflammatory and there will always be robust discussion and debate. However, you and I have been mature enough to put all that to one side and focus on the customer, and focus our efforts on areas where there is the potential for agreement, such as askCUE PI and McKenzie Friends. I am very concerned about the potential impact of the reforms on the use of McKenzie Friends in an unregulated environment. Let’s agree to disagree on the areas that we are never going to agree on and focus on the areas where we can work together to make a difference and improve the system in the interests of consumers. Let’s work together to mitigate the displacement risks if the reforms go through, regardless of whether you agree with the reforms or not. DS: We are completely aligned on that. You have opened the door today and insurers seem more willing to talk and to listen now. Everyone wants a grown up discussion and to forget the arguments that are not relevant to the customer. We agree on a lot – let’s go forward positively and build on this now. 1 See pages 48-51 for full coverage of the Fraud Roundtable.
A well functioning system is not about people’s business models, it’s about what’s right for the customer James Dalton
Everyone wants a grown up discussion and to forget the arguments that are not relevant to the customer. We agree on a lot – let’s go forward positively and build on this now Donna Scully July 2016
Modern Claims 15
Inga Beale Charlotte Parkinson, Modern Claims, spoke to the CEO of Lloyd’s of London about their unique position in the market, the challenges they face, both nationally and internationally, and the diversification of the insurance sector.
What makes the Lloyd’s market unique? A number of things. Our subscription model means that the market has always taken on new risks – very often the sort of risks that other insurers won’t – because the risk is spread across several syndicates. The Lloyd’s market is therefore best placed to provide solutions to customers who have a large or unique risk that needs coverage. Lloyd’s world-renowned expertise in bespoke underwriting means syndicates can provide solutions for firms who are looking to cover everything from cyber risk to drones to satellites. This is all backed up with our unique chain of security with dedicated funds and a central fund sitting at the heart of Lloyd’s, providing policyholders the security they need. Could you outline Lloyd’s strategy at the moment and explain the aims of Vision 2025? Put simply this is about being the world’s centre for specialist insurance and reinsurance. The key to doing this is by having a leading industry service proposition built on excellence in processes, technology and data – we see the London Market Target Operating Model (TOM) as an important element in delivering this. Accessing key and emerging markets across the globe is also important. This is why in recent years we have seen the growth of platforms in Dubai, Shanghai and Singapore, as well as new offices in Colombia and Mexico being opened. New markets for license applications include India and Malaysia. We also see oversight of the market as being key to the long-term sustainable growth of the Lloyd’s market – ensuring underwriting is disciplined, capital provision supports the risks being taken on whether new or traditional, and conduct standards are upheld. Can you outline the key global and UK trends, which are impacting the Lloyd’s market at the moment? One of the key developing trends is cyber risk. Across the globe, as businesses become more dependent on technology and digitalisation, so their insurance needs change, and over the coming years cyber security is going to be critical for many businesses, local government and communities. The size of the global market for cyber insurance has grown to over US$2.5 billion, and Lloyd’s is one of the leading insurance markets for cyber insurance with 60 syndicates providing cover. Our City Risk Index looked at 301 of the world’s most important cities and what were the threats that could impact on their economic output. One significant finding showed how manmade risks are so much more of a threat than the traditional natural threats of earthquake, flood and windstorm. It also showed that many cities still need to develop their resilience and mitigate against systemic and catastrophic events. What are the greatest challenges/opportunities in the insurance market currently and why? With the increasing amount of new risks, many of these intangible, such as intellectual property, reputation risk, and cyber risk, the challenge is responding to these. Urbanisation is also having a significant impact on the changing nature of risks. As the world increasingly urbanises, high value assets are becoming more concentrated and interconnected than ever before – and will continue to do so. Insurers who successfully invest in innovation
16 Modern Claims
Hopefully we will see more women in the coming years taking up senior positions in the insurance industry and more widely in the City and provide products that are built around providing certainty of protection in this uncertain world will be the winners in the long run. One real opportunity is to look to emerging economies and address the global insurance gap; a gap that is growing across the world partly because of climate change. The insurance and reinsurance industry is already working hard to tackle climate change and some examples include: • Investing in catastrophe modeling technology to improve understanding of when climate-related events might occur and their impacts when they do; • Helping customers improve their resilience to climate-related events by insisting on minimum rebuilding standards; • Assisting those affected by disasters to get back on their feet as soon as possible by paying out promptly on valid claims.
Clearly Lloyd’s was a keen supporter of remaining inside the EU, but things have now changed and it is up to us and the market to adapt to this new environment Coinciding with the COP21 climate summit in Paris last year, eight Lloyd’s syndicates announced a disaster resilience facility with capacity of £400 million. How could the outcome of the EU Referendum impact Lloyds and the wider market? One of the biggest challenges we are facing is Brexit. This will create a challenge for Lloyd’s and the London Market as a whole as we digest what this will mean in terms of our access to the European single market. Clearly, Lloyd’s was a keen supporter of remaining inside the EU, but things have now changed and it is up to us and the market to adapt to this new environment. We will be pushing Government to help ensure that the insurance industry is able to continue accessing the single market through the current passporting system – but needless to say, we and the market must keep our options open and look at all alternatives. Lloyd’s writes about £800 million of EU insurance business on cross-border “passport” basis that is now under threat. However, it must be remembered that all existing policies are unaffected and all business can be renewed in the usual way right up to the day the UK actually exits the EU (should that day happen). Can you outline the global risk outlook for Lloyds? The prevailing macro-economic conditions look here to stay for a while – we are operating in a new reality of abundant capital from both traditional and alternative sources, declining demand for reinsurance cover, excess capacity, and lower interest rates. Add to that the geo-political situation in many parts of the world driving an increase in political risk, the outlook is challenging. Is the insurance industry still lagging behind other professional sectors in terms of diversity, and how are Lloyds seeking to inspire the next generation of senior insurance and broking professionals? There is still a long way to go and Lloyd’s cannot rest on its laurels – we want to attract the best talent and ensure they are in an environment that allows them to thrive. Inclusion is vital to get the best out of people and we’re taking the right steps. Last year, the first “Dive In” festival took place in the London insurance market. It was a huge success and shows how far we’ve come. It was a celebration of the bottom line benefits of diversity and inclusion for the insurance industry and it runs again this year in September. We are looking at many aspects of inclusion – gender, multi-generational, multi-cultural, sexuality, and workability, which covers both physical and mental health. Do you think the perception and/or role of women in insurance is changing and do you feel pressure because you are the first female CEO? After my 34 years in insurance, it feels as though things are really changing. There are a rising number of role models out there now, certainly from when I was starting out in the workplace. Hopefully we will see more women in the coming years taking up senior positions in the insurance industry and more widely in the City – certainly here at Lloyd’s I feel part of a growing community that is much more embracing of all types of diversity.
Inga Beale Inga joined Lloyd’s as the Chief Executive Officer in January 2014.
Prior to Lloyd’s, Inga was the Group Chief Executive Officer at Canopius, a prominent Lloyd’s managing agent, from 2012 – 2013. Inga joined Zurich Insurance Group in 2008 as a member of the Group Management Board in Zurich with responsibility for Mergers & Acquisitions, Organisational Transformation and Internal Consulting, before becoming Global Chief Underwriting Officer in 2009. In 2006, Inga was appointed Group Chief Executive Officer of Converium in Switzerland (now part of the SCOR Group) after 14 years at GE Insurance Solutions. Inga held various underwriting management roles at GE and gaining experience across London, the US, and France, before becoming President of GE Frankona and Head of Continental Europe, Middle East and Africa for GE Insurance Solutions based in Germany.
Q A Q
Inga began her career at the Prudential Assurance Company in London in 1982 and trained as an international treaty reinsurance underwriter. Inga is also an external Board member to the Government’s Financial Services Trade and Investment Board.
Lloyd’s world-renowned expertise in bespoke underwriting means syndicates can provide solutions for firms who are looking to cover everything from cyber risk to drones to satellites
What is on the horizon for Lloyd’s over the coming year? Clearly the referendum will have a huge impact on the coming year. As we now move into implementing the plans we have been preparing to deal with a vote to leave, Lloyd’s and the market as a whole will be spending a lot of time ensuring we are in the best position to work with the new relationship the UK has with the EU. Alongside this, we continue to look at how we can thrive in this age of disruptive innovation. That means we must continue to be innovative and to modernise for the good of the market and the benefit of policyholders. We continue to work on the Target Operating model (TOM) to make it easier for brokers to access the Lloyd’s market. It will be a busy 12 months.
Modern Claims 17
CRAIG DICKSON & BRIAN PEARSE Charlotte Parkinson, Modern Claims, spoke to the Chief Executive, Craig Dickson (CD) and Chief Operations Officer, Brian Pearse (BP) at DAC Beachcroft Claims Solutions, about identifying innovative solutions for clients and collaborating with insurer partners.
How does the Claims Solutions Group fit in with the wider business? CD: DAC Beachcroft is a large, global law firm. We tend to focus on two or three key sectors, of which the primary ones are insurance, health and real estate. The Claims Solutions Group sits within the insurance sector and is purely focused on claims within Scotland, England and Wales, across three core practice areas; motor, casualty and property. The Claims Solutions Group represents about 50% of the people at DAC Beachcroft and about 40% of the revenue, so it is very much the heart of the business.
What are the most common types of claim in percentage terms? CD: About 40% of claims come from motor, 30% in casualty and the rest in property. We of course have claims which fit within these categories. Within motor there are credit hire, injury, catastrophic injury and fraud. In casualty there is employer’s liability, public liability and other associated work. In property we deal with household, commercial property and coverage claims, as well as subrogated recoveries for our insurer clients. The proportions don’t change too much year to year, and they tend to mirror most general insurer’s books as well, which works well.
CMCs do have a place, but it is important to distinguish what is right for the customer and what is driving profits for the individual firm Brian Pearse
What are the biggest challenges at the moment for defendant firms? CD: The biggest challenge is adaptability. We have to deal with changes because of reform, technology, our clients’ businesses, and differing consumer demand. The most adaptable firms will be the ones which win out. We’re trying to predict the future, not just over the next couple of years, but the next ten years and beyond.
You’ve recently launched the Innovations Lab. Could you tell me more about this for the purpose of our readers? CD: For firms dealing with claims this is completely unique. It came about because law firms are not typically good at innovating. This project has taken two years for us to launch, so it’s not something we’ve developed on a whim. When looking at the best environment for innovation there has been a tendency to stay away from areas that are inherently risky or heavily regulated, and where there’s no profit-surplus to reinvest, and we have changed the attitude to that. Most people tend to fall into the trap of seeing future change as being one of challenge, rather than one of opportunity. Two years ago, the Financial Conduct Authority (FCA) started its innovation program, and the Solicitors Regulation Authority (SRA) recently introduced its innovation program, so regulators are opening the door. The Innovations Lab is a research and development hub. Within that hub we can design, test prototypes and roll out new solutions, specifically for claims. It is multidisciplinary and co-created, which means it’s not just a load of lawyers looking at an idea, it’s something we’ve been working on with clients from the ground up. We want to reinvent the way law firms’ deal with claims in the next five years.
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Could you give me an outline of the current strategy in relation to claims, such as your approach to marketing and clients? CD: Historically, claims have followed a frictional, reactive response model and I want to change that. There will be fewer claims in the future, both in terms of the high value claims but also the lower value end, where reforms are going to have a big, big effect. We use our claims intelligence to create a genuine feedback loop. In the long term we will see fewer cases going to litigation, but the quality of those cases will improve significantly and that is a win-win.
Are you for or against an increase in the small claims limit? Will DAC Beachcroft be contributing in any way to the consultation before that decision is made? CD: Yes to both. We’re massive supporters of the whole reform package and the Autumn Statement is something we’ve really welcomed. It is our intention to respond positively to the consultation when it is issued. We have to make decisions that are in the interests of our customer base and it is also for us to make sure our business model adapts to accommodate those changes so that we remain successful in the future.
I still question whether the sector is always approaching fraud in the right way as there are competing commercial priorities Craig Dickson
How does the business work in collaboration with its insurer partners, both in the UK and internationally? BP: Prior to joining DAC, I worked for 22 years at Ageas and 4 years at insurethebox. Those businesses have large panels of lawyers and DAC Beachcroft was always the one that aligned themselves with the insurers’ strategy. There’s a lot of waste in the process where cases are litigated and they needn’t be, and DAC Beachcroft has worked really hard to reduce friction and minimise unnecessary litigation. DAC Beachcroft deliver what they say. CD: I’m also keen to make sure we’re aligned in how our businesses are organised, so I’ve introduced external professional management to our business, as well as highly technical lawyers. We have an effective legal business providing claims solutions, as opposed to just lots of really good lawyers doing what they’ve always done.
How do you think the industry has changed for clients?
CD: Clients’ expectations have increased and there is a lot more data available which they can use to make more conscious decisions. Insurers have also become better at detecting and defeating fraud. There are some great claimant lawyers out there who are weeding out the fraudsters but the problem is still rife. The typical view is that there’s less out there, or there’s been a shift or softening in philosophy, whereas I think it’s the opposite; the people we work with have never been stronger in their views on defeating fraud, and that comes from proximity to clients’ strategies
What’s your take on CMCs and their position in the market?
CD: The whole machine that’s built around promoting claims is incredibly unhealthy and undesirable. The danger is that we criticise the good organisations in the mix with those that are damaging the industry. They do have a place, although the way some CMCs behave is just not appropriate. I’m keen to make sure things develop both in terms of market and industry changes and to ensure that there is proper oversight in terms of how that looks. As an organisation that deals with the sharp end of these claims, we inevitably see the absolute worst. The MoJ and the Claims Management Regulation Unit (CMRU) have a tough job. It is a difficult balance to strike to make sure the consumer is not being taken advantage of for the purposes of purely putting costs into the system that would otherwise be avoidable while still providing a necessary service.
The ultra-entrepreneurial fraudsters will be looking at what happens when the Autumn Statement Consultation is released and begin looking at new ways to penetrate systems Craig Dickson July 2016
BP: That’s a big thing to me: doing what is right for the customer. For example, some customers that lose the use of their vehicle do need access to a replacement vehicle. This is where CMCs do have a place, but it is important to distinguish what is right for the customer and what is driving profits for the individual firm.
What do you think of the recent report issued by the Insurance Fraud Taskforce (IFT)? CD: I’m pleased to see the output of the report. I still question whether the sector is always approaching fraud in the right way as there are competing commercial priorities. The intentions and the output of the report from the IFT are pretty sound and the key question for me is; what happens next? We need to improve data sharing, and create a joined up view to defeat entrepreneurial fraudsters (as opposed to opportunistic fraudsters who weren’t a massive focus of the report). We know full well that the ultraentrepreneurial fraudsters will be looking at what happens when the Autumn Statement Consultation is released and begin looking at new ways to penetrate systems.
What risks do defendant firms need to be aware of at the moment and how are you approaching these? CD: There is increasing discussion around Cyber risk. We are extremely lucky to have Hans Allnutt - a leading cyber risk expert in the industry - in our business. Cyber risks, and data risks, are becoming increasingly frequent and are now firmly positioned on board agendas. The connected economy and the move towards autonomous vehicles are potentially seismic changes that may or may not happen in the way predicted, but they will happen at some point and the approach to claims will need to evolve accordingly.
Do you think it’s difficult for a business the size of DAC Beachcroft to innovate and to adapt quickly in response to the number of challenges and changes that are out there? CD: In theory, yes. But I’ve worked really hard over the last couple of years to make sure that we’re in a position to be able to innovate and we want to be leading the charge in terms of innovation, adaptability and agility. The size and scale of our business gives us a unique ability to do that, because we get a genuine view of the entire market - because of who we work with and the range of things that we do. We have created an environment where lawyers are able to innovate and be able to make mistakes or try things without fear of failure. That was one of the drivers for the Innovations Lab.
What’s next for the Claims Solutions Group?
CD: I’m looking five years and beyond. The first priority is to make sure that the firm and our clients are ready for the change that’s coming. The second is to do more to capitalise on the market leading position that we occupy by bringing new ideas and new thinking to the market. Our stated intent to reinvent the way claims are dealt with in the next five years isn’t a strap line that we’re only using internally, it’s a genuine intent. Our strategy is around retaining and growing. We look after our existing client base, and then growing it into new areas, new specialisms and develop new products and services. The utopia for me is to be the law firm who identifies what our clients’ need, before they even know they need it and work with them to implement those solutions.
Modern Claims 19
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Internet Insurers A recent survey published by Fujitsu found that a fifth of European consumers would buy insurance or banking products from Google, Amazon or Facebook. Do you think this is a realistic possibility in the next 10 years, and how could it affect the market? he ‘Brands’ mentioned form an essential part of most people’s everyday lives; we interact, share personal information, and whilst we pick up criticism from time to time, even a bit of ‘Tax Efficiency’ doesn’t seem to dampen peoples enthusiasm for them.
Amazon have for some time now been cited as a great example of customer service. They make things so easy for you to purchase from them, and the whole experience is so free from hassle - why would you even consider looking anywhere else for the products that they sell? They also make sure that the prices they offer are always competitive, and there is no evidence of resting on their laurels with Amazon continuing to innovate; whether its subscription services (taking even more of their customers’ ‘shopping basket’), or even quicker delivery, even experimenting with Drones. Meanwhile back in the ‘old’ world, insurers continue to attract criticism over complicated processes, archaic systems, and challenges on pricing ‘fairness’. So why wouldn’t people buy insurance from those brands? I can see no reason at all with most simple products. Larger commercial products are more complex and require bespoke tailoring and advice, but even there the cut off level for simple packaged products is increasing every day, making more policies able to be traded electronically. The only thing stopping all of this is their desire to get involved. These brands know how to make money, and value their reputation above all else. Insurance is a grudge purchase in the main, provides massive opportunity to destroy brand value, and maybe the biggest factor: some classes just don’t make money at all. Whilst the claimant lobby think this is a fallacy, DTI returns show that most insurers lost money in 13 out of 15 years on motor insurance. Why would Amazon, Facebook or Google bother complying with huge amounts of regulation when there is a strong possibility of a loss at the end of it? My prediction is they won’t, so insurers should see them as key partners rather than competitors. However, I think brokers and other intermediaries should be very concerned. Yes, there are still regulatory hurdles, but they are more easily overcome. I absolutely believe that a large portion of the personal lines market at least will be transacted through these firms, and we won’t have to wait 10 years! David Williams, Technical Director, AXA Insurance.
What does it take to stay sustainable? As Easi-Drive celebrates its 15th year of trading, Steve Turner, Managing Director, analyses the things that have made the company so successful. ustainable growth is among the biggest challenges any business faces, whatever the industry, and in this last year it is one that we have had to learn from ourselves. Nothing serious from an operational angle, but an issue that seems to keep cropping up on my desk is the car park; we have grown so much that we don’t comfortably have enough parking spaces for all of our staff. A nice problem to have as you can imagine, but one that still needs solving nonetheless. We are entering our 15th year of trading in June, which is a tremendous achievement in an ever changing industry. We have always maintained our mission statement, placing a significant emphasis upon the ‘longer term’ and supporting our Business Partners; reassuring them that we will still be here in five years’ time. We have not wanted to race to be the largest and that is where we have managed to stay so secure, keeping our feet on the ground. Ultimately, as MD I have 250+ salaries to pay every month and I see it as my responsibility to make sure we have enough money in the bank to pay wages. We have also made a promise to our Business Partners and their customers too, ensuring that we only take on mutually beneficial work. How to stay sustainable in an ever changing industry then? 1. Purpose Every company needs to pin down “why we do what we do, why we come to work every day.” A strong purpose drives growth and profitability and makes it easier to create services of value. This then needs to be communicated effectively to all employees who are then delivering the service. 2. Partnership and Relationships Ensuring our relationships are strong means that we are going in the same direction as our Business Partners; we are growing together and both want to achieve the same goals. 3. Adaptive Leadership To continue growing, business owners must become the leader the business needs for each particular stage of growth and at the right pace. Employing a Managing Director gave EDAM a clear figurehead. The founders and owners of the business are still involved but now the company has a main leader for the day-today operations. The most sustainable way to create value and grow is to continually invest in capabilities and technology. We are always investing in our staff and making sure the feedback loop from Business Partners is strong so we are constantly offering the best service we can every single time. Technology is key in what we do so we make sure that we invest as much as our IT department needs.
Steve Turner, Managing Director, EDAM Group.
Modern Claims 23
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Protecting vulnerable consumers Is the industry doing enough to assist vulnerable consumers, and whose responsibility is it to ensure that there are no gaps in the provision of legal/insurance services to consumers? key part of assisting vulnerable consumers is recognising that cognitive and physical ability may vary significantly from one individual to another. Products and services need to reflect this to allow customers to make the right decision for them and be treated fairly at every step of the customer journey. A multi-layered approach is necessary to meet customers’ needs at every stage.
Of course the need for an individually crafted response to the predicament of vulnerable customers is paramount in any claim. However, vulnerability is just a component of managing a customer predicament and there are many others that all combine to make each customer the individual that they are. The Ageas claims process seeks to understand these individualities and create a solution that meets customer needs. To this end, Ageas concentrates decision making at the front end and empowers employees to make decisions that achieve this. But it is not just claims where action is needed. Today’s competitive insurance market allows consumers to buy, service and renew policies through a variety of channels. Almost two-thirds of over 75s have never been online1, but the number of those using online channels has doubled since 2011. Our insights into the ageing population and financial services shows that 6069 year-olds often use price comparison websites, and it is only consumers aged 70 and over who prefer to shop around by phone (ideally UK call centres). Therefore, insurers need to be ready to support customers whatever channel they choose. Helping customers understand what policy they are buying or renewing is also key. Our insights indicate that older customers want clear and succinct messaging in communications and dislike small print. They are not alone in this, but failure to provide clear messaging can be particularly confusing for these customers and put them off buying insurance at all. Insurers and regulators need to accept that giving too much information in the wrong way can be particularly harmful for vulnerable customers. Finally, insurers can play an important role in shaping public policy to support those recognised as being vulnerable customers. By way of an example, for well over a year now Ageas has financially supported and contributed to an Older Driver Taskforce being administered by our long term partner, the Road Safety Foundation. The Taskforce has been welcomed by the Government and is devising a strategy to help ensure that older drivers remain safe on our roads with its recommendations being published this summer. 1 http://www.ons.gov.uk/businessindustryandtrade/itandinternetindustry/bulletins/ internetusers/2016
Rob Smale, Claims Director, Ageas.
The future? Google it! What single piece of technology will change the nature of the claims process in the next 10 years and why? oogle. It doesn’t matter how you look at it, Google now controls the digital marketplace and is the single piece of technology optimised to change the claims industry. In March 2016, 86.6% of online searches in the UK were made through Google1.
Critically, Google also dominates mobile search as it controls around 90% of the mobile search market between Android and iOS searches2. Importantly, Google is intelligently positioned to continue to dominate search for the foreseeable future. It’s a rare few of us who don’t use Google to investigate services and products and make a purchase on a daily basis. If harnessed correctly, Google is possibly one of the most measured ways of generating ROI from marketing investments. Unlike some businesses, we don’t have a separate strategy for marketing communications/Pay-Per-Click advertising (Google Ad words) or our website. They all feed into a single digital marketing strategy and their impact is collectively calculated to identify ROI. When marketing in the Google-sphere you must keep three things in mind! 1. Content is key: Although the Google ranking algorithms are more complex now then ever before, the core concept of search hasn’t changed: return relevant results to the customer! If your website and services are excellent - and you have relevant content that is highly useful for the customer - then Google’s algorithm will place you higher up in the ‘organic listings’. All businesses should have a strategy for organic digital marketing based around providing quality content and services. 2. PPC: A minefield of testing and measuring. There is absolutely no point in spending money on PPC unless you can measure what you spend and then measure its return. 3. Understanding search terms: The user experience (or ‘UX’) is another important aspect. If you don’t understand the way your audiences search for services online and their user journey then it’s pointless investing in PPC. Our experience in the claims industry holds us back on SEO direction as we think we know what those terms should be. In reality, Joe Public’s search terms might be very different. It’s essential to create a strategy for your entire Google presence/ marketing. Claims businesses need to harness the immense power of Google by measuring spend and the user’s digital journey through to payment. Only then can you understand how this single piece of technology will change your business forever, as it has ours. Stephen Ward, Managing Director, Clerksroom & Clerksroom Direct. Our thanks to morphsites for their Google data support in this article. 1. Data from www.statista.com/statistics/280269/market-share-held-by-search-engines-inthe-united-kingdom/ 2. http://uk.businessinsider.com/apple-ios-v-android-market-share-2016-1
Modern Claims 25
Collective protection, individual risk Is the industry doing enough to assist vulnerable consumers, and whose responsibility is it to ensure that there are no gaps in the provision of legal/insurance services to consumers? y using data to understand more about the risks they are insuring and customer behaviour across all channels, insurers can provide the most accurate, tailored price for that individual.
Such insight has proved particularly valuable in the detection of pre-inception fraud. Solutions such as SSP Verify enable insurers to identify in real-time individuals who are manipulating their data, so their applications can be investigated further. With this intelligence at the point of quote, insurers can focus on their quality clients, writing the risks they wish to write at the correct premium and declining risks that are clearly suspicious. Consumers are also benefitting from the plethora of data available at the point of use. Telematics devices enable policyholders to improve their driving style, while sensors can provide advance warning of water leaks before serious flooding takes place. Such proactive measures mitigate the losses for policyholders and reduce the amount/severity of claims for providers. As is often the case though, things are not quite so clear cut. The ultimate aim is to identify an individual and insure a segment of one, where enough is known about a particular risk to provide a price just for them. However, with greater segmentation comes the potential to create an uninsurable underclass, where some small aspect an individual is unaware of makes them an undesirable risk. Consequently people should take steps to manage their data footprint in a similar way to their credit score. Yet there are also issues for the industry itself to consider. While the historic basis of the fortunes of the many covering the misfortunes of the few has worked for centuries, pricing purely on an individual basis may lead to the risk being shared with only a couple of others. This could change the fundamentals of insurance, leading to cover being unaffordable. We are already seeing new peer-to-peer models taking insurance back to its collective roots. Guevara offers motorists the opportunity to join with other like-minded drivers to potentially reduce their premiums, while Bought By Many enables individuals with a specific insurance requirement to join a group with similar needs to obtain a cheaper policy. With continued industry disruption inevitable, insurers need to continue to make the most of the available data to accurately price risks while taking care of the collective.
Brexit Complications What impact could an in/out decision to remain in/leave the European Union have on insurance/claims? f you have an accident at work, on the roads or abroad, there is a raft of EU laws and directives in place to give you rights and protection. Consequently, if the UK votes to leave the European Union (EU), it could be that in future accident victims will find it more difficult to bring a case to court because these laws and directives are no longer in place. As things stand if you have an accident abroad, you have the right to pursue a claim against the tour operator under UK law, which incorporates an EU directive. A Brexit would open the door to these regulations either being restricted or removed altogether, which would mean pursuing your case in the country in which the accident happened. It’s a similar situation with accidents at work. The main ‘six pack’ Health & Safety regulations are derived from EU directives, subsequently turned into secondary legislation in the early 1990s. This is the main body of legislation relied on by employees who take out civil claims against employers and were a major step forward in protecting the rights of injured workers. As a member of the EU, the UK has to have these regulations incorporated into domestic law. Although a Brexit would not directly change the Scottish legal system, it remains to be seen what course of action the Scottish or UK Governments might take. One only has to look at the effect of section 69 of the Enterprise Regulation & Reform Act (ERRA) 2013, where overnight many of the civil law rights for UK workers were wiped out or watered down by the incumbent government. At UK Government level, there are proposals to remove compensation for victims who suffer a soft tissue injury in a road traffic accident in England & Wales – claims described by Justice Secretary Lord Faulks as ‘unnecessary’. Therefore, the possibility of further reform to the detriment of accident victims in the event of a Brexit is a very real possibility. Similarly, the Scottish Government has introduced court reform legislation which has removed the automatic sanction for Counsel in cases worth between £5,000 and £100,000 under the guise of cost-saving and modernising the civil justice system. This has created even greater inequality between accident victims and the insurers of at-fault parties. Whilst the EU is by no means perfect, the rights currently provided do go some way towards affording accident victims protection from meddling politicians and the insurance industry, who seem relentless in seeking to deny access to justice to accident victims.
Adrian Coupland, Managing Director of Data Services, SSP. Scott Whyte, Managing Director, Watermans.
Modern Claims 27
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M&A: the risks
Is the industry doing enough to assist vulnerable consumers, and whose responsibility is it to ensure that there are no gaps in the provision of legal/insurance services to consumers?
How does the most recent decision in Jones v Spire continue to impact on M&A and funding in personal injury sector?
ver the past 5 years, we have seen an enormous swing from rules which largely favoured the claimant, to now favouring the defendant. Having worked both sides of the fence, I consider myself qualified enough to gauge what is right and reasonable across the sector.
I spent a number of years acting for insurers and saw the frustration of increasingly unreasonable costs charged by claimant solicitors. Something needed to be done. In personal injury, the advent of the low-value claims portal coincided with the fixed-costs regime. In employment law work, introduction of tribunal and hearing fees was intended to separate the wheat from the chaff. Sadly, as ever, we pushed and it went too far the other way. There is never scope for grey area, everything just has to be black or white doesn’t it? We now have a regime in place that appears to favour the insurance industry and defendants, whilst simultaneously prejudicing claimants. For many, the Chancellor’s Autumn Statement was the last straw. This opinion has manifested and now those ‘honest’ claimants are questioning the very industry that they pay to protect. There becomes an almost ‘them and us’ mentality. Recently, my firm, Three Graces Legal, www.threegraceslegal.co.uk, has found more and more occasions where the claimant’s legal expenses cover (you know, that tiny box we don’t ever tick) will not be provided where the claimant seeks to instruct their chosen legal representative. Suggestions that the insurer’s barrister does not consider sufficient prospects are the norm, despite it being adequately merits-assessed by an experienced Solicitor here! Either that, or the insurer simply refuses to cooperate, forcing something of a Hobsons-choice situation whereby the claimant either relinquishes their legal cover, or simply is forced to go with the panel lawyer. This is not only in contravention of the person’s right to be represented by solicitors of their choice (Maltez v Lewis 1999) and the Insurance Companies (Legal Expenses Insurance) Regulations 1990, but it is also a real conflict, especially where a vulnerable client may not have confidence to deal with an unknown firm located miles away.
ome light can now be seen at the end of the tunnel, as a result of clarity that has been given by the Appeal Judgment of HHJ Graham Wood QC in the matter of Jones v Spire Healthcare, which summarises that CFA Assignment is permissible.
Those firms involved in M&A activity over recent years, who used a Deed of Assignment as a means of moving the value of WIP from one firm to another, are breathing slightly easier today. Only slightly easier, because it is highly likely the Jones case will be appealed. In fact, the Judgment is practically written with an eye on it being the subject of an appeal. The elephant in the room, when it comes to CFA assignment, arises from changes of legal entity. Picture the scenario: XXX & Co. In 2010, they make the decision to move to be a LLP. Then, in 2014 they become a Limited Company. Same firm, same fee-earners, same location, same brand. Each time they change entity they advise their clients with a nice letter. Everybody is happy, and no issues arise, right? Wrong. Each time the firm changes entity it requires a vehicle to effectively ‘move’ the value of the WIP from one entity to the next. If the firm has done nothing to address the issue, potentially all of the WIP could be at risk of being irrecoverable, if challenged. There are numerous vehicles by which a firm may choose to move WIP from one entity to another, but the scenarios generally become costlier and less plausible the more time has elapsed after the event. In reality, firms need specialist advice in order to carefully consider their position, in advance, but many firms will find that an assignment is now their potential remedy to the situation, which then of course places them subject to the risks that the developing case law on assignment brings. Following Spire, it looks a safer bet for the Claimants to use a Deed of Assignment, but until such time as the higher courts have given ratio upon the issue, an element of risk remains to the WIP asset. Zoe Holland, Managing Director, ZebraLC.
All too often, profit margins are placed ahead of ‘the honest claimant’. Until the industry wakes up and addresses this, the ‘them and us’ attitude will remain. Aaron Pearson, Director and Solicitor, Three Graces Legal. 0151 251 0070 | email@example.com
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Novice Litigants and Expert Witnesses Could the increasing number of actions brought by litigants in person put professional safeguards for expert witnesses at risk? Will the role of the expert witness change? s an experienced expert witness, I can see the potential issues in accepting instructions from litigants in person: a lesser quality of instruction, inadequate funding and a lack of advice in respect of potential adverse cost consequences. However, I believe the role of the expert witness, particularly in cases involving serious trauma, will remain essential to the Court process.
Expert witnesses provide impartial and unbiased evidence to the Court, explaining complex information in a clear and concise manner to assist in making decisions. Experts are qualified to give this evidence due to their vast experience in a particular field and in giving evidence in similar cases in the past. Without expert evidence, important needs of the parties may be overlooked, preventing the Court from making fully informed judgements. For example, in a case involving amputation, not only will I comment on the prosthetic rehabilitation needs of the party, I will also recommend evidence is obtained from experts in other areas where I feel the party may require input due to their specific needs, for example on orthotic, psychological or housing requirements. Although parties, litigants in person in particular, may feel instructing an expert witness is a non-essential cost, without expert evidence, the full extent of their needs may not be considered by the Court when making its decision on damages. Taking instructions from a litigant in person could put professional safeguards for an expert witness at risk for the reasons mentioned above. However, as long as experts make themselves aware of these risks and how to avoid them, experts will still be willing and able to play an important role in the Court process. Clearly, expert witnesses would always prefer to receive their instructions from a legal team, as this ensures that they are provided with all relevant information and assistance throughout the case. It also ensures proceedings are concluded as quickly as reasonably possible, given that a key role of legal representatives is to drive the progress of dispute resolution. Mark Ledger, Principal Prosthetist, Blatchford Clinic.
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What’s that coming over the hill? Is it a disruptor? A recent survey published by Fujitsu found that a fifth of European consumers would buy insurance or banking products from Google, Amazon or Facebook. Is it a real possibility that a firm like Google could become a market leader in the next 10 years? n our opinion it definitely is. What firms like Google and Amazon have shown in recent history is their adaptability. If they see an opportunity to do something more efficiently whilst generating a profit, you can bet that they will be working towards it. History is littered with examples of businesses suffering because they opted for the status quo; look at Blockbuster turning down multiple offers to buy Netflix, Excite failing to buy Google and Kodak continuing to focus on traditional film cameras.
The fact that corporations such as Facebook and Google are deeply engrained into people’s lives is a major advantage. They have access to vast quantities of personal and lifestyle data. In addition, the use of wearable technology and smart devices creates an almost continuous stream of data. This data can be utilised by insurance firms to provide clients with a completely tailored policy based on that person’s lifestyle. Because risk is calculated on a much wider spectrum of information, many policies could be cheaper as a result. Process innovation is also an important factor to consider when looking at new entrants to the insurance sector. Many of whom will adopt new business models that automate tasks, disaggregate work to lower paid employees and use big data to make informed decisions. This approach will result in a lower cost to serve which could in turn reduce premiums. If a major corporation does enter the insurance market then it will cause waves of disruption. The best advice for traditional insurance firms worried about potential disruptors is to not stand still. Digitise your business, disaggregate and automate processes to improve efficiencies and work with the likes of Facebook and Google to open up new avenues of data so you can better understand your clients and provide a bespoke service on a giant scale. Oliver Smith, Marketing Manager, SlicedBread.
Technology: leading the way What single piece of technology will change the nature of the claims process in the next 10 years and why? ltimately, any piece of technology could change the nature of the claims process. If we look at road traffic accidents and an assessor’s role, the claims process will simply evolve with each advancement or change we see.
We have seen a large number of advancements to vehicle safety and will continue to see large steps towards semi-autonomous and fully autonomous vehicles. Volvo have previously stated that by 2020 no one will be killed or seriously injured in one of its new cars and plans to run driverless car trials on public roads around London from next year. Various reports are stating that up to 90% of accidents are presently caused by driver error and research suggests that autonomous driving could reduce this by at least 30%. If we consider autonomous emergency braking (AEB), Thatcham Research, an NCAP accredited research centre, has urged car manufacturers to fit this technology as standard after research showed that only 2% of car buyers are including this as a paid-for option. In another recent report by Euro NCAP, they have found that autonomous braking systems were responsible for a 38% reduction in real-world rear-end crashes in Europe. However, while the benefits are becoming established, just 17% of UK cars feature the technology as standard. Forward collision warning, lane departure warnings, blind spot detection, adaptive cruise control and telematics data are just a few of the smart technologies out in the marketplace currently. As we have established from the above, a number of technological advancements are already here, already evolving and with the support that autonomous vehicles are receiving, we’ll almost certainly see these on our roads within 10 years. To consider the role of the expert witness, the vehicle damage assessor is also evolving at a rate of knots to understand how the latest systems operate, what repair methods required and how these systems could affect low velocity impact, causation and involuntary occupant movement. Will technological advancements dictate that electronic data is used within the claims process? Will the advancements decide liability? What we do know is that Volvo CEO Hakan Samuelsson has already stated that his company will indemnify and accept full liability if the technology in one of their vehicles fail whilst in autonomous mode, thus bypassing the insurer. As Volvo is leading the way here we can expect other manufactures to swiftly follow suit. Leigh Jones, Key Accounts Manager, Laird Assessors.
Modern Claims 31
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Google, the Game Changer A recent survey published by Fujitsu found that a fifth of European consumers would buy insurance or banking products from Google, Amazon or Facebook. Do you think this is a realistic possibility in the next 10 years, and how could it affect the market? e know that there has been an explosion in technological advancement since the market was introduced to the first smartphone in 1993, which was created more than 15 years before Apple released the iPhone.
I would say pretty much each and every one of us is connected to mobile broadband in some shape or form, through smartphones, tablets, watches, television etc. Mobile network capacity has naturally had to increase to cope with the number of mobile subscribers. We are therefore “connected” the majority of the time, which I believe has had an impact on human behaviour and how we do things. As a result of being connected and our mobile fluidity, the vast majority of goods and services can be purchased at the touch of a screen and are available to us 24/7. In my opinion, it would seem really odd if consumers could not buy insurance or banking products from household names such as Google, Amazon or Facebook, I think this is an entirely realistic possibility, and why not? Personally I use Google, Amazon and Facebook. They feature in my life on a daily basis. I am not too embarrassed because I know that I am not alone when I make this statement! If you consider Google for example, it is my home page and my chosen search engine. Its presence is there all of the time - in contrast to banks and insurance companies. Through their digital marketing platforms, Google and other online providers can learn, develop and use the technological expertise and data strengths of banks and insurance companies to compete head to head with them and compete for market share. It must be the case that those who use technology would use Google and other online providers for banking and insurance products. This will change the way consumers will ultimately shop for these products.
Technology: reducing frictional costs What single piece of technology will change the nature of the claims process in the next 10 years and why? t would be almost impossible to go a day without reading about how artificial intelligence is going to one day make lawyers superfluous to requirements and how the Online Court is going to empower the litigant-in-person, further reducing the need for legal assistance in lower value claims. Whilst there may currently be a reprieve for the personal injury sector (as these claims have initially been excluded from the Online Court), I think most would agree that the exclusion will almost certainly be temporary, rather than permanent.
For many years now, the claims process has been largely adversarial, which inevitably results in what appear to be disproportionate costs in relation to the value of the damages that the claims eventually settle. Where technology will undoubtedly play the most significant part in this process moving forwards is to facilitate the communication process between parties, ensuring that the claims progresses through its lifecycle with as little friction as possible. The end result will be reduced time and therefore a reduction in the costs. These systems will not be Online Courts – indeed, the objective must be that claims do not get to the stage where they need to enter the court process. There will be platforms to guide both parties through the claims process and provide each side with a clear understanding of where the other stands. Additionally, these systems will incorporate different forms of ADR at the very outset to help both parties stay on track and reach a settlement. All law firms run case management systems to assist in their processing of claims – perhaps the ideal scenario is that both parties work on the same system. This concept has recently been introduced for conveyancing and there is no doubt that it will radically alter the process. Personal injury claims will surely follow quite quickly. Mark Hewitt, Managing Director, Rebmark Legal Solutions.
It is an intriguing prospect that should bring about further innovation, and give the status quo a good shakeup. The impact these new entrants could have on the market must be huge and feared. This must be a game changer. Nicola Klimkowski, Head of Business Control and Development, LAMP Services Limited.
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Identifying Opportunistic Fraud The Insurance Fraud Taskforce published their much anticipated report earlier in the year. Amongst its findings were that many cases of fraud are carried out by otherwise honest consumers “trying their luck” at the time of a claim. Is too great a focus placed on organised crime resulting in fraud, and how should insurers/ brokers/claims handlers aim to tackle opportunistic fraud?
he most common question I am asked in the industry is ‘how do you deal with claims that just don’t feel right?’ My response is ‘define what doesn’t feel right means.’
The lack of control measures at first notification become evidently clear. The hypothesis? It’s far easier for all to identify what is staring you in the face than identifying what may not be initially obvious. Most insurance fraud results from normally genuine people. I can recall one customer admitting to needing £7,000 to pay for his wedding, so what he learned from his previous successful claim experience, he duplicated a second time. Whenever clients listen to his call recording, they feel sorry for him. Why? Because he was genuinely devastated once he admitted the truth. In another, the customer wanted a new laptop for her disabled son, so claimed on the same item twice. Motive? Her personal finances were stretched due to his disability needs and before his benefits were paid. Neither were part of a fraud ring, but were normal people in desperate financial need. As the insurer is not a real person, the rationale becomes more socially acceptable. But the definition of fraud under Section 2, Fraud Act (2006) surrounds dishonestly making a false representation. If you don’t know the points to prove, read it. It will really highlight what fraud under criminal law actually is. Opportunistic fraud is a criminal offence, period. Opportunistic fraud shares two themes with organised fraud – motive and pre-meditated thought of how to make the misrepresentation look genuine. I-COG’s conversation management model is like no other the industry has ever seen. i-Verify® uses unique psychology, active listening skills and undetectable advanced questioning to deliver a customer centric product that also successfully identifies opportunistic fraud. And 90% of the fraud we identify is opportunistic, committed by the average person on the high street that simply needs a financial boost at that specific moment. Its how you create a safe environment for customers to be honest that makes the difference.
Vulnerable Customer Care Is the industry doing enough to assist vulnerable customers, and whose responsibility is it to ensure that there are no gaps in the provision of legal/insurance services to consumers? t Zurich, we are committed to fulfilling our social and moral responsibility to support all our customers and protect their financial futures. Positively, the insurance industry as a whole is making progress in recognising that not all customers are the same - for example vulnerable customers who may need extra care at all stages of their financial lives.
We have taken this issue particularly seriously across both our Life and General Insurance businesses and already have a number of initiatives in place to ensure vulnerable customers have access to appropriate support for their needs. This includes providing our employees with bespoke training to help them identify vulnerable customers and tailoring our interactions accordingly, the use of digital signatures, harmonisation processes for where our vulnerable customers have plans over several systems, and also working with the Alzheimer’s Society to produce a stepby-step Lasting Powers of Attorney guide. However, determining who a vulnerable customer is can present challenges and this can lead to gaps in the provision of services to these consumers. The FCA definition focuses on a range of emotional, physical and practical characteristics. These include physical disabilities, mental health challenges such as dementia, the recently bereaved/unemployed/divorced, those who are unable to communicate and those with little understanding of financial products. Whilst some of these characteristics are easy to identify and address, others are not so straightforward. We in the industry therefore have to rely on the customer disclosing their vulnerability, as it is not always apparent and easily identifiable. To progress work at Zurich around customer vulnerability and address any gaps, we already have a project, sponsored at executive level, designed to embed and ensure we deliver on the ABI/BIBA vulnerable customer code as well as the DementiaFriendly Financial Services Charter. However, this is not just about complying with codes and regulation in this area. We are committed to being responsive and flexible in dealing with all customers and are particularly keen to ensure vulnerable customer needs are met - because it is the right thing to do. Sophie Timms, Head of Public Affairs and Corporate Responsibility, Zurich UK.
Insurers should always implement effective Key Fraud Indicators upon claim notification, partnered with productive question sets that are brief but dynamic in nature – this is the real key to identifying opportunistic fraud at the outset. I conduct numerous strategic reviews for insurers and brokers across the globe to help ring-fence this population at the front end. And it transforms their business. Trust me, it will yours. Tara Shelton, Chief Executive Officer, I-COG Claims Management.
Modern Claims 35
Going by the guidelines
Law firms ignoring client confidentially in M&A due diligence. aw firms are showing an alarming level of ignorance by not keeping client information confidential when engaged in M&A activity.
The Government have now handed over responsibility for the regulation of claims management companies (CMCs) to the Financial Conduct Authority (FCA). How will this impact CMCs – is the number likely to reduce further?
Guidance1 issued by the Solicitors Regulation Authority (SRA) in January 2015 recommended that firms should take sufficient steps during M&A negotiations to protect confidential client information and, where appropriate, seek client consent before any disclosures are made. They go on to say that “Firms must take steps to minimise the risk of third parties having access to client information.” Notwithstanding this it is clear that many are unaware of the SRA guidance while others have chosen to ignore it. Those who engage in these unethical practices also flout the obligations placed on firms as data holders by the Data Protection Act 1998. Further, in April 2016, the European Parliament approved a new regime for data protection, which seeks to hold data holders to greater account and give citizens greater control over their data. Many law firms, and those advising them, are operating under the misapprehension that it is necessary to allow access to client files in order to complete deals, and this just isn’t true. I regularly hear examples of this being flouted and most people tell me they had no idea – which is not an answer the SRA or Information Commissioner’s Office (ICO) would appreciate or accept. It is my view that firms are approaching due diligence in the wrong way. They should be focused on the firm’s financial situation and records, talking to key individuals and reviewing operations, technical ability, process and governance, rather than delving into confidential client files. When we advise on technical and operational due diligence for our clients in M&A, as a regulated law firm our approach ensures that all work undertaken complies with SRA and ICO guidance to protect our law firm clients and mutual professional advisors from regulatory and data protection breaches. We review significant disclosure of pertinent management information that impacts on asset value but with client details redacted. Working this way is an approach that puts the focus on operational and technical issues as a whole rather than reviewing individual client files - which is hit and miss, time consuming, costly, and breaches SRA and ICO guidelines. Lesley Graves, Managing Director, Citadel Law. 1. http://www.sra.org.uk/solicitors/code-of-conduct/guidance/guidance/Protecting-andmaintaining-client-confidentiality.page
was reminded recently that the term ‘lawyer’ has no statutory or regulatory meaning in the UK. Unlike the unauthorised use of ‘solicitor’ or ‘barrister’ which is a criminal offence under the Legal Services Act 2007, the term ‘lawyer’ can be used by anyone claiming to offer “legal services”.
Regrettably, I suspect that we will see a proliferation of such fake ‘lawyers’ in the coming years. Although lacking legal qualifications, oversight and legal insurance, this new breed of ‘lawyers’, whether attached to a Claims Management Company or a morphed version of a McKenzie Friend, will be positioning themselves as the new champions of accident victims, seeking to steal our beloved principle of access to justice for their own purposes, i.e. monetary reward. We can already see this happening. The turnover of CMC income derived from personal injury increased from £238m in 2013-14 to £310m in 2014-15. The number of PI CMCs may continue to fall when the 2015-16 figures are published next month, but I anticipate that we’ll see a further increase in PI turnover, which is the important figure. The transfer of the CMC Regulator to the Financial Conduct Authority (FCA) is still some way off, requiring primary legislation, yet to be published, and we certainly don’t know what impact this may have on toughening up the regulatory regime. I hope that the delayed re-organisation does not impact the implementation of Carol Brady’s review into the regulation of CMCs. I would have liked her review to have gone significantly further, but I hope that within its new home, the CMC Regulator will have sufficient funding and resources to deliver the rigorous and robust regulatory oversight that is so desperately needed. The tougher regulation of CMCs is not going to solve all the problems of fraud or reform the claims system to the benefit of genuine accident victims, but it is a start. The Government’s proposed measures to tackle fraud and whiplash claims will only exacerbate the problem of the proliferation of ‘legal services’ providers, whether they be CMCs or something else, leading to USstyle contingency fees and a range of unintended consequences. I see that the Legal Services Board has once again made the baffling decision that consumers would be “harmed” if there was a ban on paid McKenzie friends, but it is ok if they change their name. McKenzie Lawyers anyone? Donna Scully, Partner, Carpenters.
Modern Claims 37
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Smartphones are for businesses What single piece of technology will change the nature of the claims process in the next 10 years and why? et’s start with the contenders for the short-list. The office PC? No, old hat. The case management workflow system? Ditto. The tablet. Well, that’s newer. The good old telephone? Hardly. Although, if we said the smartphone, that might be rather different. What about the Briggs LJ online court? That would surely make the shortlist.
The following story about an everyday transaction starts to explain my contender for the top claims tech award. “Get me a pizza from ‘Pizz’a Chicago’ near my office,” said the chief geek to Viv. The rest of the team said they would like one too. “What toppings would you like?” said Viv. They gave their orders, with some chopping and changing, and one guy modified his order from a large pizza to medium. Unfortunately, the pizzas were a little late arriving because Viv was a bit confused about the office address. All very humdrum. Except that the pizza was ordered without an App, a Google search, a drop-down list, a keyboard or a phone call. The geek’s day job is to work on project Viv. Viv is not the office junior but a smartphone virtual assistant, and the pizza order was a test of Viv’s capabilities when faced with a chatty and jumbled takeaway order. Viv might be described as a few steps up from Apple’s Siri and is said to be capable of conducting a high level of conversation. This capability, which is powered by artificial intelligence and enormous volumes of data, has enormous potential for business communications. My next question is whether this story represents a vision of the future or something that could impact the claims process within months. Well, according to Ofcom, smartphones have already overtaken laptops as UK internet users’ number one device. They also report that we spend two hours online on our smartphones every day, which is twice as long as laptops and PCs. Smartphones have been issued to all New York police officers and initial findings suggest a significant reduction in police response times. There are already Apps available to provide a solicitor client interface on claims. Check out InCase, which brings client communications into the smartphone era (www.in-case.co.uk). See also the Dutch Fast Portal (www.fastportal.com), which automates communications and allows solicitors to create project workflows. Smartphones are for business - and that includes claims.
To outsource or not? Should the idea or concept to outsource or not be driven by cost?
would hazard a guess that most decision makers, when considering a proposal to shift part of their operation ‘out’, would ask; is it cheaper?
In most cases it possibly is, but should the first considerations be; is it better? What does better mean? Can a part of my operation be completed, in a compliant manner, quicker, to a high standard, more simply for us and cheaper than what we currently do? If the answer is yes then you should roll down the drawbridge and get that part of the operation ‘out’ as quickly as possible; why wouldn’t you? If a part of the service is quicker, then the likelihood is it will improve the operation and reduce case lifecycles. That’s a good thing, right? Customers like that sort of thing. Outsourced firms specialise in the small part of your operation up for consideration. That’s what they do; all they do. In addition, you have just freed up a load of management time to do what you want, perhaps concentrate on improving your output; better product. Most outsourced businesses will have developed simple and easy to use platforms. It’s not in their interests to make life difficult. If you eliminate resource planning, holiday and sickness contingencies and recruitment, then this would make life easier, wouldn’t it? Any outsourced solution operates the best when it simply merges with your operation and stays quiet, working in a compliant and consistent nature. Cost is obviously a driver and has never been more important than now. You should derive some straightforward benefit from what you pay now compared to any new proposal, but a business should consider the intangibles or less tangibles. If any new solution reduces spend on management; HR, recruitment, hardware, furniture, IT etc., then these should be taken into account and contribute to the cost evaluation. Often there is the dreaded period of adjustment and change. In most cases, I would expect organic movement from an internal to an external solution. This acts as a probationary period, a safety net on your decision. I don’t host my own website; I don’t buy or maintain my printers. So why don’t we analyse our businesses, see what we’re good at and concentrate on that. Leave the rest to what they are good at. Gordon Healiss, Commercial Director, Accuro.
Tim Wallis, Mediator and Solicitor with Expedite Resolution, Trust Mediation and others.
Modern Claims 39
ISSUE 24 June 2016 ISSN 2050-5744
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A role for MGAs connection claims and underwriting Peter Staddon explains why some Managing General Agents (MGAs) are looking to take back some control of claims functions. he Financial Conduct Authority (FCA) thematic review [TR15/6] on claims and SMEs, published last year, raised a number of important issues and focus on key areas, not least one of the main underwriting model indicators – claims settlement.
The thematic review identified areas such as checking on the status of claims and contacting insurers’ claims teams as problematic. In some cases, this was probably a basic physical issue with insurers’ claims teams being based in an entirely different building, or even an entirely different town, to their underwriting operations. However, this also highlights the potential for a disconnect between claims and underwriting. This, together with the difficulties created by claims staff turnover and access to data, has resulted in managing general agents (MGAs) looking at taking back some control of claims functions. From the perspective of the MGA, whose fiduciary duty is to its capacity provider, participation in the claims process reflects the integral part it plays in underwriting. In a survey the Association ran following the publication of the review, MGA members not only recognised the importance of an increased role in claims, alongside the broker and insurance carriers, but also called for more coordination between parties and greater access to claims data.
An important part to play
The claims function provides important insights, not only on how the insurance policy is operating, but also how it might not be working – vital information for any MGA. Keeping MGAs in the loop on claims is an issue. Whether this is as a result of a lack of understanding or misconception about how their involvement might elongate the process or add to cost, insurer and third party administrators can sometimes ignore the fact that an MGA could have important information to add to claim verification. The thematic review also identified lack of communication as a major factor impacting on the customer claims journey. Whether relating to capturing and sharing data, complaint handling or managing customer expectations, communication needs to be embraced by all components and participants of the distribution chain. Will this slow down the claims process? Not necessarily, there are also now initiatives such as the London market’s Target Operating Model (TOM) - which aims to make doing business easier with one touch data capture, a common global digital format and centralised administration. Initiatives such as this can show us the way. Information on complaints needs to be shared with all parties in the process. Complaints relating to the sales process, the
Insurer and third party administrators can sometimes ignore the fact that an MGA could have important information to add to claim verification performance or construction of the policy, or the claims settlement journey is vital information for the MGA, insurer and the broker. It should be no surprise that where there are difficulties in accessing the insurer’s claims team, a lack of clear claim ownership or a reticence in sharing data that reputation is at risk. The fact MGAs are looking at taking greater control of their claims functions should be viewed as a positive development. Many firms are building compliant processes operating to acceptable minimum standards. MGAs can help to address customer journey issues and the management of customers’ expectations. Data from claims shows how the delegated authority is performing, helping to highlight any issues too. This information will allow the MGA to review their policy offering to the broker and, where necessary, develop wording to ensure they continue to meet customer needs - a process that, by definition, supports the broker.
Modernisation: don’t stand still
The introduction of the Insurance Act this August will also have an impact. Come the “glorious 12th” of the month, we will no doubt see a different set of problems and opportunities emerge. The insurance industry should not be standing still in the face of process modernisation and the need for change; it is simply not an option. MGAs are responding by developing their input to the process. There are barriers to increased MGA participation, including a need for greater clarity of their role and the perceptions around the value of their involvement, through to more accessibility to data. But MGAs continue to call for more co-ordination amongst all parties in the claim process. Rather than adding layers to the process, they will help to ensure more appropriate customer outcomes. Peter Staddon is Managing Director of the Managing General Agents’ Association (MGAA).
Modern Claims 41
The Doctors Chambers Modern Claims Conference 2016 The third annual Modern Claims Conference took place on 15th June 2016 at Old Trafford, Manchester Utd F.C., Charlotte Parkinson, Modern Claims, summarises the event. eople from across the claims industry, including insurers, brokers and legal professionals gathered at the home on Manchester Utd, Old Trafford, for the third annual Modern Claims Conference. Jointly Chaired by Andrew Twambley, CEO, InjuryLawyers4U and Spokesperson, Access to Justice (A2J), and David Williams, Technical Director, AXA Insurance, this year’s event was created to consider the future of the personal injury market, and discuss cross-industry collaboration.
This year’s Keynote speaker, former Chancellor and Secretary of State for Justice, the Rt. Hon Jack Straw, addressed the delegates with a controversial speech relating to ethics within the claims industry. He said the government were playing a “cat and mouse game” with the industry as they try to “tighten control”. Straw also called the industry “over-lawyered,” and criticised law schools, whom he said had “done nothing” to reduce the oversupply of graduates seeking training contracts. Straw highlighted a dichotomy with regards to claims data, outlining that “objective” accident data was falling, yet premiums were “going up”, because of “inflated claims”. He added, this “abuse by the claims industry” continues.
A dysfunctional industry?
Criticising some claims companies for “bullying claimants” into making fraudulent whiplash claims, Straw drew on what he called his “own personal experiences” of cold-calling and the “compensation culture”. He called the legal system “dysfunctional” because of the “corrupt relationships” between lawyers and medical agencies. He was also quick to criticise the insurance industry, who he said, had adopted an “ambiguous attitude” to maximise their premium income. The root cause of the so-called compensation culture in the claims industry is, said Straw, driven by whiplash claims, the “vast majority” of which are “unnecessary”, and have “no foundation in medical knowledge”. Continuing his controversial address, Straw outlined his support for the “removal” of soft-tissue claims, hinting that he advocates the proposals to increase the small claims track limit, made by Chancellor George Osborne in his Autumn Statement. He went on to say that the regulation of the industry by the Ministry of
The vast majority of [whiplash claims] are unnecessary and have no foundation in medical knowledge The Rt Hon Jack Straw 42 Modern Claims
The key to customer satisfaction revolves around transparency and understanding the claims process Carolyn Mackenzie, RSA Justice (MoJ) had “not been effective”, and that he was “pleased” this duty had now been passed to the Financial Conduct Authority (FCA). Warning delegates that “pressure for change” will continue, Straw explained that the industry is capable of reform but no one will be the “first mover”, so change can only happen “from the outside”.
An industry battered by change
The first panel, ‘Access to Justice – An uncertain future?’ comprised Martin Coyne, Managing Director, Ralli Ltd and Chair of Access to Justice (A2J); Ed Fletcher, Chief Executive, Fletchers Solicitors; Zoe Holland, Managing Director, ZebraLC; Charles Layfield, Head of Legal, Minster Law – part of the BGL Group, and Janet Tilley, Director of Volume Services, Simpson Millar LLP. Twambley first asked the panel to offer their thoughts on the proposals made by the Chancellor to increase the small claims limit and remove damages for soft tissue injuries. Coyne responded saying the idea had come “out of the blue”, but Layfield countered saying he was “not surprised” it had come back on to the government’s agenda, although the “timing was peculiar”. Tilley disagreed that the proposals were a shock, explaining that she “knew it was going to come”, but that she was “disappointed” having spent 15 years lobbying. She also said she was “concerned” for genuinely injured claimants. Fletcher added that in light of the uncertainty in the market, he had “rallied the troops” at Fletchers to ensure the hardworking lawyers, who had been “battered by change” over the last 10 years, remained motivated. Holland added that her biggest concern was the removal of damages as it “impeded the fundamental right” to claim for a soft tissue injury. Coyne reiterated the concerns, explaining that the government had made no plans to “police” the reduction in premiums, which they argue will come as a result of the increase to the small claims limit. In their recent report, the Transport Select Committee (TSC) warned that the government should not make any more decisions without “further evidence”, explained Layfield. Fletcher added that it was not right that so far, no quantifiable savings had been
The conference was jointly chaired by Andrew Twambley and David Williams
passed on to consumers via their insurance premiums. Williams countered this with the claim that to date, there had been a “£1.1bn reduction” in premiums as a direct result of the Jackson reforms in 2013. Fletcher disagreed, claiming insurers “never stick to promises” to reduce premiums. Tilley cautioned that before more changes are made, existing reforms must be allowed to “bed in” first.
A transparent claims process
The ‘Insurer View’ panel, included speakers James Dalton, Director of General Insurance Policy, the Association of British Insurers (ABI); Carolyn Mackenzie, Complex Claims and Strategy Director, RSA, and Andy Watson, Chief Executive, Ageas. Chaired by Williams, the discussion began by asking the panellists if further reform was a necessary requirement. Dalton responded saying that the government want to ensure “fairness” for the 60 million motorists in the UK and that any reforms would be “about customers” and obtaining damages for them if they were entitled to receive them. The cost of running an insurance business is often overlooked, said heavyweight-insurer Chief Executive, Watson, as he explained that premium income is split between Ageas’s running costs and its distribution partners but that “the majority” goes on paying claims. Williams added that, contrary to popular belief, an increased level of claims could actually mean “more profits” for insurers. He then went on to ask Mackenzie what the industry could learn by looking at the way complex claims are run, and apply this to claims handling at the lower end of the spectrum. In response, Mackenzie outlined, “the key to customer satisfaction revolves around transparency and understanding the claims process”. Turning the discussion back to insurance company profits, Watson outlined that the two-year review undertaken by the Competition and Markets Authority (CMA) had not made any allegations that insurers were making “disproportionate profits”, despite the fact that the overall review had not had the desired outcomes for many in the industry. He went on, “the Head of the Prudential Regulation Authority (PRA) wrote to me and said
Anyone who thinks the PRA and CMA are in insurers pockets is deluding themselves Andy Watson, Ageas ‘your profits are under pressure, anyone who thinks the PRA and CMA are in insurers pockets is deluding themselves’”. He also cautioned the industry to “move on” from saying insurers are profiteering out of the claims process. Moving on to the regulation of Claims Management Companies (CMCs), Dalton explained that the insurance industry had “long argued” for better regulation and criticised the claimant lobby for “not getting on board” with their pleas. He warned that the FCA is a “big, nasty” regulator, but that he had “no sympathy”. Watson added that the FCA is “an effective regulator” but said he was “not optimistic” about the future regulation of CMCs because they are “extremely nimble” in terms of their business models. He concluded that the only way to tackle excessive claims is by “taking away incentives” to claim. Mackenzie added that more challenges may be on the horizon if the small claims limit is to increase to £5,000, but the priority must be “ensuring genuinely injured people can make a claim”.
The claims industry in the media
The portrayal of the claims industry in the media (in both the national and trade press) was the premise of the next panel discussion. Panellists included Ant Gould, Director of Faculties, the Chartered Insurance Institute (CII) and former Editor-in-Chief of POST Magazine; Michael Hardacre, President, the Manchester Law Society; John Hyde, Reporter, the Law Society Gazette, and Donna Scully, Partner, Carpenters and Editorial Board Member, Modern Claims Magazine. Williams asked the panel about consumer perception of insurance and Gould explained that they are often
Modern Claims 43
A panel of industry professionals discuss the future of access to justice
left confused because of a “lack of consistency” around price, calling the “lack of education” as to how premiums are created a “massive issue”. Williams countered, saying the insurance industry was “doing a lot to improve transparency and trust”. When asked about the general public’s perception of a compensation culture, Scully outlined that it is “believed”, although in her view, it is “not true”, and added that the notion had been extremely damaging to both lawyers and insurers. Hyde agreed but said the more the compensation culture is discussed, the more it “becomes real”. Scully also made calls to “clean up the market” by enforcing stronger regulation and “helping each other” to look better, particularly in the media. Hyde countered, arguing that he “wouldn’t bother” trying to improve PR in the claims industry, as the compensation culture is already “embedded in people’s minds”. Rather, he said businesses in the industry should reach out to local communities and “tell them positive stories” about the industry to improve their image. The CII have launched their own consumer-focussed platform, AskCiindy, to demystify the insurance process and Gould turned the conversation back to his earlier point about consumer education, explaining that consumers are “confused” about the insurance industry and that once they “understand it” perceptions will change. Hardacre hinted at a reoccurring theme from the day outlining that if “the bad CMCs” were removed from the industry, it would “stop negative associations” in the press. He added that the “shock announcement made in the Chancellor’s Autumn Statement has taken the wind out of the sales of collaboration”. Scully agreed, adding there will be “horrendous unintended consequences” if the reforms are rushed through without an impact assessment.
The pursuit of excellence
The after lunch Spark Talk, provided by the CEO of Manchester United’s Foundation, John Shiels, fittingly aimed to consider collaboration and leadership. Sheils first explained to delegates the importance of putting business vision “into context”, and “listening to customers”. He also highlighted the importance of leadership from the “top down” and the need to “recognise and develop talent”, calling for businesses to invest in their youth and “choose quality players”. He cautioned delegates about the importance of retaining talent, as otherwise he said, they “could be training staff” for their competitors.
44 Modern Claims
The shock announcement made in the Chancellor’s Autumn Statement has taken the wind out of the sales of collaboration Michael Hardacre, Manchester Law Society Moving on to communication within business, Shiels outlined the importance of paying attention to body language, which he called the “key communicator”. He also referenced “attention to detail” and called for business owners to “demonstrate” to staff that they care, as well as explaining that business owners should “not be afraid” to delegate. Ending by touching on culture, Sheils outlined that the “pursuit of excellence” by senior management will permeate through a business.
A changing risk landscape
The final panel of the day, ‘Risk Aware’, focussed predominantly on one of the most talked about considerations for insurance and legal professionals, cyber risk. Risk and compliance experts, Michelle Garlick, Partner, Weightmans LLP and Compli; Lesley Graves, Managing Director, Citadel Law, and David Hallam, Commercial Director, NCC Group, gathered to offer delegates the latest compliance tips and up-to-the-minute advice. Williams first began by asking the panel why they should take cyber security seriously, to which Hallam – whose company specialises in stress testing businesses and undertakes ‘ethical hacking’ – responded, “it is at the heart of everything we do now”, and told delegates risk is “greater everywhere”. Twambley outlined that whilst risk should be an important consideration, it can often be expensive to put the correct systems in place, but Garlick disagreed, saying it would be “far more expensive” when considering the potential cost of a cyber attack. Opening the conversation to risk more generally, Graves said that PI lawyers had “always been good” at risk management,
The “In the News” panel looked at the current challenges of the claims sector
Rt Hon Jack Straw took to the stage for the Keynote Address
Over 400 delegates filled the conference hall
but that they now need to “be even better” as legal work continues to move online. Hallam added that the majority of data breaches arise from “phishing attacks”, explaining their expert hackers can gain access to systems “within 20 seconds”, and once the hackers are in “40% manage to launch malware”, and of that 40%, “30% manage to obtain or compromise sensitive data”. Garlick concurred warning, “firms can’t just sit and hope an attack won’t happen”.
If we give a little, the government might listen Andrew Twambley, InjuryLawyers4U
The question of whether it should be mandatory for lawyers to take out cyber insurance policies was posed by Williams, to which Garlick responded by explaining firms are “taking insurance more seriously” and looking more at “AAA rated insurance companies”. She added that when it comes to cyber risk, personal injury is “not as risky” as conveyancing, and said it is “too early” for cyber insurance to be mandatory. Hallam disagreed, saying cyber insurance “is moving towards” becoming mandatory. Graves mentioned that cyber crime could easily affect the personal injury market because the firms often deal with “large amounts of money and sensitive information”. The responsibilities of the regulators to police data breaches in firms is increasing, according to Garlick, who explained that the Solicitors Regulation Authority (SRA) have “flagged the risks” to personal injury firms highlighting they should be careful to
avoid “reputation risks”. Referring back to Twambley’s concerns about the cost of monitoring cyber risks, Graves told delegates to undertake a “business assessment”, and look at how to “build the cost in to the business strategy”.
Summarising the discussions from the day, Williams said there had been “signs of common ground”, and called for the industry to work on that, saying “we need to understand our ‘enemy’ to work together”. Twambley explained that to him, “collaboration” had been the key word of the day saying, “If we give a little, the government might listen”. Williams agreed concluding, “If we understand each other’s businesses better, we can fight the battle together”. Modern Claims would like to thank everyone who attended, sponsored and spoke at this year’s conference.
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Modern Claims 45
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Fraud Roundtable Fraud has always been high on the agenda in the Claims industry, and now more than ever, with looming government reforms, innovations in technology, and a new generation of fraudsters, it is necessary for the sector to come together to tackle the issue. Brendan Gurrie, Modern Claims, reports. DS: My concern is the customer post-reforms. How do we deal with fraud, and protect the customer at the same time?
SJ: The key word is collaboration. Once we agree fraud is a problem we can work together to try and solve it. 2014 ABI figures suggested that fraud represented on average 6% of claims spend. This shows that 90-95% of claims are genuine, and our focus has to be on that small percentage where fraud exists.
Donna Scully (DS) - Partner, Carpenters – Chair
AT: If the SRA get on board and target fraudulent firms the fraud problem will start to disappear.
Damian Ward (DW) - Partner, Keoghs
SJ: My problems with the SRA are three-fold: One is a lack of resource to deal with the problem. Two, its lack of sanction when they do find a problem, and three, a lack of collaboration with the rest of the industry.
Damien Giggal (DG) - Claims Technical Excellence and Development Manager, Ageas
MM: They say they have got adequate resources, and they think they’ve sharpened their teeth. We’ve just got to see whether they actually take the action that they’re promising, which is easier said than done.
Martin Milliner (MM) - Director of Claims, LV=
DS: There are bad people out there, and they are the fraudsters, and then there are people who are easily led. They’re not really bad people by nature, but the bad lawyers and the bad CMCs are enabling them. The enablers are such a big problem in this market. AH: There often seem to be no real sanctions. Claimants can make a fraudulent claim, and if it fails, that’s it. MC: Fraud is fraud, and fraud has to be prosecuted by the police. DS: The insurance industry set up their own police division, the Insurance Fraud Enforcement Department (IFED), but the problem with IFED is it’s taken up with the big crimes. DW: Targeting the fraudster, as in the individual claimant, is one thing. The problem in prosecuting an enabler is that you need the support of the claimant, the individual whose name is being used. Unsurprisingly, claimants who have been abused in this way, innocent members of the public, aren’t willing to take those steps.
Alan Hayes (AH) - Legal Director, Carpenters Susan Brown (SB) - Chairman, Motor Accident Solicitors Society (MASS) Martin Coyne (MC) - Managing Director, Ralli Solicitors and Chairman, Access to Justice Brett Dixon (BD) - Vice President, APIL
Sarah Hill (SH) - Partner, BLM Steve Jackson (SJ) - Head of Financial Crime, Covéa Andrew Twambley (AT) - CEO, InjuryLawyers4U, Spokesman, Access to Justice
I’m going to fight as much as I can to ensure the voice of the customer is heard, to see how they are going to be protected in the new world, and to not let CMCs take over this market and make it worse than they already have Donna Scully, Carpenters
SH: The SRA does need that one big case to highlight the issue. BD: There are differences of opinion about the percentage of fraud, but there’s no difference of opinion about what should be done about it. DW: Fraudulent firms have built themselves around being SRA proof; there appears to be clear blue water between themselves, their clients, and the medical agencies. There are some invisible links that the SRA will struggle to get to grips with. MC: In the Insurance Fraud Taskforce (IFT) report, there is a recommendation that the burden of proof in Fraud SDT cases should change from Criminal to Civil burden. The Criminal Courts should be dealing with that. MM: It would enable the SRA to act more forcefully across a larger number of firms. DW: We have to have some faith that the systems we have now are still capable of establishing the truth in certain cases. DG: It’s important we strike the balance between access to justice and focusing on the claims that need defeating. With the potential fallout from Brexit there might be different people with a different
48 Modern Claims
parliamentary timetable, and removing the right to claims for damages might be delayed or lost in changed priorities. SH: The fraudsters will manipulate their model to deal with the regulations and the changes that are before them. The challenge will be tracking these changes and then identifying those behaviours. BD: I can’t see the point of the Autumn Statement if it is a fraud measure. If you remove legal representation by raising the small claims limit, and you replace it with CMCs, removing solicitors and the SRA from the process, isn’t the government going to create the Wild West? MM: The Autumn Statement isn’t about combating fraud, it’s about lowering household bills. So a bi-product may be a lot of fraud will be squeezed out of the system. But you can’t leave legal representation and regulators to one side and hope for the best. DS: At the APIL Conference, Lord Faulks said it’s not just about fraudulent claims; it’s unnecessary claims that are raising the small claims limit. I don’t think the impact assessment is going to look properly and I don’t think the consultation is.
The keyword is collaboration. Once we agree fraud is a problem then we can work together to try and solve it Steve Jackson, Covéa DS: Are we satisfied that what’s going to happen is good for our industry, good for us, and good for the people we represent? AH: As an example, if one of our customers is subject to an allegation of fraud by a third party insurer, we take a very firm line with that customer. The CMCs aren’t going to give them that advice; they’ve always got a vested interest in the outcome of that claim. DW: And the claim might not go away; you might not have it anymore but that Claim Notification Form (CNF) will reappear somewhere else. DS: That’s why askCUE PI is so helpful as it can help us to detect if a client is lying to us. If that client reappears with another CNF and an askCUE PI search is done, it alerts the insurer. SB: The profession has done a lot of collaborative work over the past few years; it’s led to Claims Portal, it’s led to askCUE PI, it’s led to MedCo, all of which are positive ways for us to get together, work out what the problem is and how to address it. MM: Despite all of that, nothing has changed. Things have not improved at all with MedCo. In fact you could actually say they’ve deteriorated. SB: MedCo has not yet been given the chance to work.
BD: There is a certain nervousness amongst lawyers about sharing information with insurers when you have pre-med offer practices contacting your clients directly. DS: The frustration I have with pre-meds is when we say to clients they have to get a medical report and provide information, and the client asks why, because last time the insurer gave them £1,000 for nothing. It makes it too easy to claim, and makes the system worse, because you need checks and balances. SJ: If you’re talking about opportunistic fraud, which I believe the proposed changes will reduce, as opposed to organised fraud, what is it that encourages people to make a frivolous claim? Premed offers may be one of those things. I’ve done a lot of work with insurers around Europe over the past few years and it’s interesting to see how different we are when it comes to assessing low value claims compared to other countries. BD: One difference is that there are no CMCs. DS: If the reforms come in, the CMCs will have a field day. MM: The FCA will deal with that issue. AH: That’s assuming the CMC decides to go down the route of seeking authorisation.
MM: The Claims Portal is extremely frustrating. Why can’t we get simple things like naming the source of your instructions, which CMCs work from? In the future, CMCs will have to be authorised by the Financial Conduct Authority (FCA), so we’d be able to track them and obtain the intelligence, we’d soon be able to put a case together.
MC: The skill sets are with the staff at the Claims Management Regulation Unit (CMRU) and with a number of people at the
DS: If something is helpful to the insurer, then we might have to live with it, because there has to be a compromise.
If the SRA get on board and target fraudulent firms, the fraud problem will start to disappear Andrew Twambley, InjuryLawyers4U
DW: More transparency at an earlier stage can create a faster claims process for those claims that insurers are happy with, and that’s a different consequence of collaboration that we haven’t talked about.
Modern Claims 49
Ministry of Justice (MoJ). How do you transfer that experience to the FCA in one go?
SH: The fraudsters will look at other types of injuries that can be claimed for and whiplash claims will morph to something else.
DS: You’re probably talking two to three years, and that’s too long.
MC: In the USA, claims for bulging disks have grown in the states where they have banned whiplash claims.
MC: In that time the CMC’s will move on, and they will metamorphose into another legal entity. SB: The more difficult you make it to be a regulated operation, the more there will be an unregulated sector that is harder to control. SJ: Two thirds of the ABI fraud figures were classed as organised crime, and that money goes in to all kind of sinister pots. MM: We wouldn’t want to see an underground CMC existence. We don’t want to see claimants not being represented. It’s a basic human right that people deserve representation, and it’s incumbent on the SRA, wider regulators and individual law firms to get the rotten apples out of their own barrels. DS: In terms of the OFT and the Competition Commission, was anybody disappointed that the reviews took so long, cost millions of pounds, and changed nothing? MM: The CMA enquiry couldn’t solve the problem because insurers didn’t collaborate well enough to come up with one appropriate view to protect the consumer’s interest. The government may come in and decide our fate, which is not necessarily a good thing. DS: That’s what these reforms are. Raising the small claims limit is a last resort because it’s going to take away access to justice for genuine people, and there’s no protection in place for them. We need to make sure that the MoJ impact assessment is genuine, in a way that protects innocent people, and in a way that suits the industry. DS: What do the government need to look at in the impact assessment? AT: InjuryLawyers4U carried out a survey asking the public what they would do if the government proposals go through, and a significant portion said they wouldn’t bring a claim to court, because they can’t face going against an insurance company without support.
DW: There will be a prognosis creep by certain organisations just to get over the £5,000 hurdle, and there will be injuries that will morph. The end of the market that is hell-bent on continuing to make money from these claims will adapt their model accordingly. SB: Squeeze the balloon and something will pop up somewhere else. DS: In 2011 at MASS, we had 30,000 letters from clients that we took to Downing Street saying they didn’t want to represent themselves, and it was influential in 2011 when the small claims limit was being discussed. MM: When the Woolf Reforms were implemented and the original small claims limit was introduced at £1,000, 48% of whiplash claims or soft tissue injury claims were below that threshold and people still found access to justice, so why wouldn’t they in the future? DS: There isn’t a safeguard in place now, and there needs to be one. SB: It will have to be a formula to enable solicitors to work profitably, and that’s a conundrum that’s very difficult to find a solution for. We at Claims Portal already have law firms phoning our IT helpline for legal advice, so if you have 700,000 litigants in person or on the phone looking for advice on how to value their claim, where are they going to go for that? MM: Insurers will play a part; they are working collaboratively with some genuinely good credit hire organisations, and have come up with ways of working that take the friction out of it - the same could apply to the legal market. DS: How could you pay out legal costs for all the people claiming? Would the insurers have to cost a safeguard? AH: It will be interesting if the consultation is going to say Before the Event (BTE) will be more expensive post-reform. Would the saving on motor policies be balanced by increasing BTE? MM: I’m not sure it’s the answer, but it’s an option.
The fraudsters will manipulate their model to deal with the regulations and the changes that are before them Sarah Hill, BLM 50 Modern Claims
DS: Can you see the good people being able to cope with these cases on their own? AH: If we got to the stage where the Portal was a publically accessed, easily understood document then claimants could do it themselves. With the prognosis creep we will be at £5,000 for most claims fairly quickly. It doesn’t solve anything; it increases damages, it doesn’t improve access to justice, it doesn’t solve the industry’s problems or the government’s objective of lowering premiums. July 2016
The more difficult you make it to be a regulated operation, the more there will be an unregulated sector that is harder to control Susan Brown, MASS DS: People have to pay compulsory motor insurance, so when they have an accident and they can’t be represented, they won’t feel like that’s access to justice. Fraudulent whiplash is connected to the enablers, who tell the clients what to say to the medical expert, putting words in their mouths and making good people do bad things. MC: The IFT Report mentioned a 6 month CNF cut off, and we at A2J certainly advocate a 12 month notification period. The doctors say that any minor soft tissue injury that they are asked to comment upon for the first time, and which is more than 12 months old is objectively very difficult to verify. If you permit no costs for late CNF lodgement after twelve months, or you diminish the amount of quantum a client can get for old injuries, that may prove to be a disincentive for the enablers. It would lessen the potential for exaggerated injuries and reduce the money available to the enablers. Nuisance calls would also diminish. AT: If you do limit it to 12 months, then a lot of fraud will disappear, because a lot of the claims between 12 months and three years are data-mined, so that will stop. DS: If we introduce the limitation, and we do other things the government suggests, then we’re helping to fight CMCs. Everyone around this table says the CMCs and the enablers are a huge problem. SB: The government thinks everybody wants to get to that pot of money: the costs and the damages. They think taking that out will solve the problem. But we should be taking out the people who are creating the problem. SH: It’s the cost of tracking them in the future; they’re evolving and you’ve got to evolve too, and that costs money.
going to be protected in the new world, and to not let CMCs take over this market and make it worse than they already have. Don’t be quiet, let’s all be involved. The government doesn’t understand this market. This is our market, these are our customers, let’s make sure we put in the consultation and protect Access to Justice now and in the future. Modern Claims would like to thank all attendees, as well as Carpenters for hosting the roundtable.
Carpenters Carpenters are a leading provider of claims services to the insurance industry and their customers. The range of services extends from receiving notification of a cracked windscreen at one end of the spectrum, to managing a multi million pound catastrophic injury claim at the other. The focus throughout our range of services is the experience of the customer. We understand that individuals involved in an accident often require time and attention in what can be confusing circumstances. We are acutely aware that we are representing our insurance clients when dealing with their customers, and at all times seek to enhance the brand and reputation of our insurance partners. Our insurance division provides our own FCA authorised LEI product, and a market leading in-house 24/7 white labelled FNOL unit. The FNOL service is complemented by an inhouse claims handling service with real time online access to individual claims and claims MI. On the legal side Carpenters have built a reputation for an ethical approach to personal injury litigation ensuring that the individual receives the best possible advice and the maximum compensation possible. We have a strong team of experienced lawyers who provide jargon-free advice in a customer friendly fashion.
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BD: And the government won’t spend any money. DS: Access to Justice is so down the pecking order on the government’s agenda, especially for the people we deal with. But they are on our agenda, and I’m going to fight as much as I can to ensure the voice of the customer is heard, to see how they are July 2016
Modern Claims 51
How to win the Battle against Claims Fraud As insurers drive consumers online and to mobile apps to service their insurance needs, the likelihood that fraud will seep into their books will inevitably increase. Tristan Prince explains how to shut potential fraud out at the front door. ising consumer demand for instant gratification and selfservice options is creating a void for many insurers and brokers that, if left unaddressed, will be felt most heavily when it comes to claims and, ultimately, loss ratios.
Insurers Offering Comprehensive Services Online
One of the most significant developments is that insurers are expanding online services to give consumers the ability to initiate a quote, incept a policy, obtain insurance documents, register claims, make mid-term adjustments, and download custom apps. Consumers can literally do it all online, often without ever speaking to a broker or insurance representative. With all these different touch points now part of the customer experience, there are far more opportunities for cyber criminals to commit fraud. The insurance industry is no stranger to online fraud, whether it’s being directed at insurers or the consumers they serve. Sadly, it has become a significant problem for businesses across the entire insurance landscape. At iovation, we have a unique view of the landscape when it comes to insurance fraud. We continuously collect, maintain and grow a robust network of granular device intelligence from hundreds of insurance fraud analysts around the world, and then use this data to protect our clients from insurance fraud.
Iovation Claims Fraud Statistics
Here are a few telling statistics on insurance fraud in the UK, drawn from iovation’s Global Device Intelligence Platform: • In the last 6 months alone, iovation’s insurance subscribers shared 232,712 unique pieces of insurance fraud related evidence at device level to help each other prevent claims and application fraud. • More than 90,000 transactions have received a decline response, due to significant device risk, for iovation insurance subscribers in the UK since January 2016. • Since January 2016, over 34% of the total declines for our insurance clients have been as a result of shared evidence and intelligence placed on high-risk devices
Emerging Fraud Trends
While the extent of fraud losses in the insurance industry remain somewhat murky, the fraud trends insurance companies are facing and the signs of growing fraud activity, are becoming quite clear. Here are just a few of them.
Rise of the Aggregators
The proliferation of insurance aggregators is perhaps one of the biggest insurance trends. With aggregator sites such as GoCompare.com, consumers can submit their information (or application) just once and receive quotes from numerous providers. This saves consumers time and money, and gives them a better experience. Still, this also introduces some tough challenges: • Insurers have less data visibility and direct contact with the customers • Higher rates of quote manipulation can be expected as consumers may manipulate information to obtain a better quote, such as a false address, claims history etc.
Insurers and aggregators are using device intelligence to stop fraudulent applications from entering into their review queues, effectively shutting them out at the front door • Applicants are able to request 100-200 quotes in a short amount of time with slight changes, such as the risk address, mileage, value of goods for example being hidden from the insurer • Fraudsters can operate from any region, and can easily change their tactics to evade detection if no verification is in place.
Proliferation of Ghost Brokers
Ghost brokers, commonly referred to as “street” brokers, falsely represent themselves as an employee of an insurance company who has special access to consumer discounts, and often advertise online via social media and industry-specific communities. Acting as self-appointed intermediaries between insurers and consumers, ghost brokers will often use bots to find the “right answers” to insurers’ application questions by filing 100-200 applications, all with slightly modified answers. Of the results, the ghost brokers will serve up the lowest priced policy to the consumer, charge them for the policy, deliver the consumers ‘’legitimate” policy documents, and then –without the consumer’s knowledge – cancel the policy and pocket the refund!
Device Intelligence and the Future of Fraud Defense
As these trends play themselves out in the critical months ahead, insurers will need to take deliberate steps to craft and implement a comprehensive customer authentication and fraud prevention strategy that helps them combat new forms of fraud and meet increasing consumer expectations for convenience. Using powerful device intelligence, insurers are now able to mitigate fraud risk at all stages of the policy lifecycle and prevent loss at key transaction points including: • At quote and policy inception – Before any loss can be incurred • At MTA – When a new risk might be introduced • At a claim – As an extra layer of identity verification • During renewal – To minimize future exposure. Both insurers and aggregators are using device intelligence to stop fraudulent applications from entering into their review queues, effectively shutting them out at the front door. As more and more insurance organisations contribute and share data about known-bad devices, the new shared information serves to benefit them all. Tristan Prince is Business Development Manager, UK & Europe at iovation.
Modern Claims 53
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Modern Claims Conference: The claimant side Dr Victoria Handley explains why, in her view, the only truth that came out of the Doctors Chambers Modern Claims Conference was the confirmation by David Williams (AXA) that dodgy insurers fuel fraud by making pre-med offers, and argues this is the headline that should be in every newspaper showing the public why premiums have risen. was astounded to witness such open unabashed lies from Jack Straw and David Williams regarding ‘whiplash being made up by solicitors’, there are ‘too many solicitors so they fuel fraud’, the ‘compensation culture is a bad thing’, ‘RTA’s have increased’ and ‘fraud is of epidemic proportions’.
The insurer panel were well versed. They spoke concisely and with authority. They relied on anecdotal evidence as if it were fact and made their case out succinctly. They stood together and reiterated each other’s arguments. They were charismatic and unyielding in their approach.
We don’t search all employees each day to stop theft and we don’t ban bicycles to prevent injury. We should not ban whiplash to remove fraud from society
The claimant cohort was lacking in data or counter argument about the rule of law, the role of justice, why we have whiplash, fraud statistics, RTA figures, the regulation of CMC’s, cold calling causes and the alliances that have been drawn in opposition.
worldwide and the second most common cause in the developing world. Police and DWP data shows that that the number of RTAs in the UK is falling. These statistics are important to counter any anecdotal insurer pronouncement that claims are on the increase.
The other side of the story
We know the maxims ‘equality before the law’, ‘no man shall take advantage from his injurious behaviour’ and ‘the doctrine of evasion’. The Magna Carta guaranteed civil justice. We have increased rights awareness from advertising, television and internet. With increased awareness comes an increase in take up. No longer shall we suffer harm and loss without recompense, even when my train or plane is delayed. A culture which is no longer prepared to accept delays, shoddy work and negligence is a good thing. To cause harm to someone is a bad thing.
What can we do about the arguments that the insurers have persuaded the Government are important? Why does fraud happen? The factors that cause someone to commit fraud are financial need, opportunity and rationalisation. Fraud is not limited to one industry or one type of person. What is certain is that if you remove opportunity (pre-med offers) you remove fraud. Sanctions are already in place to combat fraud. Prosecuting those who lie on oath, submit false invoices or lie about injuries sends a clear message. We don’t search all employees each day to stop theft and we don’t ban bicycles to prevent injury. We should not ban whiplash to remove fraud from society. Data on prosecutions for fraud and a campaign for greater use of the present criminal sanctions is needed. Whiplash does exist. Head restraints were invented to help protect against it. The NHS, Doctors and scholarly articles offer advice on its occurrence and treatment. Whiplash originates from ‘railway spine’ which was identified as a particular problem of railway crashes. They too were accused by insurers of ‘milking it’. If there is a whiplash problem then we must look at why. The mandatory use of a HANS device in motor racing prevents neck injuries and the use of a 3-point seat belt is thought to reduce the risk of injury by 45%, but the Nissan 350z has a death rate that is double that of the average sports car, whilst small cars perform poorly in the UK whiplash testing (Thatcham testing). Government should be looking at whiplash preventative measures to ensure the safety of drivers.
Taking the first step
Injuries from RTAs are the third most common cause of disability
If insurance does not compensate harm, the defendant benefits. His premiums and no claims bonus remain intact. He is able to harm with impunity when driving. It is a matter of public policy which underpins the operation of the legal system that this cannot be so. If there is to be no favouritism or preferential treatment to any person by virtue of their rank or status within society, the Government must determine why drivers in road traffic accidents are allowed to cause injury without being subject to pay compensation for the harm caused. Why are they afforded such preferential treatment under the law? More headlines are needed informing the public that in future, drink drivers will not pay compensation to you or your children after a crash. The conference was a first step in understanding the arguments. We must not allow dishonest statements to manipulate the truth just to avoid accountability. We must fight the reforms with reasoned strategy backed by legal principles and statistics. Insurers have a lot to gain by restricting rights and lots to spend on doing so. Any opposition must be supported by GMC, judiciary, Bar Council, Law Society and consumer groups. Sadly, they were nowhere to be seen at the conference. Dr Victoria Handley is Director at Handley Law.
Modern Claims 55
Fixed costs: driving arbitration Andrew Ritchie QC outlines the potential costs penalties for refusing to Arbitrate Clinical Negligence and Personal Injury claims. n 24 May 2016, the NHS Litigation Authority (NHSLA) wrote to PIcARBS stating that the NHSLA is “open to proposals from claimants’ solicitors” to arbitrate claims. This modern and commercial approach reflects the EU Directive 2009/22/EU on ADR for consumer disputes, which stated: “Alternative dispute resolution (ADR) offers a simple, fast and low-cost out-of-court solution to disputes between consumers and traders. However, ADR is not yet sufficiently and consistently developed across the Union.” It also reflects the clinical negligence and personal injury preaction protocols, which expressly require the parties to consider arbitration. “Litigation is the last resort,” they say. The Civil Courts cannot cope now with the volume of clinical negligence and personal injury claims issued each year due to the enormous cuts in funding since 2010. Reduced County and High Court staff numbers can no longer provide a telephone or front desk service, files are lost and Courts are being closed. Delays in listing case management hearings and costs budgeting hearings run at 9 months. The change in the overriding objective to focus on the convenience of the courts and the Mitchell decision, requiring strict adherence to orders and striking out for failure, have overburdened the Courts with expensive procedural hearings. Cooperation is discouraged. Worst of all, the massive increase in issuing fees and other court fees means that insurers are paying much more for a worse and slower service. None of it is online so time and money is wasted on paper filing.
Savings across the board
Insurers and claimant lawyers need to take back control over the process for settling and fighting claims. Arbitration is the only way to do that. Arbitration is NOT mediation. It is a binding and forceful procedure under the Arbitration Act 1996. Arbitration Agreements exclude the courts. Arbitration results in an enforceable award after the case is settled or goes to a final hearing. More importantly, arbitration allows insurers and claimant lawyers to plead the case, gather the evidence, e-serve and e-file it and then to settle the claim without the nuisance, delays and expense of the courts. We estimate that on average £60,000 will be saved in courts fees and legal costs per claim by insurers who settle cases through arbitration. PIcARBS provides 16 Queens Counsel from leading sets as panel arbitrators. We have created a revolutionary online e-filing system. PIcARBS arbitrations are being proposed by over 30 claimant firms up and down the country to resolve claims. The numbers are increasing weekly. However, unlike the NHSLA, most commercial insurers are simply ignoring the proposals. Refusing an arbitration proposal is financially dangerous. The courts have begun to add teeth to the ADR requirement. Refusal to agree to a PIcARBS
In the current climate with the courts needing the reduce their workload, the penalties for refusing to arbitrate are likely to be more severe arbitration (and in law, silence is taken refusal) will probably result in costs sanctions win or lose. Per Master O’Hare in Reid: “If the party unwilling to (mediate) is the losing party, the normal sanction is an order to pay the winner’s costs on the indemnity basis… This penalty is imposed because a court wants to show its disapproval of their conduct. I do disapprove of this defendant’s conduct...”
Efficiency is critical
The case law has developed since Halsey , in which the Court of Appeal gave guidance on when costs penalties for refusal to engage in ADR should be applied. In PFG , the Court of Appeal approved a costs penalty imposed on a winning defendant for refusing to mediate. In Garritt-Critchley , the winning claimant was granted indemnity costs because the defendant refused ADR. In Laporte , the winning defendant was deprived of one third of its costs due to his failure to engage in ADR. In Reid , the defendant refused to mediate. Master O’Hare awarded indemnity costs to the winning party due to the losing party’s refusal to mediate. In Bourne , the winning defendant was deprived of 50% of his costs due to his refusal to engage in mediation. These cases have all focussed so far on refusal to mediate but PIcARBS was only opened for business in May last year. Before then arbitration was not available for personal injury and clinical negligence claims. The same penalties will apply to refusal to arbitrate, but in the current climate with the courts needing to reduce their workload, the penalties for refusing to arbitrate are likely to be more severe. Fixed costs will drive parties to arbitrate because efficiency will be crucial to success and PIcARBS arbitration with e-filing provide efficiency. The same fixed fees will apply to PIcARBS arbitrations. Andrew Ritchie QC is a Barrister and Arbitrator at 9 Gough Square and PIcARBS. PIcARBS is shortlisted for the Claims Innovation of the Year award 2016. www.PICARBS.co.uk
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Rehabilitation – the most challenging but rewarding aspect of injury litigation? Amanda Stevens considers why personal injury practitioners should engage with the revised Rehabilitation Code, and explains why rehabilitation in clinical negligence litigation should take centre stage. f someone you knew suffered an accident, I wonder what advice you would give? Would it be to find the best lawyer and make sure they got the maximum compensation? Whilst important considerations, my advice would be find a lawyer who really understands rehabilitation and how to access it early, as well as being a robust litigator. After all, the biggest preoccupation of my clients down the years has been how to get their life back on track as quickly as possible - money alone can’t do that.
The first Rehabilitation Code was introduced in 1999, and unsurprisingly did not result in huge changes straight away. That era was fraught with numerous costs wars. Rehabilitation initiatives require a certain degree of trust. But champions of rehabilitation continued to push ahead. A major boost was inclusion of rehabilitation as a necessary process within the court Pre-action Protocol for Personal Injury claims. There is now widespread uptake, although some commentators place that at about 50% of all claims, so there is still a way to go.
The 2015 Rehabilitation Code
During last year, I chaired the working party which reviewed and substantially rewrote the Code. We have tried to make it more user-friendly. A one-page summary document was produced for busy practitioners, together with a workflow document showing recommended timescales for each stage of the process. All the documentation can be accessed at www.Iua.co.uk/IUA_Member/ Publications/Rehabilitation_Code.aspx. The Code is not intended to be a straightjacket, but a guide to good practice. Different organisations will place their own interpretation upon it. Training has not been rolled out in a coherent manner, despite fantastic efforts in some quarters. APIL has produced a revised Best Practice Guide which is available by contacting them via www.apil.org.uk. Previous editions have been extremely popular. The Code sets out two separate work streams, depending upon injury severity with an eye to proportionate cost alongside good clinical practice. Ten markers are listed, which may justify greater support than indicated by injury severity alone. The importance of goal setting is highlighted to maintain clear focus through the rehabilitation journey. It is important to remember that a full liability decision is not required before any rehabilitation intervention can take place. If there is likely to be at least a partial admission, rehabilitation can be commenced straight away. Clinical evidence demonstrates earlier interventions increase the likelihood of more successful outcomes. Money provided for rehabilitation can never be recouped unless it can be proved that there has been fraud or fundamental dishonesty.
Protracted investigations before liability admissions appear to be the blocker, but I would like to see rehabilitation in clinical negligence litigation to take centre stage Previously anxiety around this delayed some claimants from engaging rehabilitation, when they were in a precarious financial state post-accident. Equally, there are now inbuilt safeguards for compensators, allowing them to offset some rehabilitation expenses against other heads of loss where rehabilitation has been unauthorised in advance and considered unreasonable.
At the end of July, I chaired the first meeting of the 2015 Code Review Group. We are keen to understand any practical difficulties with implementation so that we can make adjustments. A research questionnaire will be distributed to representative groups who use the Code. We are aware that many clinicians still do not understand what it is all about and this is not helping the injured persons’ journey to optimal recovery. We are exploring ways to work more closely with rehabilitation doctors. A Clinical Best Practice Guide is being produced by the British Society of Rehabilitation Medicine and the Vocational Rehabilitation Association, which will sit alongside the Code. Some organisations are significantly better at rehabilitation than others. It remains a challenge to persuade them to invest in more training and process around rehabilitation. However, many can vouch for the cost effectiveness of early rehabilitation as well as more subjective qualitative improvements in outcome. I will finish with two personal observations. As a former hospital manager, one of my greatest frustrations is the lack of anything like early engagement with rehabilitation in most clinical negligence claims. Protracted investigations before liability admissions appear to be the blocker, but I would like to see rehabilitation in clinical negligence litigation take centre stage. Finally, I would like to encourage everyone who has not fully embraced the Code, to take time to read it and think again. I can honestly say that my cases where there has been effective rehabilitation have given the greatest personal satisfaction, far beyond the size of the settlement sum – for an injured client to regain quality in their day-to-day living is the most important thing. Amanda Stevens is the Group Head of Legal Practice at Hudgell Solicitors.
Modern Claims 57
Modern Claims’s panel of resident industry associations BIBA, MASS and FOIL consider the burning issues impacting the claims industry at the moment.
The great tumble dryer fiasco ost people should by now be familiar with the product recall of approximately 4.3m faulty tumble dryers across the UK within the Whirlpool Group including Hotpoint, Indesit and Creda, due to a fault which was originally identified in October 2015. Many customers, including myself, are still waiting for the promised modification, which I believe in my case will arrive in August 2016, but not until December and beyond for many other customers. Whirlpool has dealt with the matter poorly but they have now started to offer replacement tumble dryers at a lower specification to absolve themselves of the responsibility of coming to modify the fault. But, as alleged in a Daily Telegraph article on 15 March 2016, it seems that the replacement tumble dryers may also be faulty. As well as exercising the product recall and products liability insurance of the Group, this matter came to my attention as Chair of the Industry Claims Working Group (CWG), when an insurer took the decision to repudiate liability for a fire claim which emanated from one of the faulty tumble dryers. The customer was using the dryer to the manufacturer’s instructions so there were no grounds, either moral or technical, to repudiate liability for the claim. However, what it did demonstrate is that the evolution of the accidental damage cover on household policies has caused wordings to change and the interpretation of a defective
product wording has become skewed away from the original intention; the principle of insurers covering “fire, however caused”. Due to the intervention of BIBA and the CWG, the insurers retracted the repudiation and the claim was correctly paid. The CWG itself also generated constructive dialogue with insurers that are members of the group, raising awareness of the issue, with all member insurers agreeing that interpretation of the wording and subsequent repudiation was wrong. It also enabled them to ensure that similar claims received by their offices would be dealt with appropriately. The one sad fact in this case was that - upon referral to the Financial Ombudsman Service by the CWG suggesting that guidance be issued to insurers – and in the light of this case, there was little interest to become involved. At the advent of the Financial Conduct Authority, it was suggested that it would be a “forward looking” regulator and one would have hoped that the Ombudsman might have taken a similar view, which may have resulted in a considerable amount of work being saved for their team in the future. Meanwhile, I continue to wait with bated breath for the visit of the Whirlpool engineer to correct the fault on my tumble dryer, hopefully before Christmas 2016! Andrew Gibbons ACII, Managing Director, Mason Owen Financial Services Ltd and Chair on behalf of BIBA of the Industry Claims Working Group.
A change of direction y way of a break from being asked to write, talk, and attend meetings about the proposed changes to whiplash, I was pleased to be asked recently to consider whether MASS could support an initiative calling on the Government to take action on the high incidence of fatal and serious accidents caused by young drivers. As it happens one of my sons is currently learning to drive, and I have been considering what I can do to get him relatively safely and affordably on the road when he passes his test.
It is well known that young drivers are involved in more catastrophic and fatal motor accidents than any other category of road user. The risk of death is doubled for 15-19 year olds and (for males in this group) trebled from the general population. Most experienced personal injury lawyers will have seen those dreadful cases where a carload of teenagers suffer life-changing injuries due to the reckless driving of a teenager who has just passed his test. Apparently the cost to the economy of these was £2.9bn in 2013 – it’s a large number, and I’m not quite sure how it is calculated, but whatever the financial cost, it is insignificant alongside the personal cost to young people of having to live with the consequences of brain and/or spinal cord injuries.
58 Modern Claims
Road safety charity Brake’s ‘Too young to die’ campaign is calling for the introduction of graduated driving licensing (GDL). Brake suggest a 12-month learner period before sitting an initial test. A further test would then follow after a two-year novice period when restrictions apply such as a late-night driving curfew and restrictions on the size of engine they can drive. Of course, the risk of making it more difficult and expensive to become a fully qualified driver is that the number of unlicensed, uninsured young drivers would simply increase. However, the evidence from New Zealand, Australia and some US states, suggests that the introduction of GDL has reduced young driver injuries. This is certainly a topic on which a public debate is needed, and – to come back to where I started, the proposed changes to whiplash, because I can’t get away from them – probably an infinitely better place for the Government to allocate legislative time and resource. Instead of wasting time seeking to deny accident victims justice, let’s save an awful lot of human misery by driving out accidents involving young drivers. Susan Brown, Chair, the Motor Accident Solicitors Society (MASS) and Director, Prolegal.
Time to make progress on fixed fees osts budgeting was a key initiative of the Jackson reforms but pressure on resources and the time involved in approving costs budgets has led to considerable delays and a number of proposals to row back from this reform. Costs budgeting is far from perfect: it doesn’t control pre-issue costs, there is a need to build in contingencies that are unlikely to be needed, and there is a need to budget on the basis of a fully contested trial which in most cases doesn’t happen. The Forum of Insurance Lawyers (FOIL) believes that fixed recoverable costs is a more certain, less cumbersome and more realistic approach to reducing costs. There is a growing consensus in favour of extending fixed recoverable costs to cases at the lower end of the multi-track. Lord Justice Jackson has recommended it, the Department of Health supports the principle for clinical negligence claims and Lord Faulks, Minister of State for Civil Justice, speaking at the Association of Personal Injury Lawyers’ (APIL) conference in May, said that Government supported the principle. There is nothing new in fixed recoverable costs. We already have them for many personal injury claims up to the fast track limit and for intellectual property claims up to £500,000. For too long fees have been determined by the cost of lawyers
doing what is considered reasonably necessary in each case. On the face of it, this may not seem to be a bad approach, but the reality is that without adequate restraint costs have got out of hand, and in some cases, badly out of hand. Lawyers are resourceful and should be encouraged to use their skills to find more efficient ways of working. Defendant injury lawyers and many commercial lawyers have trodden this path for years. They have innovated and managed to stay profitable whilst delivering better value for money. There is no reason why this approach should not be applied to litigation generally. The Ministry of Justice has its hands full with a range of proposed reforms but it is disappointing that, despite being promised fixed fees in clinical negligence claims by October, we have only seen limited activity on fixed costs since January. Lord Faulks’s speech to APIL gives some encouragement and FOIL believes the time is right to press ahead with this. FOIL has set up a working party to look at Lord Justice Jackson’s proposals in detail and would like to encourage progress on this issue. Duncan Rutter, President, Forum of Insurance Lawyers (FOIL).
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Personal injury solicitors integrate Proclaim Compensation specialist selects Proclaim Practice Management Software solution to enhance personalised client service.
“Overall, as a well-established law firm, we continually develop our services to meet the needs of the dynamic personal injury sector. Proclaim is a fantastic solution for us as it’s completely flexible, therefore ensuring that we are providing the most efficient and tailored service for our clients.” Michael Jefferies, Managing Director at Jefferies Solicitors
Jefferies Solicitors has been providing personal injury legal services for over two decades. The firm deals with a wide range of compensation claims for accidents and personal injury throughout the UK. Operating from Altrincham and Hanley, Jefferies Solicitors provide legal advice with a strong emphasis on a friendly and approachable service to clients.
Jefferies was looking for a Practice Management Software solution that would regulate working practises across the firm, whilst allowing fee earners to continue providing a personalised service to clients.
After an intensive selection process, a Proclaim Practice Management Software solution was chosen. Proclaim provides all fee earners with full access to live cases – regardless of locations
– and seamlessly stores all details of clients and their claims, simplifying the retrieval process. Additionally, Jefferies also opted for Eclipse’s CaseViewer tool, allowing staff to export entire cases into non-Proclaim environments (e.g. a Microsoft tablet), and interrogate the history, from simple searching to filtering data based on tailored rules, without affecting the case in the main Proclaim system – extremely useful when in court.
Since implementing Proclaim, Jefferies has been able to operate as a paperless office. Every document is now scanned into the system and automatically stored in the relevant case history, minimising paper usage, whilst providing fee earners with a complete picture of cases. In the future, the practice is planning to implement Eclipse’s TouchPoint system to take client service to the next level. TouchPoint will provide Jefferies’ clients with a completely personal ‘self-service’ experience and total transparency, giving them the ability to check on their case at any point and from anywhere – providing them with a greater understanding of the entire process. For further information, please contact Darren Gower, Marketing Director at Eclipse Legal Systems, part of Capita plc, via darren.gower@eclipselegal. co.uk or call 01274 704100. Alternatively, visit www.eclipselegal.co.uk
How Simpson Millar’s LPC benefits the Claims Industry et up in May 2013, the LPC opened as a dedicated unit in Manchester in July 2013. The centre is managed by Richard Greer, a non lawyer with extensive business outsource processing and operations management experience. The LPC only handles post Jackson RTA and General PI claims working within three dedicated teams within the structure.
In LASPO, Richard and his team saw a great opportunity to improve services for clients. They set out to find a way of applying process improvement methodologies from the non-legal sector to help streamline claims processing. With a goal of reducing the duration and operational cost of claims, and to improve client satisfaction, the team mapped out and streamlined all internal EL/ PL/RTA processes. Improving external processes and relationships with stakeholders was another priority for the team. Through regular supply chain performance reviews, they were able to improve results and share best practices. As a result of this, claim duration was reduced by 50% from 12+ months to 6 months. Processing costs were more than halved – reduced by over 60%. Client satisfaction rates went up – evidenced clearly through client satisfaction questionnaires.
involved. By creating a welcome pack and a next steps pack, Richard has helped clients understand the claims process. The feedback to date has been hugely positive.
Innovating the supply chain
Richard and his team created a win-win situation for all parties by improving the claims process. Clients receive an even better level of service and convenient appointments. Suppliers benefit from a reduction in no-shows and increased uptake in their rehabilitation offering. The LPC has partnered with suppliers to link in Simpson Millar risk assessments – enabling them to take calculated risks on proactive rehabilitation. They also set up a unique partnership with work sources via the ‘Recommendus’ system – a free lead portal for customer recommendations for brokers and organisations handling claims. ‘Recommendus’ helps work sources compliantly track their work and supply chain revenue. For further information call 0808 129 3320, or alternatively visit http://www. simpsonmillar.co.uk
Improving the client journey The LPC has measurably improved the journey for Simpson Millar’s clients who often don’t have any experience in making a claim, let alone the knowledge of how to go about it and the processes
Modern Claims 61
10 MINUTES WITH
BEN FLETCHER Q A
Has the industry changed drastically since you started working in it?
Yes, the insurance industry does look quite different now. In many respects, some of the most interesting changes arise from those influences outside the insurance industry itself, particularly in consumer attitudes and technology. I think consumers are now better informed than they ever were and with that comes an ever increasing expectation of what ‘good’ looks like. Couple that consumer attitude shift with the rate of technological change, and things look quite different now from when I first joined an insurer in 1997. Systems and processes are designed and put in place to protect what are the vast majority of good and honest people. However, insurance fraudsters by their very nature simply look to exploit that process or system for their own gain. For every step forward that we as an industry take to improve our processes and customer experience, the fraudsters will be plotting how to exploit it. Therefore, in the same way that the insurance customer journey has changed over the last decade in particular, the way that frauds have been committed has changed accordingly. Our job as fraud practitioners is to detect and prevent as much of that as possible.
What has been the key positive or negative impact of change in your area of the market?
The biggest positive impact has come from the improving recognition, from not just within insurers but across the industry and also reaching consumers, that fraud is a serious problem. It is one that harms all of us. Many fraudsters are intelligent, well-resourced and motivated. As such, dealing with the issue requires a number of things, not least innovative and collaborative solutions to tackle them. When I first started in the industry, fraud was an issue tucked away most probably in a claims team and not very visible at a management level. Fast-forward to 2016 and fraud is a board agenda item which will commonly feature on corporate risk registers. Insurers and the industry seek holistic strategies to deal with the problem which starts at the quote and application stage. This recognition of fraud as an important industry issue has driven investment in the area and professionalised how fraud is managed. I take pride in having played a small part in that.
This recognition of fraud as an important industry issue has driven investment in the area and professionalised how fraud is managed. I take pride in having played a small part in that
Who inspires you and why?
There are some great innovators and leaders in our industry who have worked hard to create the holistic fraud strategy that we have and which other sectors and countries would like to emulate. As such, I am lucky to be surrounded by a great team and a strong industry of colleagues who want our industry to be the best it can.
Have you had/got a mentor? If so, what was the most valuable piece of advice they gave you?
I have had a mentor in the past and the single best piece of advice was a very simple one; ‘do what you say you are going to’. If you don’t know what you can deliver then say you don’t know, explain what you need to do to find out and go away and do it. Stop spending time finding the reasons to explain why you have not been able to do something and make sure you ‘under promise and over deliver’, not the other way around.
If you were not in your current position, what would you be doing?
As a bit of a petrol head and F1 fan, ideally something connected to the motor industry and particularly motor sport.
Ben Fletcher is Director at the Insurance Fraud Bureau (IFB).
SAVE THE DATE Doctors Chambers Modern Claims Awards 27th April 2017 New Dock Hall, Leeds CONTACT For sponsorship enquiries email@example.com | 01765 600909 For event enquiries firstname.lastname@example.org | 01765 600909
62 Modern Claims
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Modern Claims brings you all the latest news from the Claims Industry, with a newer, fresher and more modernised look! Happier reading with...
Published on Jul 29, 2016
Modern Claims brings you all the latest news from the Claims Industry, with a newer, fresher and more modernised look! Happier reading with...