Modern claims magazine issue 6 email

Linking the Industry Together

March 2014 | Issue 06 | ISSN 2051-6495 Adjusting the scope and operations of regulation: Kevin Rousell explains how Claims Management Regulation will change in light of reform.

Michael Brown: The Senior Partner at Berrymans Lace Mawer speaks to Modern Claims about the new challenges for defendant firms and shares his predications for emerging trends in insurance fraud.

Modern Claims Magazine | March 2014 | Issue 06

‘Claims management companies and ambulance chasing lawyers are moving towards the commercial sector and looking to simulate claims volumes for industrial deafness, repetitive strain injury and medical based injuries, which can often be difficult to prove’ John O’Roarke

STUART FORRESTER ‘The establishment of DLG Legal Services is absolutely not in response to the referral fee ban. It is a response to the new opportunities that have arisen as a result of the Legal Services Act which allows us to provide legal services directly to our customers’ Supported by Charlton Grant

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Introduction

03

Welcome to T

he New Year is now well and truly upon us and for some, 2013 may already feel like a distant memory.

2013 may have been the ‘year to forget’ for many in the claims industry but, as has been so widely reported, a wealth of opportunity for innovation has been borne. So much so, that we have decided to produce a special Supplement with this edition, which has a core focus on innovation in the claims arena in light of reform.

On a more personal note, the start of this New Year has been an extremely exciting time, as I have now taken the mantle from the very capable hands of Emma Waddingham to become Group Editor of Modern Claims Magazine. Having been involved with the title since it was launched in last year, I am delighted to fulfil what is a natural transition to my new role.

In this issue, as always, we have the usual array of hardhitting features and interviews. Our cover star this issue is Stuart Forrester, Director of the newly licensed DLG Legal Services, he talks to Modern Claims about his plans for the ABS on page 11. Diversification of fraud is also the topic on every bodies lips and we spoke to Michael Brown, Senior Partner at Berrymans Lace Mawer (page 15) and John O’Roarke, Chairman at the Insurance Fraud Bureau (page 19), as they offer their predictions on emerging trends in insurance fraud and much more, for the coming year.

The initial findings from the competition commission,

published in December is now beginning to shift the focus of claims management, as Tony Rand explains (page 51) and in light of the findings, we also have an all important regulatory update from Kevin Rousell, on the state of play for Claims Management Companies (page 46). Kevin Hughes also highlights the importance of striking a balance between brand and cost and what these can mean to the consumer on page 59.

In expectation of further change afoot this year and to keep you up to speed, we are holding the Modern Claims Conference on 25th March at Stamford Bridge, Chelsea FC. The conference is now fast approaching and I would urge you to book your tickets (visit www.modernclaimsevents. co.uk) now if you have not already done so, as this is set to be a sell-out event.

Please do feel free to share your thoughts and ideas for Modern Claims with me by e-mailing me via charlotte. parkinson@charltongrant.co.uk, but for now, sit back, relax and enjoy this issue of Modern Claims!

Charlotte Parkinson, Group Editor charlotte.parkinson@charltongrant.co.uk

Modern Claims Magazine Project Director Kate McKittrick Accounts Director Karl Mason

Issue 06 – March 2014 | ISSN 2051-6495

Advertising Group Editor Charlotte Parkinson Rachael Pearson Design Head of Events Matthew Phillis Julia Todd

Contact t: 01765 600909 e: info@modernclaimsmagazine.co.uk w: www.modernclaimsmagazine.co.uk

Modern Claims Magazine is published by Charlton Grant Ltd ©2014.

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.

MC // March 2014

04

Contents

CONTENTS

10

07-10 INTRO & THE NEWS

07 Don Clarke talks news

10-19 THE INTERVIEWS 10 Interview with... Stuart Forrester,

19 Interview with... John O’Roarke,

DLG Legal Services

Charlotte Parkinson, Modern Claims, spoke to the Director of DLG Legal Services about why the Direct Line Group thought the time was right to diversify their service offering to their expanding client base.

Insurance Fraud Bureau

15 Interview with... Michael Brown, Berrymans Lace Mawer

Charlotte Parkinson, Modern Claims, spoke to the Chairman of the IFB about the changing landscape of fraud and how his position as Managing Director, General Insurance at LV= as well as a varied career in the insurance industry, stands him in good stead for combating modern-day fraudsters.

15

The Senior Partner at Berrymans Lace Mawer, speaks to Charlotte Parkinson, Modern Claims about the new challenges for defendant firms, his predications for emerging trends in insurance fraud and the impact on the consumer of insurer/ legal ‘businesses’

19

EDITORIAL COLUMNISTS Alan Nesbit Managing Partner Nesbit Law Group & Chairman, ARC Andrew Gibbons ACII MIoD Mason Owen Financial Services member of BIBA Andrew Pemberton Director Argent Rehabilitation (part of Parabis Group) Andy Whatmough Director S & G Response Bippon Vinayak Chairman & CEO Doctors Chambers Bruce Bourne Bruce Bourne Associates Craig Budsworth Chairman MASS & RTA Partner, Glaysiers

MC // March 2014

David Fardy Advocate Lyons Davidson

Gerry Lee Senior Partner P R Hanna Solicitors

Nik Ellis Managing Director Laird Assessors

Tim Wallis Mediator, Solicitor, Director Expedite Resolution

Darren Gower Marketing Director Eclipse Legal Systems

Jeff Dawson AIC Director of Sales Elite Insurance

Patrick McGuire Partner Thompsons Solicitors

Tony Rand CEO Vamco & Managing Director Partsave Ltd

David Johnson President FOIL

Jonathan Hewett Group CMO Octo Telematics

Peter Horton Chief Operating Officer - GI LV=

Zoe Holland Managing Director ZEBRA Legal Consulting

David J Williams Managing Director, Underwriting AXA Insurance

Keith Crosier Peter Parry Managing Director/Engineer Managing Director Legal and Technical Assessors Ltd Independent Accident Investigations Kevin Hughes CMO Richard Forth GoCompare.com Managing Director Forth Associates Kevin Rousell Head of Claims Management Rob Smale Regulation Claims Director Ministry of Justice Ageas

Dez Derry CEO mmadigital Donna Scully Partner Carpenters Don Clarke Partner, Director of Strategy Keoghs LLP

Michael Davidson Head of Strategy & Sales Goldsmith Williams Solicitors

Russell Thomson CEO Eclipse Legal Systems

Contents

23-40 THE OPINIONS 24 Sector Soapbox

Craig Budsworth, MASS, Andrew Gibbons, BIBA, Alan Nesbit ARC and David Johnson, FOIL

27 The game changer

Gerry Lee, P R Hanna Solicitors

27 True independence

Rob Smale, Ageas Insurance

29 Still Alive and Well?

David J Williams, AXA

49 Six Reasons to Look Again at ADR and Mediation

Goliath

Insurance- Policies and Pitfalls

Peter Horton, LV=

Dez Derry, mmadigital

31 The rise of the ‘smart’ consumer

Jonathan Hewett, Octo Telematics

Nik Ellis, Laird Assesors

34 A unified experience for your client

Russell Thomson, Eclipse Legal Systems Keith Crosier, Legal and Technical Assessors Ltd

35 Is independence the answer?

Andrew Pemberton, Director, Argent Rehabilitation (part of Parabis Group)

Modern Claims spoke to our legal experts about how they are keeping on top of change and delivering the best possible service for their clients in the new legal environment.

How insurers position themselves, and communicate to potential customers, can be highly effective, as Kevin Hughes reports.

61 Re-engineering the parts procurement process

37 The finer details

Zoe Holland, Zebra Legal Consulting

Tony Rand explains why the report of the Competition Commission’s ‘Provisional Findings’, published in December, is beginning to shift the focus of claims management to other matters.

37 A fighting chance

62 5 minutes with...

39 Learning to do what is right

62 Garvins Solicitors LLP chooses

Richard Forth, Forths Associates Peter Parry, Independent Accident

41-62 THE FEATURES

53

59 Not just a matter of cost

35 Keep your crystal ball close at hand

CAR policies are intended to indemnify against ‘all risks’ of damage to the Insured Property during construction works. All risks, that is, that are not otherwise excluded by the policy, as David Pliener explains.

55 Legal Opinion

34 Ability and capability

Jeff Dawson AIC, Elite Insurance

53 Construction All Risks (CAR)

31 How to get it right in 2014

Professor Dominic Regan recently said that Alternative Dispute Resolution (ADR) is now “back on the agenda” as a means of settling disputes efficiently and at proportionate cost, Tim Wallis reports.

51 An alternative story of David and

29 Managing a surge

05

Martin Milliner, LV= insurance

59

Proclaim

Personal Injury specialist to implement Proclaim Case Management firm-wide in 2014.

43 Making the simple complex and sinister

Patrick McGuire explores whether, in a bid to create a simple and efficient system, the scales of justice have been tipped in favour of the Insurers in Scotland.

45 Adjusting the scope and operations of regulation

Kevin Rousell explores what the MoJ and the Claims Management Regulator are doing in light of change.

61 MC // March 2014

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Don talks news

07

DON TALKS NEWS...

WHIPLASH - TIME FOR REFORM

I

doubt that many would disagree that the last 12 months have brought more reform in the personal injury compensation arena than has occurred in the last 20 years. The Government have driven through both reform led by Lord Justice Jackson and from the Ministry of Justice itself. They are to be applauded for their willingness to tackle difficult issues head on and seek to reduce pressure on premiums for hard pressed motorists.

Having said that, one vital piece of the reform jigsaw remains outstanding. I am of course talking about the thorny issue of whiplash or RTA soft tissue compensation that has grown to epidemic proportions in the UK over the last 10 years. Whilst the number of road traffic accidents has been in decline and vehicles have become safer, the volume of whiplash claims has continued at an unacceptable level.

The catalyst for this increase was a dysfunctional process that provided perverse incentives to claims farmers and claimant lawyers alike to pursue more and more claims.

The Jackson and MoJ led reforms have gone some way to abate those incentives but there is no doubt that in terms of whiplash, more needs to be done. Under the leadership of the Justice Minister, Shailesh Vara, the MoJ have undertaken to drive reform ‘at pace’. Having met the Minister, I have no doubt in my mind that he means

‘We need an envoronment where the expert is not under any commercial pressure to produce a certain outcome and / or prognosis’ what he says and is committed to communicating firm recommendations by his self imposed deadline of July this year. The MoJ have clearly articulated their views on reform.

They see this as a medical led solution and wish to deliver a panel of both accredited and truly independent medical experts. Only reports from a panel expert would support a whiplash claim in the new regime. At Keoghs, we agree that these dual strands of accreditation and independence are key to the success of the proposed reforms.

Swift and efficient redress A new process must deter fraudulent and exaggerated claims with a clear message that such claimants will be exposed by the accredited and independent expert.

Equally, any new process must also preserve access to justice and provide swift and efficient redress for genuinely injured claimants. Accreditation and continuous training and development are the cornerstone of any profession.

Experts must be competent and keep up to date with

new research and opinion. We see thousands of medical reports every year and it must be said that the quality is very varied. The concept of ‘cut and paste’ whiplash reports is well known and we see reports which barely vary, save for the claimant’s name and address.

Accreditation needs to ensure that the expert has up to date knowledge, is suitably qualified and experienced and can present evidence to a high standard. Training should include objective criteria for assessing a claimant when presenting with whiplash symptoms. The ability to appreciate the bio-mechanical aspects of whiplash should also be fundamental. In short, given the speed and mechanics of the accident, could the claimant have sustained the injuries complained of? Accreditation is not a one off requirement. There should be an annual refresher to ensure that experts keep up to date and also recognise their duty to the Court in medico-legal reporting. We also believe that peer review and some form of selective audit should also form part of the proposals. Having said this, there must also be a clear and independent appeal process to protect experts in the event of a failure to secure accreditation or proposed removal of an existing authority.

MC // March 2014

08

Don talks news

True independence This brings me to the issue of independence.

We need an environment where the expert is not under any commercial pressure to produce a certain outcome and / or prognosis. It is commonplace now for the solicitor to instruct an expert where a direct financial link exists - it is often the case that the medical agency is owned by those who also own the law firm.

Whilst we recognise the expert’s duty to

‘The catalyst for this increase was a dysfunctional process that provided perverse incentives to claims farmers and claimant lawyers alike to persue more and more claims’ the Court, there is unquestionably a lack of independence in such circumstances. The MoJ clearly recognise this (as do others on both sides of the traditional Claimant/Defendant divide) and have committed to breaking such links in the new process.

We welcome this commitment and look forward to seeing how this will work in practice. Experts should then be in a position to make a declaration of financial independence in their reports. Whilst accreditation and independence are key, there are other more nuanced issues that will assist in improving the overall process. We consider it essential that the defendant be able to jointly instruct the expert or at least be able to provide their own version of the accident event. Experts have been unfairly criticised for some of their opinions in the past, when the information they had been given about the accident circumstances was, at best, rudimentary. It is key that the expert is fully informed by both parties as to the precise accident circumstances so that a considered opinion can be given as to the bio-mechanical impact of the collision.

Fixed fees that are embedded in the Civil Procedural Rules will also deliver transparency and consistency. Fixing fees avoids dispute and the parties should work together over the coming months to agree what is reasonable.

Experts should then be paid promptly regardless of their opinion within the report to prevent any perverse financial incentives.

Whilst not adopted, I still support Lord Justice Jackson’s interest in some form of damages evaluation tool. This would bring further transparency to the compensation process and avoid dispute over relatively small sums.

Whilst not in scope over the coming months, it is an issue that I hope the MoJ will be prepared

MC // March 2014

to re-visit in time as a further step to improve clarity for the consumer.

A final plea A final plea would be in connection with scope. It can be no coincidence that since the RTA portal fixed fees were reduced last year, we have seen a sudden and continuing increase in the number of ‘ancillary’ medical reports attached to whiplash claims. I am of course talking about compensators being inundated with reports from psychologists and rehabilitation experts.

It is perhaps also no coincidence that these reports are often commissioned by solicitors with a direct financial link to the agency instructing that expert.

The timing of this sudden and stark increase in such reports from certain claimant law firms, marries up to the reduction in the fixed fees. This needs to form part of the MoJ’s work over the coming months. This new layering of cost through additional disbursements is negating the effect of the reduced fixed fee, whilst often adding no, or no significant benefit to injured victims.

The intended benefit of reduced transactional cost should be passed on to hard pressed motorists and not find its way back into the coffers of claimant law firms through new and additional charges.

There has been so much debate about whiplash compensation over recent years. It is time for that debate to crystallise under the auspices of the MoJ stakeholder group. The Minister is committed to reform and has set an ambitious deadline of July for formal recommendations. All stakeholders should now come together to support that ambition and work with the MoJ to deliver an improved process. Such a process should have independence at its heart. That will serve to deter wouldbe-fraudsters and those who seek to exaggerate symptoms for personal gain.

Access to justice and swift redress will be preserved for the genuine claimant.

To conclude, I would take you back to the MoJ’s original consultation on whiplash entitled “Reducing the number and costs of whiplash claims”. That has always been the goal and I hope that the culmination of the next few months work delivers that ambition through a more effective and efficient medical process.

Don Clarke is a Partner at Keoghs

Comparing apples and oranges For those involved in the now small number of claims not covered by the low value protocols, the recommendations that the Civil Justice Council (CJC) will shortly be making to the MoJ on the Guideline Hourly Rates (GHR) payable to law firms are likely to be of particular interest.

In a post-Jackson world dominated by fixed fee structures it is clear that there needs to be a radical rethink of what constitutes an equitable hourly rate for work which has historically been considered ‘complex’.

The value of a case can no longer be the single arbiter of complexity, as common processes can be applied to a large range of multi-track cases.

Unfortunately the research conducted by the CJC to date, focusing as it does on pre-reforms operating costs, is unlikely to expose this issue. It really could be a case of comparing apples and oranges, when the recommendations are made to the MoJ. FOIL, Keoghs and others have strongly made this point at the recent verbal evidence sessions that form part of the consultation process, and we now wait to see whether there is any shift in approach.

L L P

N E S B I T B U R Y

-

L O N D O N

Association of Regulated Claims Management Companies

L A W -

L E E D S

G R O U P -

L I V E R P O O L

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Interview with... Stuart Forrester

11

Interview with...

STUART FORRESTER In the wake of two heavy-weight corporate organisations, PwC Legal and DLG Legal Services gaining ABS licensing approval at the end of January, Charlotte Parkinson, Modern Claims, spoke to the Director of DLG Legal Services about why the Direct Line Group thought the time was right to diversify their service offering to their expanding client base

Q

Why did Direct Line want to diversify into a legal offering in the form of the ABS DLG Legal Services? The Group already provided some out-sourced legal services, why was it important to bring these in-house and branch out to offer full legal services offering?

A

We announced our intention some time ago to establish our new law firm, DLG Legal Services Ltd, which will be wholly owned by the Direct Line Group. The aim of the new venture is to provide us with legal services to our customers of our insurance products. The overall aim of DLG Legal Services is to offer a proposition, which is in the clear interest of customers, to offer them an affordable range of legal services, in the event of them having to make a non-fault claim, for example, if there was an accident where the damage was caused by a third party. Initially, to offer advice on and manage the claimant’s personal injury and non-injury claims, such as debt recovery, employment and contract issues. Following the Legal Services Act 2007, we were presented with the unique opportunity to extend the range of services we currently offer to our customers, which protects them from excessive legal costs.

This will allow our customers to have access to affordable access to justice, should they need it. If a customer has taken out one of our motor legal protection policies and is unfortunate enough to be in an accident which is not their fault and they need to make a claim, they will be able to keep 100% of their awarded damages. If they do not already have a policy with us, we will be able to provide them with an affordable service.

‘The overall aim of DLG Legal Services is to offer a proposition, which is in the clear interest of customers, to offer them an affordable range of legal services, in the event of them having to make a nonfault claim’

MC // March 2014

12

Interview with... Stuart Forrester

‘The establishment of DLG Legal Services is absolutely not in response to the referral fee ban. It is a response to the new opportunities that have arisen as a result of the Legal Services Act which allows us to provide legal services directly to our customers’

Q A

You have an extensive background in accounting and finance, what made you the right person to fill the role of Director of DLG Legal Services?

When establishing these structures, one of the things the regulators keep talking about is that these new entities must be in the interest of the customer and they must be well managed with a sound commercial footing. Financial stability is a key theme which is emerging in the changing landscape, with a common theme from the SRA often being that these new organisations should be run as businesses. The financial stability is so important because, without that, we cannot provide a lasting service to customers. This is very much a team effort and we have sourced the relevant technical expertise from our in-house teams and our partners. It is the senior management team which we have in place that covers the legal, financial and operational expertise required to run this business and as a result of that, people leadership is going to be a key part of my role. I have been very fortunate in my career to have worked in a number of challenging and interesting roles, all of which are regulated in one way and another and this, coupled with my financial acumen and knowledge, provides me with a fantastic platform for taking on this role.

Q A

What will your role as Director of DLG Legal Services involve on a day to day basis?

People leadership is absolutely key and will form a large part of my role, making sure that I can understand and help people deliver their roles within the new business. No day within the role is going to be the same and there will be a variety of different things happening every day. I will also be working on a continual basis with the management team to ensure they are committed to the customer, as well as helping assess what they need in order to best deliver that service.

Q A

Why did Direct Line want to partner with the Parabis Group?

DLG Legal Services will provide a range of our own services, as well as those provided in partnership with the Parabis Group. We have a long established and trusted relationship with Parabis having collaborated previously as two businesses. They are market leaders in bringing people, processes and particularly legal expertise, to businesses in this field. We firmly believe that combining our services with their experience and skill with our in-house legal departments within our claims business, will allow us, jointly, with the right skills and expertise, to deliver a good service to our customers.

MC // March 2014

Q

How potentially disruptive is/has the conversion process been for both parts of the Parabis Group and Direct Line Group to customers and staff etc during the licensing process and creation of the new venture?

A

There has been no disruption at all, particularly for the customers, there has been an absolute continuation of service and there has been no change at all during the application process to the services which we provide. We continue today to provide the services either direct, from our staff within the Direct Line Group or via our panel, some of which goes to Parabis already. The same is true for the staff who look after our customers. The application process itself and the creation of the new law firm, has been lead by me and supported by a dedicated Project Team, which was set up specifically to create the new business.

Q

Why did you take the decision to launch DLG Legal Services now, at a time of such great change within the wider legal and insurance sectors, and has this decision been to the detriment of staff who work under the Direct Line umbrella, in the form of redundancies etc?

‘Financial stability is a key theme which is emerging in the changing landscape, with a common theme from the SRA often being that these new organisations should be run as businesses’

A

We announced our decision some time ago and took our time to consider what we wanted to do.

As previously mentioned, the Legal Services Act provided an opportunity for us to offer the services direct to our customers in this changing environment and protect them from excessive legal costs, particularly in the event of a personal injury claim. The existing teams which already provide our legal services (such as in-house litigation services), will be moving under the DLG Legal Services Ltd law firm. DLG has announced in the past some proposed changes and potential job losses but these are completely separate to the establishment of DLG Legal Services.

Q A

The application for ABS licensing was an extremely lengthy process, initially having been made in July 2013 and having been granted at the end of January 2014, with services being offered from March 2014, how did you find the licensing process?

It is important not to forget that we are setting up a business from scratch in a heavily regulated environment and it is essential for the benefits of the future clients that the process is comprehensive and thorough. The SRA have a hugely important role and we are absolutely delighted to have been granted a license for our business.

Interview with... Stuart Forrester

13

‘We are setting up a business from scratch in a heavily regulated environment and it is essential for the benefits of the future clients that the [regulatory] process is comprehensive and thorough’

Q

Why is DLG Legal Services not expected to make a material contribution to Direct Line Group profits, given that it will save the Group money in the long run and was the main catalyst for the decision a response to the referral fee ban?

A

The establishment of DLG Legal Services is absolutely not in response to the referral fee ban. It is a response to the new opportunities that have arisen as a result of the Legal Services Act which allows us to provide legal services directly to our customers. When we made the decision to progress with our license application, we needed to be satisfied that it was in the clear interest of our customers to offer these services. Customers, the regulator and politicians will be happy with our offering, as it demonstrates the exact reasons why the Alternative Business Structure (ABS) legislation was introduced; to widen access to justice, give customers more choice and a great experience.

Q

What will DLG Legal Services offer consumers of legal/insurance/ financial services which differentiates it from the competition?

DLG Legal Services is all about offering our customers greater legal protection, access to affordable justice, access to legal advice in respect of employment and contract disputes, as well as enabling personal injury claimants in particular to retain as much compensation as possible. This means that for our existing legal expense claimants, 100% of all damages are retained. Without legal

expenses insurance, we have created a fair alignment between the risk taken by us in relation to the claim and the share of legal expense paid by that customer, which creates an affordable access to justice. This contrasts with some practices out there in the market, where some solicitors may retain up to 25% of awarded damages as success fees.

We are delighted to have been awarded our licence from the SRA and delighted to be able to extend our offering to our customers, which in turn has allowed us to continue to differentiate ourselves from the market.

Stuart Forrester is a Chartered Accountant having qualified in 1995 with Wilder Coe. Prior to his appointment as Director of Legal Services at Direct Line Group in 2013, Stuart spent four years with Provident Insurance as Head of Finance. He has also held a number of senior positions at Bradford Housing Trust and Merrill Lynch.

A

MC // March 2014

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Interview Interview with... with...

Michael Mike Brown

15 11

Interview with...

MIKE BROWN MICHAEL BROWN Michael Mike Brown, Brown, Senior Senior Partner Partner at Berrymans at Berrymans Lace Lace Mawer, Mawer, speaks speaks to to Charlotte Parkinson, Modern Claims about the new challenges for defendant firms, his predications for emerging trends in insurance fraud and the impact on the consumer of insurer/legal ‘businesses’.

Q A

How is Berrymans Lace Mawer working with insurers to improve the speed in which claims are turned around for consumers, for example, by utilising early investigation methods?

Keeping claims within the extended MoJ process/ portal depends on compensators admitting liability within short, fixed periods of time. Speed of investigation and decision making are crucial. BLM worked with insurers and large corporate insured’s before the extension of the scheme, to ensure that they were fully aware of these challenges. We provided help and technical support and worked together on solutions to ensure prompt claims notifications and swift investigations. This support and training is an ongoing process allowing for a collaborative, joined-up approach, which prioritises early investigation.

We have provided additional training and support for claims investigators encouraging a more pro-active system of full investigation of circumstances, based upon whether a claim is likely to be received rather than when a claim has actually been filed by a third party. We work with clients to monitor claims trends and to prevent repeat claims. We are using the HighQ Collaborate system as an extranet facility, assisting lawyers to investigate and deal with claims proactively and without time consuming duplication of effort. HighQ Collaborate allows us to develop a precedent bank with a document management functionality, to build an online wiki resource dealing with recurring issues on claims and which allows us to share updates on legal developments. The objective is to create a cloud-based virtual legal environment, where claims staff can access a range of reference and case information. We are keen, wherever possible, to streamline processes with B2B integration and the use of a joint portal is a valuable first step. In addition, we are working with clients looking at all aspects of third party intervention, whether they are medical, property or motor, to speed up settlement of genuine claims.

‘It will take some time for the reforms to bed in and, crucially, for the courts’ approach to the reforms to crystallise’

MC // March 2014

16

Interview with... Michael Brown

‘The challenge for law firms over the next 12 months will be to deal with all of the changes and uncertainty whilst simultaneously striving to maintain quality on behalf of clients’

Q A

What are the key challenges for the claims sector and defendants in the next 12 months?

The claims sector is in a period of uncertainty and flux following the introduction of the ‘Jackson’ reforms and the extension of the MoJ process. This is not unexpected: we are waiting to see how the rules and procedures apply in practice. As ever with significant change it will take some time for the reforms to bed in and, crucially, for the courts’ approach to the reforms to crystallise. Law firms are testing the parameters of the new rules. So far different courts’ approaches to the same issues have proved divergent. At this early stage, we have seen more applications to court, greater administration and ironically, increased costs. When combined with the post-Mitchell ‘blood on the floor’ approach to any breach of a court direction there is a significant pressure on law firms to ensure that workloads are such that the lawyers can deal with these additional pressures. The practical impact of qualified one-way costs

‘Awareness, identification, detection, deterrent and intelligence sharing are key aspects of avoiding fraudulent claims in all areas’ shifting (QOCS) is likely to become clearer in the next 12 months. Insurers and compensators will no doubt be reviewing their litigation strategies extensively, given the significantly reduced ability to recover costs under the QOCS regime. At the same time, defendants will certainly test the courts’ approaches to the limited exceptions to QOCS. The challenge for law firms over the next 12 months will be to deal with all of the changes and uncertainty whilst simultaneously striving to maintain quality on behalf of clients.

MC // March 2014

Q

Do you anticipate an influx of clinical negligence/industrial disease/NIHL claims in the coming months/years and how can fraudulent claims be avoided in these types of often complex/ expensive cases?

lifecycle are essential. Without training for staff who deal with these cases and use of these red flag indicators, it is possible for cases to rumble on without fraud being detected early.

This leads to increased cost for the insurers in defending the claims and puts them on the back foot in terms of investigation. Fraud awareness is essential for handlers of these claims

‘‘It is certainly the case that [ABS] models will enable closer business relationships to exist between insurers and legal practitioners but whether that is in the best interest of the consumer remains to be seen’

A

The influx of clinical negligence claims appears to have peaked and is now settling out. The NHS LA’s annual report for 2012-13 recorded a 10.8% increase in claims from 201112. There was a rush to beat the 1/4/13 deadline for end of recoverability of success fees. The latest data indicates a settling out of claim numbers but a broadening in the type of solicitors trying to get into the clinical negligence market, which suggests that the fees limits in other personal injury sectors is pushing firms to move into more lucrative areas, of which clinical negligence is seen as one. As to the years ahead and what this could hold, the expectation must be that the restrictions on recoverability of costs will move even into this sector of work. For many years it has been seen as special, due to its heavy expert requirements but it is surely only a matter of time before there will be more aggressive attempts to control those costs. The impact of Jackson is being felt in the form of greater control of the number of experts and sharing required between defendants under the title of costs control/budgeting.

There has been a notable increase in these types of claims over the past 12 months in the fraud sphere. It is clear that the claims market has moved from the traditional motor arena into these areas. To monitor the claims and avoid fraudulent pay-outs, training for staff accompanied by red flag indicators at the start of a case and during its

to ensure that the identification and detection of claims with fraud concerns is prioritised to ensure that the right investigation strategy is employed. Awareness, identification, detection, deterrent and intelligence sharing are key aspects of avoiding fraudulent claims in all areas.

Q

In an interview with Modern Claims, in July 2013, Tim Oliver, Group Chief Executive of Parabis Group said ‘both defendant firms and insurers need to work together to find a dynamic solution to EL/PL and push them through to settlement’. How have insurers/ defendant lawyers been working collaboratively to streamline the EL/ PL claims process?

A

The extension of the MoJ process to incorporate EL/ PL claims up to £25,000 itself provides the basis of a dynamic solution to low value EL/PL claims and for pushing them through to prompt settlement. To ensure that clients were (and are) in a position to take advantage of the benefits of the process, BLM has been involved in extensive training, both before the introduction of the reforms and on an ongoing basis. The key is to ensure that claims are dealt with efficiently whilst not compromising quality. Insurers are competing for market share and it is crucial that they have a partnership with suppliers

Interview with... Michael Brown

that ensures that their policyholders are happy that the right claims are being settled at the right stage and at the right cost. In November 2013 we launched a new product offering solutions to specific legal issues for a low fixed cost price.

ExpressAssist essentially provides access to legal advice to those issues that may be blocking the resolution of a claim, such as a difference of opinion between insurer, policyholder

‘In the short term, claims which generate minimal money for the fraudster or those fraudulent claims that come with too many obstacles for them to make the business profitable will peak and decline quickly’ and the corporate board; a pressing need to make a decision on liability to keep cases within the MoJ scheme for injury claims; or an immediate need for advice on resolving policy coverage issues. The service is designed to apply to prelitigated civil claims under £25,000 in the fields of casualty, disease, policy coverage, professional indemnity, product liability and property damage. It was initially developed to offer extra assistance to clients in light of the reduced timescales for responses on liability set down by the MoJ reforms. We soon realised that it had a wider application across other classes of business which had claims that often came up against unnecessary barriers.

Q

The Competition Commission published it’s provisional findings at the end of last year, the overall aim of the commission was to ensure that access to justice is not compromised in lowering insurance premiums; do you think this aim will ultimately be achieved?

17

A

It is clear from the recent discussions and publications following the Transport Committee’s review of the cost of motor insurance/whiplash that the Government feel that a real push towards establishing such a panel will assist in reducing whiplash claims.

In terms of these panels becoming a reality, there is a lot of work to do before that is achieved. APIL, whilst supporting the principle of using medical experts in the fight against fraud, has openly criticised the introduction of medical panels. John Spencer, vice-president of APIL, said: “ . . . it’s important that the injured person, like all other types of litigant, is able to choose his expert.”

Concerns have been expressed by many from across all areas of the claimant, defendant and medical professions in relation to the independence of such a panel. It is very easy to say such a panel will be independent. However questions remain unanswered around who will control the panel; who will regulate the panel; who will register experts to it and control entry to the panel; the method of review of the panel; the right of appeal and what this process will look like; and to whom the panel is answerable. Until such questions are answered the reality of the panel seems some way off.

Q

How important is it for Insurers to be working with partners who can innovate and produce streamlined claims solutions, what are the best and most efficient solutions (such as co-sourcing and risk-reward models), which both insurers/defendants should be adopting?

A

Insurers want to work with firms who innovate and produce great solutions to contain litigation and reduce indemnity spend. These are key elements for any relationship and is our primary focus at BLM. We are continually asked for new solutions to meet the new challenges which insurers face. The best and most efficient solutions vary depending upon the business model of the insurers concerned as well as their ethics and ethos in relation to resolving claims. As such it is impossible to say there is a best efficient solution.

‘Industry knowledge and awareness will be key and prompt and powerful deterrent messages should be clear to ensure that these claims areas are not exploited for a prolonged period’

A

The publication of final findings is still some way off, to say nothing of the implementation of any new approaches. The access to justice question probably resonates more with the impacts of the MoJ reforms and the fixed recoverable costs which now also apply in litigation.

Access to justice can be ensured if business models adapt to the new regimes. At only six months in to the introduction of the new fixed recoverable costs regime it is probably too early to be seeing sustained trends.

Q

Many believe that a truly independent medical panel holds the key in the fight against fraud, do you think the claims sector will reach a point where this panel will become a reality, will it ever be fully independent/how will it be effectively regulated?

Q

Much of the talk in 2013 was how ABSs would affect the claimant side of the market, how do you anticipate ABSs will affect defendant firms moving into 2014, particularly in light of large scale joint ventures between insurer/legal practitioners?

A

As the liberalisation of the legal services marketplace matures, it is likely that more defendant firms will be exploring ABS models. Whether such models are the right business models remains to be seen but there is no lack of desire to explore the benefits of such models. It is certainly the case that such models will enable closer business relationships to exist between insurers and legal practitioners but whether that is in the best interest of the consumer remains to be seen

MC // March 2014

18

Q A

Interview with... Michael Brown

What area(s) of fraudulent activities/claims are you most concerned about as 2014 takes hold and how do you think these issue(s) will play out over the coming months/years?

It has been clear for some time that the traditional motor fraud arena is changing. Fraudsters are diversifying into other areas. The bottom line is that fraudsters will move into any areas where money is to be made. The growth in noise-induced hearing loss claims has been significant for the last 12-24 months and his growth is anticipated to continue. There has been an increase in advertising by claims management agencies to advise the public of the opportunities for them to bring medical negligence claims. This is an area in which we have seen tremendous growth. In the short term, claims which generate minimal money for the fraudster or those fraudulent claims that come with too many obstacles for them to make the business profitable will peak and decline quickly.

However whilst these areas are being exploited, fraudsters will be testing new areas to move into to make money. It will be key for all those involved in claims to increase their own awareness of the issues, to ensure that the handlers can identify and detect these claims quickly and deploy appropriate strategies to tackle such claims. Industry knowledge and awareness will be key and prompt and powerful deterrent messages should be clear to ensure that these claims areas are not exploited for a prolonged period.

Q A

What is next for Berrymans Lace Mawer?

Our strategy is to continue working collaboratively with our clients, as we remain at the centre of the risk and insurance marketplace. We are expanding our business to ensure we are dominant in all lines of insurance. This will be supported by the development of new products and services that we can offer to our clients to ensure they meet the challenges ahead. We are also looking to refresh our brand and reposition ourselves, whilst ensuring we remain connected to the insurance world, to our clients and to each other at BLM.

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16/12/2013 17:52

Interview with... John O’Roarke

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Interview with...

JOHN O’ROARKE Charlotte Parkinson, Modern Claims, spoke to the Chairman of the Insurance Fraud Bureau (IFB) about the changing landscape of fraud and how his position as Managing Director, General Insurance at LV= as well as a varied career in the insurance industry, stands him in good stead for combating modern-day fraudsters.

Q A

You have had a 25 year career in the insurance industry, how have you previous roles at AIG, Churchill Insurance and RBS Insurance helped shape your role at the IFB? When I first joined AIG from the accounting profession, the jargon and terminology were daunting and when most people first enter the insurance industry, they think they will never understand it but within twelve months they are speaking the language. From the outside, the industry looks impenetrable but once immersed in, little by little, an understanding is forged. It is my broad base experience of a variety of roles within the insurance industry that have prepared me for my role as Chairman at the IFB. For example, during my time at AIG, most of my time was spent oversees and I was experiencing how different markets work in North America, Europe and Africa as well as focussing on large risks. At AIG we insured oil platforms, aeroplanes and chemical plants, whereas moving back to the UK to work for Churchill, there was much more of a personal lines focus working on car and home insurance and LV= has very much been a continuation of that. The industry has experienced a huge upturn in litigation for personal injury over the last 5 or 6 years, which simply wasn’t a feature of the market 10 years ago. 10 years ago, insurers had an appreciation of the real, genuine cost of personal injury but, unfortunately, the upturn since then has largely been fraudulent or opportunistic.

John is Managing

Q

How has the role of the IFB changed since it was established in 2006? Is organised crime/ insurance fraud becoming an increasingly pertinent issue and is it becoming increasingly difficult to detect organised crime rings?

The establishing of the IFB in 2006 was prescient in itself, in that it anticipated, at an early stage, how bad organised crime would become. The organisation has grown in capability and confidence in step with the challenges that it faces. As these challenges have become more sophisticated and the criminals have become smarter and more deceptive, the IFB has evolved accordingly, although this is still far from a completed task. An area

A

Director of LV= General Insurance.

John is a Chartered Accountant and began his career in insurance with AIG. After six years overseas he returned to the UK and spent 13 years with the newlyfounded Churchill Insurance, initially as Finance Director and then Managing Director. Churchill became one of the UK’s best known car insurance brands with annual premium income of over £2bn before being acquired by RBS in 2003.

John was appointed Chief Operating Officer of RBS Insurance in 2003 but left RBS in 2005 to set up ABC Insurance, along with four other RBSI directors.

ABC was acquired by LV= in 2006 and formed the new management team of the LV=General Insurance business. LV= is now the UK’s third largest car insurer and a leading home and SME insurer. The company routinely wins awards for its customer service and won the BIA General Insurer of the Year award in 2012.

John was appointed as Chairman of the Insurance Fraud Bureau on 24 April 2013. The IFB was established in 2006 to lead the detection and prevention of organised, cross-industry fraud and is current managing fraud operations totalling £120m.

MC // March 2014

20

Interview with... John O’Roarke

‘An area where the IFB has evolved particularly well is data sharing and the biggest advances we have made to date involve sharing data with insurers to help us combat crime’ where the IFB has evolved particularly well is data sharing and the biggest advances we have made to date involve sharing data with insurers to help us combat crime. Going forward, this is also going to be the biggest area of opportunity for us.

Q A

Other than motor, what are the most common types of insurance fraud being committed today?

Clearly, motor is by far the biggest area of fraud currently being committed but there are certainly a number of other themes emerging within the industry. One of these areas is home insurance, where the patterns emerging are less centred on organised crime and the behavioural patterns are much more opportunistic, as people are trying to claim for things which aren’t on their policy, for example and the economic climate is certainly a contributing factor to the rise in this type of fraud.

The second theme which is emerging, which is probably more concerning, in terms of motor claims fraud, is that some claims management companies and ambulance chasing lawyers are moving towards the commercial sector and looking to simulate claims volumes for industrial deafness, repetitive strain injury and medical based injuries, which can often be difficult to prove.

‘Claims management companies and ambulance chasing lawyers are moving towards the commercial sector and looking to simulate claims volumes for industrial deafness, repetitive strain injury and medical based injuries, which can often be difficult to prove’

MC // March 2014

Q A

Ghost brokering has been widely reported as an increasing area of concern for insurers and the IFB, how are the IFB working with insurers to put a stop to this issue, particularly the data capture and manipulation which is a key part of these often complex cases of fraud?

Ghost brokering was the story of 2013. In the second half of 2013, through awareness of the issue at the IFB and at the financial crime committee of the ABI, most major motor insurers became alive to the risks and the modus-operandi of fraudsters committing this type of crime.

From my own experience at LV=, we have managed to close the door on the majority of ghost brokering. The main way we have done this is by closing down the peripheral payments, pre-paid and foreign credit cards and implementing tighter controls around payment generally, which have made it much more difficult for criminals to get away with ghost brokering.

Q A

How are the IFB working with the police to combat organised crime?

There is a very strong relationship between the Insurance Fraud Enforcement Department (IFED), which is a joint venture between the police and the insurance industry and which insurers are funding. This has been extremely successful and in the fourth quarter of last year the 400th arrest was made. The establishment of this department has been a real catalyst and has raised the profile of insurance fraud and the ability to prosecute at a national level and although the

Interview with... John O’Roarke organisation is only currently London based, we have had increasing interest from other police forces around the UK.

Q

A

Q

Q A

Currently, the IFB is reviewing its strategic priorities for that period but they key things that are currently being considered are enabling better access to data and data sharing.

There are multiplicities of data sources and data repositories and our job is to bring some cohesion to data gathering and analysis to make it a more efficient process. The IFB is still mainly known as a motor insurance fraud prevention mechanism and with increased success and by-in from the industry there is now an opportunity to broaden the scope of the IFB and begin working in other lines of business, such as industrial injuries.

Technology plays a large part in the fight against insurance fraud, what new and existing systems have/will be put in place to keep up with the advance in technology for criminal activity?

There are a number of technologies out there and most insurers are increasing their investment in fraud detection technology. Certainly, at LV=, we made a big systems implementation in 2013 for a new anti-fraud package, which has increased our capabilities to detect patterns in data and most other insurance companies are doing the same thing. A lot of insurers are also reviewing underlying claims technology as well as the operating systems for the claims themselves rather than fraud detection. The industry’s ability to detect fraud also depends largely on the first notification of loss (FNOL) process and how rigorous this initial process is. I would imagine at least half the industry will be in the process of renewing their underlying claims platforms at the current time.

A

Q A

required.

Q A

What are the key goals/aims of the IFB moving into 2014 and over the next 2-5 years in terms of both strategy and vision?

What is the most effective strategy to combat insurance fraud?

Awareness is on certainly something which is on the increase and this is absolutely key. 5 to 6 years ago, companies making investments in anti-fraud data was certainly low down the priority list and now people realise that every pound invested in anti fraud delivers ten times that in benefits. Data is also absolutely critical, if there isn’t sufficient data to detect commonalities in addresses, postcodes, credit cards and phone numbers for example, organisations expose themselves more readily to fraud. Financial investment is also crucial as it may be easy to justify spending money on revenue generation, whereas it is perhaps harder to justify spending money on anti-fraud costs control but it is money well spent. Lastly, investment in people is crucial because, ultimately, human judgement and intelligence is

21

How is the IFB working alongside other membership organisations, such as the ABI and BIBA, in terms of collaborating with data pools for example?

The IFB works extremely closely with the ABI because it was set up under their sponsorship and they work extremely closely with the general insurer community.

Increasingly, over the last 2 or 3 years, the IFB has been working very closely with BIBA to encourage Brokers to understand the value to them in making investments in anti-fraud programmes. There has been an arms race amongst the broker community to make their models as effective as possible when it comes to combating fraud because if they do that, they are rewarded with better rates. A lot of the Brokers we deal with have fantastic anti-fraud capabilities and it is these who are rewarded with our most competitive rates.

What happens next for the IFB and what is high on the agenda for 2014?

Independent medical panels are very much in the spotlight at the moment, as for the government, this would offer high

‘The IFB is still mainly known as a motor insurance fraud prevention mechanism and with increased success and by-in from the industry there is now an opportunity to broaden the scope of the IFB and begin working in other lines of business, such as industrial injuries’ potential for cutting claims costs and subsequently premiums, which is something the insurance industry agrees with. There is a concern in the insurance industry however, that we could rush into a solution which simply changes the labels on the sham medical agencies. If the industry does reach a point where a truly independent panel is established, which is separate from any kind of financial inducements, the claims industry will certainly benefit as claims frequency will be reduced.

MC // March 2013

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The Opinions

23-39

THE OPINIONS

23

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The Opinions

Sector Soapbox Modern Claims gathered together our industry experts to find out their views on how forward thinking claims practicionerson should be approaching change in 2014

Positive consumer education

I

n January 2013, the British Insurance Brokers’ Association (BIBA) received the results of its annual claims survey, which showed that brokers believed that insurers were becoming stricter on paying claims, mainly because of the economic climate and fraud.

The Financial Conduct Authority (FCA) was also looking at claims, as they were seeing record levels of complaints through the Financial Ombudsman Service.

In May 2013, BIBA, in association with stakeholders including the ABI, insurers, brokers, CILA, loss assessors, Airmic and other stakeholders in claims, launched the industry claims initiative. Such a vast subject required clear terms of reference that were narrow enough to enable meaningful discussion, but wide enough to be able to deal with the issues that the market was facing.

These include engagement with the FCA claims review, to educate customers and to generate positive messages about the good work done by the industry in terms of claims.

The group wrote directly to the FCA to offer its service to them as part of their current review, which will report this year, but it is inevitable that their work will extend into

the commercial arena, where the group is well placed to assist the FCA. Through the group, BIBA will commission a guide for consumers, which compliments similar work in this area by Airmic for its members. AXA Insurance has researched the reasons why claims are repudiated with a view to educating the customer in terms of risk.

It is often overlooked by the press that insurers pay something in the region of £40M per day in claims, yet it is only where claims go wrong that it seems to reach national press. Positive stories, where the industry helped customers in the recent floods are numerous, but unfortunately are not news. The Government recognises that the work of the claims initiative is important.

Sajid Javid, the Financial Secretary to the Treasury, commented on the importance of the group in the November edition of BIBA’s membership magazine, The Broker. These comments were reiterated in a speech at the launch of the BIBA Manifesto at Westminster on the 14th January 2014, as the work of the claims initiative is one of the key messages within the BIBA 2014 Manifesto.

The work of the group continues and welcomes further engagement from all areas of the market.

Andrew Gibbons ACII MIoD, Mason Owen Financial Services member of BIBA

One case can change everything

W

hen we think about the impact of LASPO, we all thought that the main impact was going to be about the changes to funding and costs. Many of our members then spent months getting to grips with the new rules, how this was going to impact our clients and ultimately our businesses. Then along came the Mitchell decision.

One court case, about the implementation of reforms, has changed the very essence of litigation.

When I speak to members at the minute, the main thing that is causing them, and their fee earners, sleepless nights is the change in the perception of dealing with court orders. The recent interpretation of this being that you cannot even mutually agree to extend time without an application just seems ludicrous. However, as one practitioner in a jurisdiction that already adopts a similar approach has commented, ‘there will be a lot of pain for a couple of years but then you will see the benefit in the end’. I’ll wait for the end before I accept that. The only benefit is that this is cross industry, so I know my defendant colleagues are feeling the same pain.

Craig Budsworth, Chairman, Motor Accident Solicitors Society (MASS)

MC // March 2014

The Opinions

25

Leaner, meaner and more Roll Back On Jackson robust Costs Savings

T

he number of claims management companies has fallen dramatically since the referral fee ban; what are your predictions for the CMC section of the market moving into 2014 and how effectively (or not) are the CMR policing regulation of CMC’s?

Whereas the number of registered claims management companies have fallen dramatically, it is an unintended consequence of the referral fee ban that many CMC’s who continue to carry out regulated activity are doing so under the radar. It is true that some of them have closed completely, but it creates potentially significant problems for the consumer, solicitors and the regulators as many are now simply underground.

The CMR is now in the process of attempting to widen its powers. This is inherently difficult, due to a background of reductions in budget and problems with creating new regulations for micro businesses due to the 3 year moratorium. As many CMC’s are micro businesses, this has been a difficult task for them. Nevertheless they have managed to tighten controls on CMC’s and widen their powers by simply re-defining some of the rules and adding or removing phrases to give a wider meaning.

For example in Client Specific Rules removing the words ‘its relationship with clients’ and replacing it with ‘itself’.

The rule now reads: ‘these rules set out how a business regulated under the Act must conduct itself’. Now, therefore, as well as existing clients, potential clients are covered by the rules. This would include people who had been cold-called but had never actually signed a contract with the CMC. The good thing for those CMC’s still operating in the regulated arena and doing so openly and legitimately, is that more robust regulation will improve the reputation of the sector, and will help the CMR remove, punish or educate those who are not working within the regulations. There may well be some further reduction and consolidation in numbers, as the larger more sophisticated CMC’s swallow up some more of the smaller ones, however that is likely to slow down from the last 6 months. It should, however, mean a leaner more robust and more regulatory compliant sector, which should assist consumers, lawyers and CMC’s opponents going forward.

Alan Nesbit Chairman ARC (Association of Claims Management Companies). ARC is the trade body that represents the interests of small to medium Claims Management Companies in relation to both personal injury and financial mis-selling markets

W

e live in the post-Jackson era. Justice is synonymous with proportionality. Efficiency is king. The juggernaut of Reform rolls on, as the MOJ convenes a working group to deliver an expert accreditation scheme for whiplash cases - at break-neck speed. All this is aimed at delivering the Holy Grail of affordable justice - or is that reduced motor insurance premiums? In the last few weeks, there have been a couple of other developments which suggest a rather different direction of travel potentially.

First, the Government consultation on Court fees. Within a paper that has drawn relatively little attention, the Government has quietly suggested changes to the Court fees system, which may seem at odds with the goal of stripping out the cost of litigation. Remarks about reducing taxpayer subsidy of the courts service appear alongside a contemplated hike in Court charges across the board, with significant increases in issue fees for high-end cases. The potential financial impact on Court users – of which group insurance companies comprise a significant cohort – could be substantial, as illustrated by Government’s stated goal of reducing its contribution to the annual £621m bill for running non-criminal business in the Courts from £121m to nil.

Second, there were the oral evidence hearings that Foskett J’s CJC Costs Committee convened to take soundings on variation of the Guideline Hourly Rates (GHR). The GHR assist Judges assessing legal costs liabilities at the conclusion of a case. After determining the number of hours reasonably spent on the case, the Judge consults the GHR to help determine what charge rate those hours should reasonably attract. A £1 increase in the hourly rate translates to an additional £1 return for every hour spent on the case. Extrapolate that across the thousands of cases that come to Court each year and the increase in litigation cost is considerable. Yet, sitting before the committee, one was left with the impression that a possible increase in the GHR is far from off the table.

Both initiatives have yet to come full circle. A diverse range of stakeholders have made submissions and now wait with anxiously to see if they have been heard – or rather listened to. Where we will end up on either front is hard to predict. However, it is clear the outcome has the potential to significantly roll back purported savings delivered by the Jackson reforms.

David Johnson, President, Forum of Insurance Lawyers (FOIL)

MC // March 2014

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The Opinions

The game changer

True independence

T

ailor made, bespoke ATE Insurance is potentially a game changer for lawyers, their clients and consumers alike in Northern Ireland (NI). I’ve now been practising Personal injury law for over 25 years in NI and its only in recent times that I can honestly say the product recently launched by DASLaw Assist, after their in-depth assessment of our particular jurisdiction, enables me to realise a career ambition and provide my clients with genuine access to Justice.

The timing of course couldn’t be better, Lawyers in NI, like our colleagues on the mainland, are inundated with seemingly wave after wave of attack for doing no more than what our clients rightly expect us to do and indeed what society has charged us to do. The latest and possibly most serious challenge yet faced, is the threat to withdraw legal aid from civil proceedings. It seems inevitable that, following the current consultation process, the local Assembly will seek, at the very least; to severely restrict the availability of legal aid and at the same time will conveniently omit to deal with their obligations to provide the public and the consumer with genuine access to justice.

Thankfully, the current product from DASLaw Assist will be able to fill the likely gaping void. The main features of the product have been designed specifically for the NI market place with proportionality and timing being the essential components for the all-important premium.

A fair and reasonable figure in the hundreds of pounds, payable only if the claim is successful and at the end of the case, makes for a very receptive and willing client. So far and where appropriate, the acceptance rate by clients is over 95% and it goes without saying, it then gives us at P R Hanna Solicitors the confidence to properly and fully pursue our client’s claim to the most successful outcome possible. As one of the leading personal injury law firms in NI, P R Hanna Solicitors are proud to be at the vanguard of this innovative product and are delighted to play an important role in enabling the consumer to have their interests at the centre of such a progressive and constructive development.

Gerry Lee, Senior Partner, P R Hanna Solicitors

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Independent medical panels have long been called for in a bid to combat the ‘claims culture’, are they really the answer, or is there too much scope for bias, error and potential foul play? How could these panels be effectively regulated/policed?

T

he introduction of independent medical panels is part of a package of measures announced by the MOJ to tackle the UK’s compensation culture and in particular, whiplash claims. With a deadline of 22nd July for the introduction of the panels (House of Commons summer recess), a cross-industry working group has been created to decide on the remit of the medical panels.

Independence is critical and with each party looking to protect their own commercial interests, the challenge in setting up and monitoring these panels is significant.

The use of truly independent medical panels could prove to be a solution but this is reliant on the medical experts being de-coupled from any party that has an interest in a lengthy prognosis. The issue is that many medical agencies are currently linked to law firms so there will need to be some firm controls in place and a randomised selection process to guarantee there are no connections between the medical expert and the claimant’s legal team.

Randomised selection, in turn, will help eradicate referral fees and setting payments well below the current levels applied by the Association of Medical Reporting Organisations should be achievable.

I also believe that a process of peer review should be built into the accreditation process for the members of these medical panels. This peer review should consider prognosis, referral to other experts and recommendations for treatment. To work effectively it would need to be based on independent research on whiplash claims controlled for the impact of compensation claims.

This research would then be used as the base-line for determining the duration and the appropriateness of referral for treatment and further medical reports. This process would also, as a natural consequence, ensure that medical reports (an additional income stream for some), are produced to the required depth and detail and are not excessive and over costly.

In principle, the introduction of independent medical panels will have some clear merits but the devil will be in the detail. Achieving an entirely non-partisan process will be the biggest challenge. However, what we must remember is that whiplash claims are very difficult to diagnose, except in the most extreme cases, so the creation of independent medical panels shouldn’t be treated as a cure-all for the UK’s whiplash epidemic.

Rob Smale, Claims Director, Ageas Insurance

MC // March 2014

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The Opinions

29

Still Alive and Well?

Why have referral fees for credit hire companies not yet been banned as we saw in the case of Personal Injury practitioners last year – is it because the ban would be too difficult to police/regulation would be too difficult?

I

should begin by saying I absolutely believe they should be banned, the ‘Marketing Costs’ argument is even less credible in this area and their removal would undoubtedly affect behaviours and reduce costs in the long run. So why haven’t they been banned?

Whilst there were some protests about the ban on referral fees for injury claims, the argument against them was easier to articulate. The emotion in describing ‘selling’ someone else’s misfortune, taking advantage perhaps of an injured persons naivety and directing them to someone based on an earning opportunity rather than necessarily ‘Best Fit’ would have been a marketers dream!

Contrast that with the murky, hidden world of Credit Hire Referral Fees, kickbacks, a complicated process that is much less transparent, and also who really cares where somebody gets their car from, a Ford Focus is a Ford Focus surely (or Mercedes E Class as some CHO’s might suggest but I digress). So no perceived risk of poor advice to the impacted party.

Legislation (attempting) to Ban referral fees is always going to be complicated, so maybe also the view was focus on

where the biggest problem was. Our TV screens and Mobile Phones over run with offers relating to quick cash from a Whiplash claims, combined with insurance premiums becoming increasing unaffordable partly as a result, particularly for young drivers , persuaded Government that something had to be done about that issue specifically, and therefore gave that ban their support.

We have sadly seen creative (and sometimes quite blunt) ways of getting round the ban, recent proclamations being that they are ‘Alive & Well’ and that the ban had produced no real impact. I think that is a little harsh, but the ban can be circumvented, and a less transparent area such as credit hire would have produced many more ‘solutions’.

My hope is that the future won’t just see an end to Credit Hire referral Fees, but an end to Credit Hire completely. It shouldn’t be necessary; insurers should have provided a like for like courtesy vehicle as part of a policy entitlement from the start. CHO’s can simply convert to a conventional hire model, much less messy and no risk of court appearances for the customer! Maybe the Competition Commission Review will now make that mandatory? Here’s Hoping.

David J Williams, Managing Director, Underwriting, AXA Insurance

Managing a surge

T

he concept of a surge ‘event’ suggests that these are infrequent occurrences that arise every 10 or 20 years, but this is most definitely not the case. Indeed, they are becoming more common as the UK experiences significant volatility with the changing climate.

Whilst work has been undertaken to provide improved flood protection in the UK and is high on the insurer’s agenda, the reality is that this has not consistently achieved the desired outcome.

It is critical that insurers have a robust response plan that caters for all levels of event and ensures that the customer is put at the heart of how they respond.

When a customer’s home is damaged and potentially uninhabitable, they need to be able to speak with a professional quickly, who can both support them during an emotionally difficult time and arrange for the correct steps to be taken to return their property to its pre-incident state as soon as possible.

This provides a significant challenge, as it means that insurers, or their representatives, need to provide sufficient resource to respond to the consumer demand, both at the point of notification and throughout the lifecycle of the claim to ensure quality fulfilment. When an event occurs, a large number of customers are affected at the same

point in time, which means that an insurer may experience multiple times their usual volume of calls. It is therefore essential that insurers have robust plans in place to quickly deploy suitably skilled resource into the property claims function, to ensure that the customer journey is managed from the outset. This also enables effective triaging of the claims, with customers in the worst position being prioritised and the less serious claims being settled quickly with minimal effort for the customer.

Seeing claims through to fulfilment is equally important and therefore effective planning needs to take place post notification to respond to the high demand for authorisation and payments. This requires strong collaboration with the Supply Chain and effective and flexible plans, to ensure resource is deployed in a timely and appropriate manner at a time when demand is likely to be much higher than supply.

Extreme weather is becoming more and more of a common occurrence and consumer expectation is increasing. Successful insurers will be those that have robust response plans in place across their own claims operation and that of their supply chain, to ensure that they deliver for their customers when they need them most.

Peter Horton, Chief Operating Officer, LV=

MC // March 2014

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The Opinions

31

How to get it right in 2014 How important is it that claims professionals get the marketing spend right in 2014? Is there too much money being pumped into ineffective/incoherent schemes and how should claims professionals (insurer and legal) be engaging with different marketing channels to increase brand awareness/create and nurture relationships with new and existing clients?

A

s with any investment, businesses want to know their money is well spent. While traditional methods like: leaflets, print adverts, radio and TV, can be expensive, we always suggest that digital marketing runs in parallel to these.

But you shouldn’t continue with a specific marketing channel just because it’s familiar. If it’s becoming inefficient, adapt or remove it in the same way you would a back office process that is not working efficiently.

content. It shows you where your visitors come from and what they do on your site, which keywords are working best and even what page was the last one a visitor looked at.

There are ways you can continuously research which channels are working best for you. Asking your new clients where they heard of you is the easiest way to do this. Maybe a reference code with each advert should be quoted to be sure that you can track the effectiveness of adverts in the press. A crude method but still watertight in tracking your traditional marketing spend. With modern marketing methods, however, come modern tracking tools.

Marketing budgets will always be under scrutiny. Just as traditional advertising sales will show you their coverage data to predict how many people will see your advert, modern marketing methods show you exactly how far your online activity has gone. This allows you to learn what is working well so you can ‘spend smart’ when dividing your marketing budget between channels, maximise lead generation and keep ahead of your competitors.

Google analytics ‘Google Analytics’ tracks a wide variety of web-based

Dez Derry, CEO, mmadigital

Conversion rate optimisation traffic.

This tool follows someone moving through your site, where they stop, where they leave and then send it to you as a video. It records where their mouse moves and clicks and can create heat maps to show the most popular areas on your website, all in real time. Social media channels have their own inbuilt tracking tools too, showing how successful your free and paid for promotions were.

The rise of the ‘smart’ consumer Insurers are currently in a race to convince consumers of the benefits of monitoring their driving. Has the industry/ consumer seen the full benefits of telematics technology and what can we expect in 2014 in terms of technological advance vs. reduced insurance premiums?

T

he smart consumer now shops around and is armed with the knowledge of how to achieve a balance of price and benefits. 2014 will also see growing consumer expectation in terms of not just the benefit of use of a product or service but also how simple and easy it is to interact with the provider.

As consumers we are, in the main, prepared to trade a little bit of ‘us’ for a better deal. The data we provide to price comparison sites or through social media is on parallel with that collected for the purpose of telematics insurance, so the key for providers is to build strong customer value propositions and deliver captivating user interfaces and experiences. This is far more than just a simple discount. The claims ‘product’ can be transformed with telematics, both in terms of a proactive approach to FNOL and forensic accident reconstruction to optimise claims costs and combat fraud, allowing better deals for all.

At Octo, we are constantly working on new devices and user interfaces designed to reduce the cost of Telematics to the Insurer and deliver a more compelling proposition to the customer. Technology does two things; it gets smaller and it gets cheaper, so we expect to see the appeal of telematics expanding from the young drivers in the coming years to segmented offers for different driver groups. Substantiation of price discount will remain but we are already witnessing propositions based on safety and assistance in a number of our markets.

Once the Telematics selection benefit race is run, we expect to see technology and big data analytics combining, to deliver better propositions for consumers and improved financial results for insurers.

Jonathan Hewett, Group CMO, Octo Telematics

Insurance Telematics is a fusion of technology and data analytics. It sounds a bit smart but the cost effective technology solutions around today allow insurers to do what they have been doing since the days of yore when bets were placed on ships, captains and routes. We do the same with the modern driver, we just have better, faster and more insightful data.

MC // March 2014

The Opinions

Ability and capability

A unified experience for your client

Can assessors ever fully assure their clients that they will be returned to their ‘pre-loss’ state following a damage event?

Which latest technology is the best in the claims sector at the moment, how can/is technology benefitting not only the client but also insurers and lawyers in the claims arena in 2014? How important a part does technology have to play in the ‘wheel’ of smooth running for the claims process?

A

n assessor can only provide assurance if they are confident that both the property can be repaired safely and correctly, and that the repairer has the physical ability and capability to do so. There are three main routes available to an assessor to provide indemnity; monetary compensation, replacement or repair. The former option, subject to agreeing a correct figure, is typically an easy route and provided a suitable substitute can be found, so is replacement.

In the automotive world, repair is a very common option and often the most pragmatic method to indemnify a client. However a body shop must be capable of returning a vehicle to its pre-accident condition by having the correct repair equipment, coupled with the appropriate skill set. The evolution of vehicles over the last few years has seen an exponential increase in equipment, particularly sensors and electronic control units and also construction materials, such as carbon fiber, plastics and aluminum.

Indeed, the world’s bestselling vehicle, the Ford F150, now has a 95% aluminum construction.

Traditional repair methods using hammers, dollies and heat are not possible on such materials, and can actually cause dangerous fatigue or brittleness. Even plastics are evolving; as an example, some spoilers are designed to bend at speed to alter the aerodynamic and cooling properties of a vehicle. Repairing them on a budget with traditional filler may make them look cosmetically acceptable, but they would simply crack once the plastic moved at speed. The assessors’ role in the repair process is therefore twofold. The more obvious is the loss adjusting side, where costs are controlled and the most economical repair method is found. The second and more important role, in terms of safety and assuring a return to a pre-loss state, is having the current technical knowledge of modern vehicle repair techniques; it is imperative to ensure that the repairer utilises not only the appropriate repair method but also the correct tools.

Provided the assessor is confident in the repairers’ ability, then there is no reason why he couldn’t assure the client that he will be correctly indemnified by being placed back into the position he enjoyed prior to the incident.

Nik Ellis, Managing Director, Laird Assessors Ltd

34

T

he focus in the claims sector is increasingly based upon speed, transparency and accessibility. Insurers and lawyers have had access to great internal IT systems for a fair while - software that automates processes, provides consistent decision making, and trims the fat from the claims process. The missing cog has always been at the other end - the customer end. The external face. How can IT help the customer to engage fully in the process, be kept informed, and feel less like an outsider?

Smarter claims organisations are increasingly looking at this - engaging the customer - as a key differentiator, a way to sell their service and raise the competitive bar.

So how can this be done? The customer journey, the experience, has to be mapped out and integrated with current internal processes. It’s all well and good having smart and efficient internal systems, but if the customer experience is not up to scratch then that’s a big issue.

Self-service technology (Eclipse’s TouchPoint system) is now available that ties the internal claims process in with a customer-facing tool. Ideally claims firms want the customer to be able to maintain contact all the way through a claim, feeling very much part of the process, but in a low-cost way for the claims firm itself.

It’s now possible for insurers and lawyers to provide claimants with access to live claim statuses, giving them the ability to sign documents, engage in two-way conversations, and up sell additional claims services - all through the iPad the customer uses while sitting on the sofa.

This type of self-service is the key to uniting back-end efficiencies and front-end experience, and is set to become the norm for the claims sector as a whole.

Russell Thomson, CEO, Eclipse Legal Systems

The Opinions

Keep your crystal ball close at hand

F

orecasting of major/impact losses is no longer an issue of looking at the coming seasons.

Historically we knew that winter was coming and there was going to be some ice or snow, Easter was the traditional first big holiday getaway and then there were other peaks such as clocks going back or forwards. All of these contributed to a rise in claims, not such an exact science in the last few years.

Winters do not fall into the same criteria anymore; let’s look at October, traditionally cold and miserable. I don’t regard Yorkshire as the substitute for the Mediterranean but I was still cutting grass and had things growing in the greenhouse! Two years ago in my neck of the woods, we had almost constant snow from November to March.

We are now mid February before the first significant snowfall. Plenty of rain, especially for the residents of the south west, what if this had been snow? I haven’t seen any specific motor related claims statstics for the south west published recently but I suspect the flood claims would outnumber the ones had we had snow.

Cars are significantly better equipped in terms of ABS traction control etc, not to mention the epidemic of Chelsea tractors and their close relatives. Many younger drivers don’t have the regular experience of driving in snow, so many just don’t drive when there is snow.

Claims are therefore down.

Speaking to others in the industry and viewing our own figures over the last few years the only two main surges of claims of any predictability are the clocks going back and forward (closely related to the low sun in the sky). I don’t know what happens here but people seem to get out of routine and lose the ability to drive sensibly.

January brings a surge but this is generally because unless they have to, people won’t claim around Christmas, they leave it till the new year. The January surge is just a balance of the December wind down.

We are coming to expect that there will be some major claim period each year, but where will it happen? There are some areas literally on fire with claims and other areas quiet at the same time, the reason I wish I knew because the situation can reverse overnight.

It would seem that we are faced with the unpredictability of climate change and insurers will need to keep that reserve pot topped and the crystal ball close at hand!

Keith Crosier, Managing Engineer, Legal & Technical Assessors Ltd

35

Are independent medical panels really the answer to whiplash fraud?

I

ndependent Medical Panels (IMPs) remind me of the wonderful Hillman Imp (1963-76) – a great little car by all technical specifications, rear engine, practical, independent suspension, but a heroic failure.

IMPs cannot solve the Daily Mail’s compensation culture. They will not reduce claims numbers. The panels will be more expensive to administer and, although their reports may ultimately be of a higher quality, that will mean higher costs.

They may contribute to tackling fraud by making it harder for opportunistic claimants, but they won’t stop organised fraudsters – however independent the expert, some whiplash-symptom fakers will get through. So why bother? Why are IMPs seen as the solution for a dysfunctional system?

Let’s spin forward to what a possible future with IMPs might look like. The subjective and objective quality of reports will be higher, thanks to market-wide templates and minimum content requirements. These will take longer to prepare, increasing the transaction cost.

The expert (who may be a physio by then) will have self-funded the cost of attaining accreditation, unless the MoJ, GMC, Experts Witness Institute or AMRO has been persuaded to administer it for free. Report volumes will have risen as pre-med settlements become the exception. The result: higher volumes of more expensive reports, the cost of which ultimately will be borne by the policyholder.

Insurers will finally have a mechanism to identify experts or firms whose reports they suspect are unfounded, of poor quality, or whose prognosis consistently falls outside a normal distribution. The threat of having accreditation removed will have raised standards generally and enabled removal of truly fraudulent practitioners. A central DWP-style contract will not be implemented (or will have failed if it is). It will be business as usual with entrepreneurial firms still tiptoeing around LASPO to protect their income stream from medical reports.

IMPs will improve quality (at a cost), I’m sure, but we cannot expect them to solve wider issues in the market. The claims culture debate was stimulated by the rising costs of motor insurance and Jack Straw’s distaste for cash incentives to claim within his Blackburn constituency. The adverts have not stopped, indeed Hampson Hughes recently announced a £500 increase in their cash incentive plan, but premiums do seem to be falling – without IMPs. Andrew Pemberton, Director, Argent Rehabilitation (part of Parabis Group)

MC // March 2014

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The Opinions

The Finer Details Independent medical panels have long been called for in a bid to combat the ‘claims culture’, are these really the answer, or do they leave too much scope for bias, error and potential foul play? How could these panels be effectively regulated/policed?

I

ndependent medical panels has been at the core of the Government’s campaign against ‘claims cheats’ and is inline with on-going views from MASS, ABI, AMRO and FOIL. A system that deals with the problem of fraud head on is a welcome one. However, the devil is in the detail, and as yet that detail isn’t on the table.

The process of working out the details started in January with the justice minister, Shailesh Vara, holding round table meetings with stakeholders (such as industry representatives, practitioners and regulators). Given these discussions have only just taken place, the proposal that the medical panels will be ready to go later in 2014 is an ambitious one. It gives us a flavor of the Government’s aggressive approach to its implementation. The MOJ’s launch of a cross-industry working group is much needed.

The working group will be charged with working through the specifics of the scheme. Timescale of delivery is still a real concern. How will the required manpower be brought together in the next few months? Who is going to pay?

The proposed medical panels will be made up of accredited medical experts who will assess Claimants who have suffered a soft tissue injury as a result of road traffic accident. It is expected that only reports compiled by an accredited expert will be acceptable. The scale of that accreditation itself is a huge undertaking.

Reassurances have been made that the scope will be limited to RTA whiplash claims up to £5,000. An overall, better quality system of medical reporting is welcomed by many. With the sheer volume of such medical reports though, how will quality be reviewed and judged within the independent medical panel? It is difficult to see how this will happen ‘on the ground’ without significant resource and of course, cost. Has this been thought through properly? There is little point having an independent panel that can’t be appropriately regulated and that can’t deliver and/or assess quality across the board. The independence of that regulation is also a concern.

37

A fighting chance Can assessors ever fully assure their clients that they will be returned to their ‘pre-loss’ state following a damage event?

I

t is always difficult to assure clients of any guaranteed outcome, as invariably external factors come into play which are relevant but had maybe not been envisaged when the assurance is made. In my mind, there are a few different elements that need to be considered that will ultimately decide whether a ‘pre-loss’ state, or close to, is actually achievable, some are determined by the skill set of the loss assessor (and their experience in presenting cases on behalf of clients) and other are outside this skill set.

One of the prime determinators of this success, in the context of an insurable event, is whether the client has sufficient cover in place to allow for this to occur. This appears to be an obvious statement but, in the context of a broadly depressed and recessionary economic environment, as has been prevalent in the past few years, at Forths, we have seen many instances where clients have left themselves underinsured through selecting insurance based on minimising premiums rather than business need.

In such a circumstance, dependant on the nature of the damage event, and particularly In the context of significant events, regardless of the skill of the loss assessor, it may simply be impossible to put such a client back in their ‘but for’ state. Given sufficient insurance, or in the event of a legal claim for uninsured losses, then there is at least a fighting chance that a pre-loss state can be achieved, as long as the client’s view on what their pre-loss state was, is reasonable and based on economic reality. For example, a business interruption claim for a diminishing business, in the immediate pre damage event period, cannot generally be based on, say, profitability 2 years prior, when the business was much larger.

There has been no real answer as to how the industry will deal with pre-medical offers. As such, fraudulent claims at this early stage will remain. It is difficult to be enthusiastic about a system without the comfort and reassurance of sufficient time, consultation, resource and funding to implement that system appropriately.

Whether this actually occurs will then be dependant upon the skill and experience of the loss assessor in presenting the losses initially, in a structured and well documented format that has considered the full impact of the damage event on all aspects of the business, but also in having the ability to satisfactorily argue any counter points raised by the Defendant’s insurer or legal advisor when they undoubtedly arise.

However, even in the context of ostensibly a full financial recovery, the disruption caused by a damage event, which cannot always necessarily be claimed for, may linger on for a significant period.

Zoe Holland, Managing Director, Zebra Legal Consulting

Richard Forth, Managing Director, Forths Associates

MC // March 2014

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The Opinions

39

Learning to do what is right

Can assessors ever fully assure their clients that they will be returned to their ‘pre-loss’ state following a damage event?

M

aybe they can but this isn’t happening at present. I would like to widen this issue. I have investigated thousands of injury claims and been personally involved in road traffic collisions.

I have never understood why victims don’t receive ‘inconvenience’ compensation. A typical traffic accident commences with disruption, your journey delayed at best, cancelled or ruined at worst. Family days out, children are late for or miss an event. Reimbursed for entrance tickets? A romantic evening spoiled? No cherished memories created.

Injury may require hospital attendance and perhaps compensation for injury but what about the waiting time? Multiple attendances, parking, travel. What about future nervousness when driving or passing the same accident location? Form completion, how many times do you need to provide your personal details? Arranging car repair/replacement, no one will convince me that a conscious buyer will pay the same value for a vehicle that has been damage repaired.

Then there are personal affronts, your integrity challenged because you have been a victim of a previous claim(s). We investigated a blocked claim because an estranged drug dealing boyfriend reported his injured female passenger wasn’t in the car at the time. Her claim was successful but his lies were extremely upsetting. Another claim we investigated involved a limousine. Immediately attracts suspicion, multiple occupants, none were seen by the at fault driver, it contained a bride with her bridesmaids enroute to her wedding, her delayed arrival for the ceremony probably caused anxiety for many attendees in addition to affecting the brides special day.

How could such an ‘inconvenience’ award be calculated? By analysis of the circumstances just like an injury or replacement motor part. Whilst we all wish insurance was cheaper and we should all wish to eliminate fraud, fairness should be a genuine element of all business strategy. Economic competition is heating up for both sides of the personal injury profession, is it not time for increased collaboration and shared values for servicing the public? There will always be elements of fraud, people taking advantage or seeking more than their share. Show me a profession without wrong-doing. Courts (and independent investigators like us) are available to settle disputes, but we would be a stronger entity if we all did what was right.

Peter Parry, Managing Director, Independent Accident Investigations

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The Features

41-62

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The Features

43

MAKING THE SIMPLE COMPLEX AND SINISTER Patrick McGuire explores whether, in a bid to create a simple and efficient system, the scales of justice have been tipped in favour of the Insurers in Scotland.

W

e have had the scandal of bankers’ bonuses and seen utilities’ profits soar through windfall without tax. These situations come about when private institutions seek to maximise income in the absence of suitable State intervention.

In Scotland, however, recently announced civil court reform will have the opposite effect. By the State intervening and introducing court reform, they have handed a gilt edged bonus to the insurance industry to the cost of victims of accidents, workers and the trade unions who represent them.

We have to assume that the offending provisions are the product of the law of unforeseen consequences and we have to trust that the Scottish Government will remedy the situation before the proposal gets anywhere near the statute book. However, at the moment, the consequence of the proposals contained in the Courts Reform (Scotland) Bill is that the insurance industry have been handed a loaded deck of cards, gift wrapped and marked with love from the Scottish Government. The insurers Christmases have all come at once.

Civil court reform was inevitable in Scotland; it has long been expected and accepted.

‘By the State intervening and introducing court reform, they have handed a gilt edged bonus to the insurance industry to the cost of victims of accidents, workers and the trade unions who represent them’ The policy considerations underlying the change are however very different to England and Wales in two crucial respects. Firstly, Scotland has never had success fees or CFAs. Our

‘Despite one of the Bill’s highest objectives being judicial specialism, as many as 40% of personal injury cases will be denied access to the specialist personal injury court because of their value’

recent Sheriff Principal Taylor Review rejected completely the notion that there was a ‘compensation culture’ in Scotland. Indeed, the good Sheriff found that there was under claiming north of the border. Secondly, it has long been recognised in Scotland that ‘access to justice’ means more than simply being able to ‘have your day in court’. An integral part of access to justice is access to appropriate legal representation which, in turn, demands a fair system of legal cost expense recovery. Access to justice without representation is a myth.

Accordingly, in the context of personal injury claims, the Scottish Government based on its own research paper ‘In the Shadow of the Small Claims Court’ rejected many years ago the notion that personal injury cases should proceed in a no cost recovery environment. There must be equality of arms; because insurers, who do not rely on cost recovery, will always employ the best counsel and solicitors.

Thus, unlike the position south of the border, there was no need for politicians to pander to the whims or ‘compensation culture narrative’ spin of insurers as they approached civil court reform. Instead, our reforms were principally just that – court reforms to create a system fit for the 21st century; one that is simple, efficient, cost efficient for the taxpayer and makes wide of judicial

specialism. These are all entirely laudable ideas. Indeed, a lynchpin of the proposals, the creation of a nationwide specialist personal injury court, has been warmly welcomed.

However, in the drive to create a simple and efficient system, the civil servants who have drafted the Bill have less tipped the scales of justice in the favour of the insurers than simply thrown the scales away altogether.

For, as currently drafted, personal injury cases with a value of less than £5,000, it is unclear what the position will be in relation to costs recovery.

Despite one of the Bill’s highest objectives being judicial specialism, as many as 40% of personal injury cases will be denied access to the specialist personal injury court because of their value. In the specialist personal injury court, victims will be denied access to Counsel while insurers will of course continue to employ the best talent from the Bar. These issues can be remedied with simple amendments.

Only time and political will shall tell if the current gifts to the insurance industry will remain in the final version of the Act. Patrick McGuire is a Partner at Thompsons Solicitors

MC // March 2014

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The Features

45

ADJUSTING THE SCOPE AND OPERATIONS OF REGULATION The nature of the regulatory challenges facing Claims Management Regulation has evolved considerably since regulation was introduced in 2007. Kevin Rousell explores what the MoJ and the Claims Management Regulator are doing in light of change.

‘CMCs can no longer target consumers through advertisements which offer vulnerable individuals a cash incentive for signing up to use their services and CMCs must now agree contracts in writing with their clients before any fees can be taken’

Where we are and what we have achieved We continually look to improve the delivery of a robust regulatory regime that the public can trust to drive out bad practices from the industry, while allowing compliant claims management companies (CMCs) to go about their business, providing efficient and competitive services to consumers who wish to use them.

A significant programme of reforms was undertaken in 2013, which centred around more robust enforcement and stricter rules requiring CMCs to raise standards. In a series of measures made in response to consumer concerns, we introduced key changes to the Conduct Rules for CMCs to help strengthen existing action to drive out poor practices and better protect consumers. Most crucially we

brought an end to verbal contracts and imposed a ban on CMCs offering cash incentives or similar benefits to consumers to make claims. CMCs can no longer target consumers through advertisements which offer vulnerable individuals a cash incentive for signing up to use their services and CMCs must now agree contracts in writing with their clients before any fees can be taken. We also recognised a need to be more transparent in our decision making and began publishing online the most recent enforcement decisions and live investigations, as well as quarterly updates on our work to tackle malpractice in priority areas of concern, such as non-compliant marketing and PPI claims handling.

As part of reforms to the costs and funding of civil litigation, referral fees paid between CMCs, lawyers, insurers and others for personal injury claims were also banned. We have been closely monitoring how the industry is adapting to the ban, making sure CMCs are following the rules, and working closely with partners such as the Solicitors Regulation Authority (SRA) and the Financial Conduct Authority (FCA), sharing information and raising issues as they emerge. We have already inspected the practices of more than 800 CMCs across England and Wales, identified issues with around 300 CMCs in relation to their business models and issued 50 warnings for rule breaches. Those CMCs we continue to have concerns about will be subject to further monitoring and enforcement

action, as appropriate.

Approaching the first anniversary of the referral fee ban, it is no surprise that we have observed a shift in business practices. The largest personal injury CMCs have opted for a ‘pooled marketing’ model, while others have become alternative business structures, as have a number of insurers. The most notable change has been the sharp decline in the number of CMCs operating in the personal injury claims market. Since the ban and related civil justice reforms came into effect in April 2013, more than 500 CMCs have left the market. At the start of 2013, around 2,300 CMCs were operating in the personal injury market, falling to around 1,400 CMCs at the end of December 2013. We anticipate that the market will continue to contract further as CMCs who are unable to adapt their business models to comply with the referral fee ban, leave the market.

By contrast, the number of CMCs operating in the financial claims sector has remained relatively steady, although we are beginning to see signs of contraction in the payment protection insurance (PPI) claims market. PPI is likely to remain the main focus of the financial claims sector until there are indications of a significant decline in the rate at which PPI redress is being paid out, or there is a major shift towards other financial claims areas. A small number of CMCs have already began to consider new

MC // March 2014

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The Features

47

‘Building on last year’s reforms, we are reinforcing our commitment to improving further our ability to drive out and punish bad practices by CMCs, better protect the consumers who use their services or are subjected to their marketing practices, and to help organisations that are on the receiving end of high volumes of claims’ claim areas – we have seen for example, some CMCs exploring mortgage mis-selling, investment mis-selling and packaged bank accounts. As a forward looking and outcome-focused regulator, we are working closely with the FCA, Financial Ombudsman Service, and the financial industry to identify emerging claims areas and any associated conduct risks. This includes looking closely at how CMCs are adapting to last year’s reforms, potential shifts in the PPI dominated financial claims market, and using more data and intelligence to head off risks before they materialise.

Looking ahead Building on last year’s reforms, we are reinforcing our commitment to improving further our ability to drive out and punish bad practices by CMCs, better protect the consumers who use their services or are subjected to their marketing practices, and to help organisations that are on the receiving end of high volumes of claims.

What this means in practice is that we are continuing to develop and deepen our understanding of the sectors we regulate and respond to what consumers and industry are really experiencing. To that end, we are taking forward a series of new measures this year, designed to strengthen and extend the effectiveness and reach of the regulatory regime. The new measures will target key aspects of the regime, in particular controlling CMCs’ behaviours and incentives in the personal injury and financial claims sectors. This means:

‘The industry, of course, also have their part to play in driving up standards. CMCs must give consumers and defendants more confidence in the system by ensuring that they comply with the rules’ Stronger conduct rules We recently consulted on new proposals to tighten the conduct rules for CMCs further to help tackle the poor practices of some CMCs when presenting financial claims, particularly mis-sold PPI. We are proposing to strengthen existing requirements to ensure that the merits of a claim are properly substantiated and investigated, and any data/leads CMCs receive through telemarketing are legally obtained. The consultation closed on 9 January 2014 and we are now considering responses.

The proposed reforms should significantly improve compliance in the industry, particularly the PPI claims sector, by easing the congestion in the claims system caused by a backlog of spurious claims. Those consumers who still choose to claim back mis-sold PPI through a CMC can be more confident of higher industry standards.

New power to fine CMCs In addition to strengthening the conduct rules for CMCs, we are reinforcing and expanding our enforcement tools with a new power to fine CMCs for rule breaches. This will be a broad ranging power, capable of use against persistent minor rule breaches through to the most severe of breaches, causing widespread detriment. The details will be consulted on this year.

Additional resources We are boosting our operational capabilities with additional staff to help ensure we can move more quickly to tackle priority areas of concern, and are increasing the regulation fees paid by CMCs for 2014-15 to ensure that the claims sector – and not the taxpayer – continues to pay its way and provides the sufficient resources needed to meet the cost of regulation.

Better consumer redress We are aiming to bring consumer complaints against CMCs within the remit of the Legal Ombudsman by autumn 2014. This will allow consumers to benefit from the Legal Ombudsman’s wider powers for redress, including the ability to award compensation and enable us to dedicate more resources to tackling bad practice.

Conclusion This year’s reform plans give us huge opportunities to do things better, providing flexibility to adjust the scope and operation of regulation as needed to respond to the changes and volatility in the claims market. As the claims industry continues to evolve, their practices are being monitored and we will respond with further reforms as necessary to provide better protection for consumers and the public. The industry, of course, also have their part to play in driving up standards. CMCs must give consumers and defendants more confidence in the system by ensuring that they comply with the rules.

Kevin Rousell is Head of Claims Management Regulation at the Ministry of Justice

MC // March 2014

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The Features

49

ADR: SIX REASONS TO LOOK AGAIN AT ADR AND MEDIATION. Professor Dominic Regan recently said that Alternative Dispute Resolution (ADR) is now “back on the agenda” as a means of settling disputes efficiently and at proportionate cost. So, is ADR the missing piece of the puzzle and should litigants now be looking to utilise alternative means more than they have done in the past? Tim Wallis reports. that failing to respond to an offer amounted to a refusal to mediate which attracted a six figure costs sanction).

Being ‘Mitchelled’ You might be ‘Mitchelled’. It is not hard to think of a case developing in such a way that both parties might have potential CPR 3.9 problems. One solution is to arrange a mediation to settle damages and costs – this puts the parties, not the court, back in control of the case. A variation on this theme is to consider mediating before commencing proceedings.

A

s a professional mediator and former litigator I say ‘Yes’, and these are my six reasons for doing so.

Time to consider alternatives Jackson LJ says so: “The aim is that, in general, no case should come to trial without the parties having undertaken some form of alternative dispute resolution to settle the case.”

Negotiation and joint settlement meetings are fine, but where they don’t work, you need to consider alternatives. This is the template the judiciary are working from.

Don’t ignore it Professor Regan has advised that you need to trawl every single existing case to detect whether you have (inadvertently or otherwise) ignored an offer to mediate. (In PGF v OMFS [2013] EWCA Civ1288, the court found

Other Avenues It’s proportionate, innit?

Proportionality rules and where it becomes clear from the figures in precedent H at a cost management discussion that the proposed costs give rise to a proportionality issue, the court will want to know what settlement avenues have been considered and are proposed. A general intention to negotiate may not suffice and failure to give thorough, knowledgeable consideration to ADR will give rise to a risk of cost sanctions.

Bear in mind that (a) “The Jackson ADR Handbook” (Amazon £34.99) is the judicial bench-book that has been issued to all judges and (b) in lower value claims, telephone mediation is available and a really good option.

Managing the flow Cash-flow has never been more important. How can you turn work in progress into cash in 5 weeks?

Arrange a mediation in 3 weeks time.

This is not difficult to do, the main time constraint is usually the solicitors and insurers diaries. At the mediation, agree both damages and costs and that they be paid within 14 days. OK, it can sometimes take 6 or 7 weeks, but it can take 4 weeks. There is no reason

why costs and damages cannot be agreed at the same time. So, if you act for a claimant, organise a mediation.

If you are an insurer, offer to mediate on the basis that you are prepared to mediate damages and costs, both to be payable within 14 days.

Proven track record Finally, (and, I would say, most importantly) mediation very often works. Many cases come to mediation notwithstanding the resistance of one or both parties and/or one or both lawyers. The fact of the matter is that mediation has a successful track record (Trust Mediation has a settlement rate of 90% over a five year period) and our research shows that clients positively like the process. Telephone mediation has proved successful for the court’s Small Claims Mediation service: between March 2007 and March 2008, the service had a settlement rate of 68.2 per cent and a user satisfaction rate of over 95 per cent. Telephone mediation is an economic proposition for smaller claims or single issue disputes. Even the Court of Appeal mediation scheme, where by definition there has already been a first instance decision, has a settlement rate of 68%.

Now, I would say all of this, wouldn’t I? But note also that when Professor Regan considered whether now was the right time for practitioners to look at ADR again, his conclusion was that the arguments for doing so are “unanswerable”. So, go and find a difficult case and take it to mediation.

You will most probably see it settle and you will then repeat the process.

Tim Wallis, Solicitor and Mediator with Expedite Resolution, Trust Mediation and others

MC // March 2014

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Steven Eldred, Partner Thomas Eggar A Legal 500 firm

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The Features

00 51

AN ALTERNATIVE STORY OF DAVID AND GOLIATH Jeff Dawson explores the impact of LASPO on ATE Insurance as he compares the modern day claimant seeking justice, to the story of David and Goliath.

It is easy to draw parallels between the hopeless odds stacked against David in his epic battle with Goliath and a modern day impecunious claimant seeking justice. In order to save a few quid, the government saw fit to take David’s sling from him in the hope he would run away. The truth is the claimants, who are well aware of their rights will simply not just go away.

During consultations with the MOJ it was clear to the Legal Expense Insurance Group (LEIG) that the ATE Insurance industry was seen as part of the perceived “compensation culture”. Incredibly, the MOJ thought we had no consideration to our shareholders, insured fraudulent or speculative cases and paid every claim we received. Of course that was absurd but they pressed ahead and removed the recoverability of premium.

QOWCS has taken away some of the risk of litigation for the client however an ATE insurance policy continues to be essential to protect the client at the “front line”. Then again QWOCS does not protect claims which have no personal injury element. I suspect there are many other types of perfectly legitimate claims simply brushed under the carpet and large businesses are already developing strategies to take advantage of the legislation. I am sure we have not yet seen the impact to small businesses in relation to that.

A mean costs regime In a mean cost regime, law firms appear to view the success fee as profit and any premium paid from within it is a loss. This, despite the fact there is no legislation dictating a premium cannot be taken over and above the CFA/ DBA regulation maximum success fee. Although we see price competitiveness as a healthy part of our business in our view this has created a race to the bottom(which is dangerous given we are effectively testing a new insurance product).

Elite Insurance is concerned how cheap premiums, to cover risk where behaviours have not yet been properly established, will impact the quality of the cover or how an ATE insurer (protecting its position) will invoke draconian controlspossibly written intelligently into the TOBA/Policy wording. Both will surely have a negative impact on the perception of our industry.

Great expectations A recent interview in The Insurance Times with Hill Dickinson’s claims unit technical manager Phil Oultram assessing the impact of LASPO stated “Claimant solicitors have got quite aggressive in the way that they

present claims. The expectations [for damages] are now significantly higher than they used to be”. He is not wrong in this respect as the article also quoted damages paid out in December 2013 were up by 18% from December 2012.

As levels of business start returning to Pre April (despite a 11% decrease)and claims start finding their way back to law firms despite the referral fee ban, it will only be a matter of time before defendant insurers will surely push back and their behaviour will become more aggressive in response.

It was Phil Oultram who went on to state “There is a much greater risk now in bringing a claim” and therefore it is

‘Although we see price competitiveness as a healthy part of our business in our view this has created a race to the bottom(which is dangerous given we are effectively testing a new insurance product)’ imperative law firms chose their “weapons of choice” very carefully. It would appear David has alerted Goliath and those law firms who carry no cover or insist their clients take out cheap ATE products (without any consideration to what the policy covers) may end up footing the bill for their client. Let’s face it, who would wish to be a lawyer dealing with a client who has won their case but failed to beat a part 36 offer on the advice of a solicitor looking to maximise a success fee. This will be difficult to explain to a client as to why they received no compensation. I am sure Outram et al will be delighted to highlight such a case in tomorrow’s Daily Mail.

The clever firms have worked with us on our bespoke comprehensive scheme, insured their clients at the outset (keeping the premium down),charged a premium above their success fee and had the freedom to act in the best possible interest of their client. This will undoubtedly serve them best in the future in respect of settling at the right compensation and therefore fending off any potential claim for professional negligence. As PII insurers this is something Elite Insurance have identified and are keen to work on to help protect our insured firms.

What is a crying shame is the effect the changes have had onclaims oflow value but of high importance, especially where the claimant is seeking redress for something less tangible than cash compensation. Since April, I have been asked to insure thousands of impecunious claimants looking for ATE insurance critical to taking the claim forward. Whilst Elite has developed innovative ways in which we can help but to some, the only advice I could give was to go and see their local MP and take their anger out on them.

It would appear Goliath is alive and well!

Jeff Dawson AIC is Sales Director at Elite Insurance

MC // March 2014

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The Features

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CONSTRUCTION ALL RISKS (CAR) INSURANCE – POLICIES AND PITFALLS CAR policies are intended to indemnify against ‘all risks’ of damage to the Insured Property during construction works. All risks, that is, that are not otherwise excluded by the Policy, as David Pliener explains.

‘When CAR policies were initially introduced, they tended to exclude all damage caused by defective design or workmanship, even if that damage was to insured property which was itself free from the defect’ As is evident from these examples, the distinction can be a fine one and has fairly (but unhelpfully) been described as ‘impressionistic’.

What is CAR Insurance?

You might think that they would be much more straightforward than Professional Indemnity policies (where you need to show negligence) or polices where there is a need to pigeon hole the loss into a requisite category of occurrence, such as ‘flood’ or ‘explosion’. If so, you would be disappointed.

Damage The fundamental idea is that this type of cover responds to an occurrence or casualty, whereby the works are damaged. The lawyers agree that this means there must be an ‘adverse change in the physical condition of the insured property’. The tricky bit is deciding what that means. So, for example, is there ‘damage’ when: •A grain silo breaks down because its pipe gets blocked with grain due to a defect? (Answer – No – there was a loss of use but no damage).

•A house becomes contaminated by radionuclides from Sellafield? (Answer – No – there was a diminution in value of the property but no damage).

•A ship’s deck becomes temporarily covered by hydrochloric acid (Answer – Yes – because there was at least a temporary contamination which impaired the value/use of the vessel).

•A residential flat suffers from a large ingress of dust (Answer – Yes – because the levels of dust amount to a change in the physical condition of the property).

Defects The CAR policy is not intended to provide a guarantee that the contractor’s work is not defective.

Consequently, when CAR policies were initially introduced, they tended to exclude all damage caused by defective design or workmanship, even if that damage was to insured property which was itself free from the defect.

However, this meant that a claim would be excluded even where there was extensive damage to wholly nondefective areas of the insured property.

There was a demand in the market for wider cover and the industry developed a suite of exclusion clauses known as ‘DE’ clauses, which permit some recovery for losses caused by defects, but provide for a spectrum of exclusions from the most restrictive (DE1) – all excluded - to the most generous to assureds (DE5) – all insured except for the cost of improvement. There is a similar suite of clauses published by the London Engineering Group, known as the ‘LEG’ defects clauses.

The DE clauses There are many difficult aspects of the DE clauses, but perhaps the most common faced by the industry arise in DE3 and DE4. In simple terms: •DE3 excludes damage to ‘property insured’, but carves back into cover property insured, which is free of the defective condition but is damaged as a consequence of the defect.

•DE4 excludes damage to any defective ‘component part’ of the property

insured but carves back into cover any parts or items of property insured which are free from the defect but damaged as a consequence.

So, if the non-defective ‘property insured’ (say, a shed) is damaged as a result of a defect in other property insured (say, the main building), both DE3 and DE4 would provide cover.

However, if the defect was part of the shed, DE3 would exclude any damage to the shed, whilst DE4 would only exclude damage to the part of the shed which was defective. If only it was always that obvious.

This can in practice become a very difficult distinction to draw, and, often, one with very significant cost consequences. For example, if defective windows are installed in a building and the walls or ceilings are damaged by consequent water ingress, has there been damage to property insured which is free of the defect, so as to provide cover under DE3? Or was the whole facade of the property insured in defective condition? The Court of Appeal on that occasion thought the former and suggested that in ‘commercial terms’ the plasterboard and windows were distinct.

Such distinctions are often far from clear and hard to predict.

David Pliener is a barrister at Hardwicke Chambers and a contributor to Paul Reed QC’s ‘Construction All Risks Insurance’ book, due to be published

by Sweet & Maxwell this spring.

MC // March 2014

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The Features

55

LEGAL OPINION

Modern Claims spoke to our legal experts to find out their plans and strategy for 2014

Policing the ban Why have referral fees for credit hire companies not yet been banned as we saw in the case of Personal Injury practitioners last year – is it because the ban would be too difficult to police/regulation would be too difficult?

I

n order to answer this question we must first examine how well the ban on referral fees has been policed/ regulated. There are of course several ways in which parties are able to pay for work in a manner that is within the regulatory regime. Whether that is in terms of marketing, recommendation fees or working under an ABS licence, at this point in time they are not, if carried out correctly, in breach of the rules.

All the regulators are making some efforts to police this ban, it is not clear to what extent this is a priority for either the SRA or the FCA, however it remains a high priority for the CMR. The SRA, in particular, have been relatively open in confirming that financial security of the organisations that they regulate is their absolute number one priority and everything else is understandably secondary.

There has not, as yet, been any high profile cases where the referral fee ban has been breached and then effectively and noisily punished.

The customer journey Which latest technology is the best in the claims sector at the moment, how can/is technology benefitting not only the client but also insurers and lawyers in the claims arena in 2014? How important a part does technology have to play in the ‘wheel’ of smooth running for the claims process?

U

K Telematics, in comparison to other countries is still relatively a niche service; I make the distinction of service rather than product as this is how telematics should be highlighted to potential customers; for which there are many in the UK being grossly overlooked.

Today the benefits of telmatics have not been fully realised by either insurers or consumers and this will remain this way until such time the industry embraces a wider focus other than the young driver demographic and driver behavior only. We all understand and appreciate young drivers attract higher premiums for being a higher risk, however; there is a forgotten population out there who are also able to benefit from telematic services. As we stand today, there is high reliance on mobile TM applications which has the added customer concerns of MI reliability and stability. For instance if you’re using a mobile application there are potential signal issues; stability of the handset in the vehicle and of course reliance that a policy holders phone will be charged and remain so; policy holders are also paying for this data through their data contracts; to make a pricing decision based on driver behavior from a mobile application

could prove a tough call for many underwriters.

Tomorrow however could be a different story as those who widen their focus to other market and demographic needs will certainly benefit through an increased policy book and reduced attrition due to servicing genuine customer needs.

Following our recent study into wider TM opportunities it is clear Telematic services are best served when integrated into a vehicle in a more reliable fashion. A growing number of manufactures are now moving this way and this paves the way for new market opportunities such as breakdown prevention linking with engine management systems; safety controls and triage; fraud reduction using the availability of reliable MI to assess RTA claims and being able to control costs through market leading intervention and recovery of motor policy holders.

For 2014 and the future if we address the real needs of a wider number of motor policy holders offers improved; reliable; quality underwriting data and in turn fairer policy premiums for all. Those who embrace a wider focused telematic service will certainly reap the rewards of mass market appeal.

Michael George Davidson, Head of Strategy and Sales, Goldsmith Williams Solicitors

If a referral fee ban was to be created for CHO’s then it is difficult to see who would be an effective regulator. The likely avenues are the SRA and FCA as it is only solicitors and insurance companies who pay those referral fees. However there is little, by way of evidence, to suggest that this is either a priority or a significant problem for either regulator.

Furthermore, the government has not, in any way, indicated that there is a drive to remove referral fees for CHO’s, this is understandable, whereas the political sound bite to be gained from banning referral fees in Personal injury is clear. Finally there are the issues the entire Credit Hire sector is facing over the Competition Commission.

Significant changes may ensue as a result, leaving any referral fees in the system obsolete.

Alan Nesbit, Managing Partner, Nesbit Law Group LLP

MC // March 2014

56

The Features

How can practitioners obtain relief from sanctions post-Mitchell?

A

s well as exemplifying the robust approach to litigation recommended by Jackson LJ1, the Court of Appeal in Mitchell2 provided guidance as to how to consider applications for relief from sanctions.

As a starting point, sanctions are pre-supposed to have been properly imposed.3 If practitioners wish to challenge the imposition of the sanction itself, this should be by way of appeal or, exceptionally, application to vary or revoke the order,4 in which case the Tibbles5 criteria apply.

In seeking relief, practitioners should consider whether the nature of the non-compliance is trivial; if so then provided the application is made promptly, relief will usually be granted.6 Failures of form rather than substance or narrowly missing deadlines are examples of insignificant failures which may be considered trivial.7 Applications for extensions made before time has expired will be looked upon more favourably than those made after expiry. 8 In considering triviality, practitioners may rely on the dicta of Richards LJ in Durrant9. If a case’s background can be relevant in considering triviality, arguably some of the factors under the old CPR3.9 checklist may be relevant to triviality itself, rather than simply being circumstances of the case the court must consider to enable it to deal justly with an application.10 Practitioners would also do well to cite HHJ Oliver-Jones QC in Adlington.11 If the consequences of a breach are minimal, which is especially likely where the opposing party does not oppose the application for relief, this may satisfy the issue of triviality.

If the non-compliance is not trivial, practitioners will need a good reason for the default; this will usually arise from circumstances out of the party’s control. Examples may include a solicitor’s debilitating illness or later developments in litigation which rendered the original period for compliance unreasonable although the period seemed reasonable at the time and could not reasonably have been appealed, but will not usually extend to overlooking a deadline or being overworked. 12 Going forward, practitioners should ensure submissions based on triviality, promptness and good reason are well-supported to avoid falling foul of the firm line on enforcement13 courts will take post-Mitchell.

David Fardy, Advocate, Lyons Davidson 1Review of Civil Litigation Costs: Final Report (21 December 2009) ‘Recommendations’ 8.1(vii): “The courts should be less tolerant than hitherto of unjustified delays and breaches of orders”. See also Fred Perry (Holdings) Ltd v Brands Plaza Trading Ltd [2012] EWCA Civ 224 at [4].

2Mitchell v News Group Newspapers [2013] EWCA Civ 1526.

3Ibid at [45].

4CPR 3.1(7).

5Tibbles v SIG plc (trading as Asphaltic Roofing Supplies) [2012] EWCA Civ 518.

6Mitchell at [40].

7Ibid.

8Mitchell at [41].

9Durrant v Chief Constable of Avon and Somerset Constabulary [2013] EWCA Civ 1624 at [48]: “the noncompliance becomes more significant, however, when it is seen against the background of the failure to

The customer journey Which latest technology is the best in the claims sector at the moment, how can/is technology benefitting not only the client but also insurers and lawyers in the claims arena in 2014? How important a part does technology have to play in the ‘wheel’ of smooth running for the claims process?

I

t is difficult to say which technology is best for the claims sector as each business will find the best fit for their business and there is a vast array of choice so not one solution fits all. Carpenters chose LexisNexis case management systems for the flexibility of the technology which has allowed us to create bespoke applications for FNOL, Defendant and claimant files both Pre and Post litigation fully linked to the MOJ portal. We are also part of an early adopter programme for the LexisNexis One product which is a full ERP system based on Microsoft Dynamix AX. Carpenters’ choice was in relation to offering our clients a bespoke service and our technology must support our strategy.

Technology brings many different benefits ranging from ensuring a quality consistent service to customers to having the Management Information in real time to ensure that claims are being handled and managed properly. Our philosophy is to ensure that technology works for both the business and our customers to improve the customer journey whilst managing costs. We are rolling out a secure client portal where Claimants can logon to retrieve documents, as our research showed that clients would like instant access to correspondence so they can make decisions wherever they are. The clients can login via a computer or a smartphone to retrieve correspondence and send updates directly to their claims handler.

The expansion of the MOJ portal in 2013 meant greater emphasis on technology and those who do not have robust and integrated solutions would face duplication and dual entry into the Portal. Having the right solution for your business ensures that duplication can be eliminated and processes can become slicker and improve overall performance and quality. There are advantages with technology led claims handling as this also allows seamless links with third party applications, for example, links to Fraud databases and key attractor lists, have flagged fraudulent claims and fraud rings, this has seen a reduction in bad claims and spend. Technology is incredibly important in the wheel of the smooth running of the claims process and simple things like diary management, adherence to both protocol timescales or court direction timescales are both important for the progress of a claim but also to ensure that risk is minimised throughout a practice.

comply with Lang J’s earlier order, and the fact that Mitting J, in extending that deadline, had seen fit to specify the sanction for non-compliance”.

10CPR3.9(1).

11Adlington v ELS International Lawyers LLP [2013] EWHC B29 at [32]: “the ‘nature’ of non-compliance cannot, in my judgment, be divorced from consideration of the ‘consequences’ of non-compliance”.

12Mitchell at [43].

13Ibid at [48].

MC // March 2014

Donna Scully, Partner, Carpenters

The Business of Law

June 2013 | Issue 6 | ISSN 2050-5744 The first ever Modern Law conference: ABS: the new frontiers of law. Emma Waddingham summarises an extraordinary event

The Business of Law

Sector roundtable: MLM hosts a debate to see if the legal sector is pioneering or fearing the extensive innovations in IT.

March 2013 | Issue 5 | ISSN 2050-5744 Emma Waddingham reports exclusively from Westminster on the recent All Party Parliamentary Group roundtable on the future of legal services.

Dom talks news: Jackson: the cases you need to know!

Rob Terry, Group CEO of Quindell Portfolio PLC speaks to Modern Law about how he manages standards and clients across one of the largest legal services portfolios in the country.

The People’s lawyer: Greg Shields asks if law firms are actually any good at putting people first.

points of entry “Barristers contribute to the reform of law, assisting government and doing so for free – you can’t label, regulate and commoditise this, which the LSB is sometimes keen to do” Maura McGowan QC, Chairman of the Bar Council

Modern Law Magazine | March 2013 | Issue 5

Modern Law Magazine | June 2013 | Issue 6

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news@prhannasolicitors.com Aspire Charity Aspire Charity AsPire ChArity news@prhannasolicitors.com Aspire Charity

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Aspire Charity

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Based atmention Musgrave Hospital Belfast, with his wife.

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Around 80% of cycling accidents occur in daylight, the most However, cycling accidents in the dark are more likely to be fatal.

However, cycling accidents in the dark are more likely to be fatal. dangerous hours for cyclists being 8-9 am and 3-6pm on weekdays. dangerous hours forvehicle cyclistsinvolved being 8-9 am and 3-6pm on weekdays.

The most common in collisions with cyclists is a car However,cycling cycling accidents in the dark are more likely to be fatal.

However, accidents in the dark are more likely to be fatal. or taxi, with the rider usually being hit by the front of the vehicle.

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Photo courtesy of Ulster Tatler

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Northern Ireland. established us as the legal firm of choice for many throughout Northern Ireland.

Our reputation for providing excellent customer with a minimum of fuss and cost has employment and personal injury cases, as well as service conveyancing, both commercial and residential.

P Rfirm HANNA SOLICITORS established us as the legal of choice for many throughout Northern Ireland.

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& 3 Floors, Lesley Suites, 2/12 Montgomery Street, Belfast, BT1 4NX Suites, 2/12 Montgomery Street, Belfast, BT1 4NX 2 & 3 Floors, Lesley P R HANNA SOLICITORS nd rd Email: info@prhannasolicitors.com * www.prhannasolicitors.com 2nd & 3rd Floors, lesley suites, 2/12 Montgomery street, Belfast, Bt1 4nX Tel: 028 9023 5554 Fax: 028 9023 5767 Belfast, BT1 4NX 2 & 3 Floors, Lesley Suites, 2/12 Montgomery Street, Photo courtesy of Ulster Tatler P9023 R HANNA SOLICITORS tel: 028 5554 Fax: 028 9023 5767 Email: info@prhannasolicitors.com * www.prhannasolicitors.com Tel: 028 9023 5554 * Fax: 028 9023 5767 &email: 3rdofFloors, Lesley Suites, Street, Belfast, BT1 4NX 2ndEmail: Members Headway – The Brain 2/12 InjuryMontgomery Association Personal Injury Solicitors List info@prhannasolicitors.com info@prhannasolicitors.com * www.prhannasolicitors.com www.prhannasolicitors.com Tel: 028 9023 5554 * Fax: 028 9023 5767 Members of Headway – The Brain Injury Association Personal Injury Solicitors List Email: info@prhannasolicitors.com * www.prhannasolicitors.com Members of Headway – The Brain Association Personal Injury Solicitors Members of Headway – The BrainInjury Injury Association Personal Injury Solicitors List Photograph Courtesy of Ulster Tatler2

Photo courtesy of Ulster Tatler Photo courtesy of Ulster Tatler

P R HANNA SOLICITORS established us as 028 the legal firm of choice many028 throughout nd rd P 9023 r hAnnA soliCitors Tel: 5554 * for Fax: 9023 5767Northern Ireland.

List

The Features

59

NOT JUST A MATTER OF COST Some insurers target certain customers through their pricing, hoping to attract the right type(s) of people based on statistics alone, but how they position themselves, and communicate, can be highly effective too, as Kevin Hughes reports.

Most organisations are obsessed with the concept of ‘brand’, with increases in brand awareness and brand warmth featuring highly on their wish lists.

And this is an understandable preoccupation, as a company’s brand can be a crucial differentiating factor.

A brand encapsulates all that your business is, it’s very reason for being, and will influence your audiences’ perceptions of you as a company, the services you offer and what you stand for, and as such can determine whether people want to spend their money with you, or with one of your competitors.

But what does brand stand for when it comes to insurance, in particular?

Well, from Gocompare.com’s perspective, the short answer is, it depends. Insurance is an unusual product in as much as people rarely appreciate it until they have to use it, but of course they hope that they never have to. And for some types of insurance – most notably motor insurance – which is a legal requirement if you are to drive or ride on UK roads, the product is the very definition of a grudge purchase.

The differentiating factor For car insurance, and particularly among young drivers, who typically pay the largest premiums, cost is a greater consideration than anything else, including brand. Research we carried out recently among 2,000 motorists1 confirmed that cost is the most important thing for most people when choosing a car insurance policy, with three quarters of those surveyed saying that this was their main reason for opting for their insurer. By comparison, just over half are influenced by the quality of cover being offered.

Our research into the factors that influence motorists’ choice of car insurance policies revealed that, in

addition to the price of the policy, drivers were concerned about the level of cover on offer and the insurer’s reputation, particularly in relation to paying out for claims.

Rank

Reason for choosing car insurance provider

%

1

Cost

75

3

Insurer's reputation

33

2 4 5

Quality of cover

I trust the insurer to pay out if I need to claim The ability to pay in monthly instalments

51 32 28

For many drivers, If I get a good deal (e.g. 11 months cover for the price of 12, second vehicle 21 discount, free gift) insurance represents a 6 significant proportion 7 Recommended by friends and family 12 of the cost of running 8 Specialist provider (e.g. older/younger/women drivers, sports/classic cars) 5 a car, so it is no 9 Recommended by an insurance broker 4 surprise that price is an important 10 I like their advertising 2 consideration in

choosing an insurance policy. And this is echoed in the activity we see on our website too, with around 50 per cent of the users of our car insurance comparison service opting for the cheapest quote they receive, and the rest clicking through to insurers further down the quote results page.

An involved purchase What encourages people to opt for quotes other than the cheapest one provided is highly subjective, but as Gocompare.com clearly display excesses, add-ons and, through a partnership with independent financial research company Defaqto, up to 30 additional policy features, it’s likely that the quality of cover and even brand familiarity or trust comes into play. Incidentally, these two factors came in second and third in the aforementioned research.

For other types of insurance, such as home cover, price is still an important factor, but it’s a rather more emotive and involved purchase than motor insurance. People have a choice whether or not to buy contents cover, for example, and they are doing so to look after their belongings and things they are attached to, so policy features and trust in the insurer can play a much bigger part in the decision-making process.

As such, targeting is hugely important when it comes to developing brand awareness and, ultimately, trust among your customers. Naturally, some insurers target certain customers through their pricing, hoping to attract the right type(s) of people, be that based on age, occupation, address, the type of car driven or home lived in, or a myriad of other factors. But how they position themselves, and communicate, can be highly effective too. What is it that you offer, and in what way do you behave, that will encourage those people that you’d like to count among your customers to consider you over anyone else? If you can get this right then you’re onto a winner but, alas, only if your premiums are competitive too, in most cases.

Kevin Hughes, Chief Marketing Officer, Gocompare.com

1 Research commissioned by Gocompare.com. On 9th August 2013, Vision Critical conducted an online survey among 2,000 randomly selected British adults who are Springboard UK panellists. The margin of error-which measures sampling variability-is +/- 2.2%. The results have been statistically weighted according to the most current education, age, gender and regional data to ensure samples representative of the entire adult population of United Kingdom. Discrepancies in or between totals are due to rounding.

MC // March 2014

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The Features

61

RE-ENGINEERING THE PARTS PROCUREMENT PROCESS If 2013 was a year of change for the personal injury sector, the report of the Competition Commission’s ‘Provisional Findings’, published in December is beginning to shift the focus of claims management to other matters, as Tony Rand reports

T

he Commission identified two areas of dissatisfaction with current repair management processes: “claimants experience detriment from cars not having been repaired to the legal standard.” Not much explanation required. The Commission carried out surveys of its own, and then commissioned an independent audit through MSX International. Although the sample was small and could be considered unrepresentative, at over 40%, the high percentage of perceived sub-standard work convinced the Team that here was a serious compliance issue, giving rise to customer detriment. “[Insurer repair audits] do not in themselves ensure that repairs are carried out to the legal standard.”

The Commission was concerned that insurers pay insufficient attention to their responsibilities for ensuring an acceptable standard of repair service to policyholders. Anecdotal evidence suggests that post repair inspections are few and far between and in some cases only conducted in response to a customer complaint.

Shiny and new By the time a post repair audit is carried out all rectification work has been covered in shiny new paint, so it is virtually impossible to determine whether the vehicle has been repaired with a genuine manufacturer’s part or a cheap imported copy, or simply patched up with filler. Many insurers stipulate the PAS 125 quality standard for their repairers. Does this go far enough? Unfortunately we have come across many examples of sub-standard repair work from PAS 125 accredited bodyshops. One has to wonder whether bodyshops have any proper understanding of how a proper quality system should be implemented. In too many shops, quality is little more than a paper chase and a row of lever arch files on a dusty shelf.

On the same day as the ‘Provisional Findings’ were published, the Commission issued its ‘Notice of

Possible Remedies’. Not surprisingly the Commission found that identifying a problem is one thing, but an effective solution can be more elusive. Indeed, the only remedy the Commission could propose was a structured programme of post repair inspections.

This suggestion was surprisingly tentative and would be impractical, ineffective and extremely expensive.

It would be impractical because it is inappropriate for a consumer-oriented conversion process, carried out by a large number of dispersed and relatively small production units. To be effective, customers would have to be persuaded to return their repaired car to the bodyshop for a proper inspection. We would anticipate strong resistance from customers because of the inconvenience caused. Indeed, the remedy itself could be considered detrimental to consumers.

It would be ineffective because by the time the repair is completed, it is very difficult to determine how the damaged area has been repaired – whether with body filler, a second-quality (non-oe) substitute or the authorised manufacturer’s (oe) part. Any post repair inspection programme would have to be independent (and how do you guarantee independence?) and prohibitively expensive. Who would be responsible for picking up the cost of the inspecting engineer’s inspection and report, and who would pay for the customer’s replacement vehicle while the inspection is carried out?

The elephant in the room Last year we launched a new direct parts procurement service through our company Partsave Ltd. We had some interesting meetings with car dealers. Parts fraud has always been the elephant in the room that no one wanted to notice. Occasionally, the tip of an iceberg would pop up to the surface, but the scale of abuse was unknown. Many dealers have told us they experienced from 10% to 20% and more ‘credit note returns’. In other

‘The only remedy the Commission could propose was a structured programme of post repair inspections’ words, parts that were ordered not because the repairer intended to fit the part, but solely to have an invoice on file in case of a post repair review.

The annual spend on replacement collision damage parts runs in excess of £1.6 billion. At £160 million, the scale of abuse is massive. ‘Credit note returns’ is only one part of parts fraud, so the total amount is undoubtedly far greater. It is hardly surprising that MSXI’s study was so conclusively negative. The Commission’s report is a wake-up call for insurers and indeed any other body responsible for managing repairs. We are already having discussions with insurers and other intermediaries. Partsave provides a fully documented ‘closed circle’ quality system, while offering real cost reduction opportunities for insurers and repairers alike.

Tony Rand, Managing Director, Partsave Ltd

MC // March 2014

62

The Features

5 MINUTES WITH...

Martin Milliner, LV=

Q

Has the industry changed drastically since you started working in it?

A

When I first started in the industry we did not use computers to manage any of our claims processes at all. Everything was paper based. Claims were seen as something to be repudiated or settled cheaply with little regard to the customer in terms of speed, fairness or being kept informed. That said, many of the current plights such as credit hire, the compensation culture and fraud were absent.

Q A

What has been the key positive or negative impact of change in your market?

Customers get a far better and fairer service than at any time during my working lifetime.

Q A Q A

Who inspires you and why?

My children, they make me strive to do the best I can to ensure they have the best possible future.

Have you had/got a mentor? If so, what was the most valuable piece of advice they gave you?

Don’t be frightened to back extraordinary ideas. As Henry Ford once said “if I had asked my customer what they had wanted they would have said a faster horse”

Q A

If you were not in your current position, what would you be doing?

An archaeologist or even worse possibly an accountant.

Martin Milliner is Director of Claims at LV= Insurance and is speaking at the Modern Claims Conference on 25th March 2014, to book your ticket, please visit www. modernclaimsevents.co.uk

GARVINS SOLICITORS LLP CHOOSES PROCLAIM Personal Injury specialist to implement Proclaim Case Management firm-wide

A

mbitious injury claim litigation practice, Garvins Solicitors LLP, is implementing the Proclaim Case Management Software solution from Eclipse Legal Systems. The Manchester-based practice specialises in road traffic and injury claim litigation, providing assistance and medical rehabilitation for clients involved in non-fault accidents.

Garvins is experiencing an increase in new injury claim cases and has ambitious expansion plans to take advantage of the changing face of the personal injury marketplace.

MC // March 2014

Garvins is taking the Proclaim Personal Injury Case Management solution across the entire practice.

Users will also have instant desktop access to Proclaim’s A2A (Application-to-Application) tools for processing Portal claims for both RTA (Road Traffic Accident) and EL / PL (Employer Liability / Public Liability). In addition, Garvins is also implementing the Proclaim Lite solution for staff members whose requirements are focused more around time recording and data storage, rather than process management and document creation.

Craig Budsworth, Partner at Garvins and also Chairman of MASS (Motor Accident Solicitors Society) comments: “Recent legislative changes have restructured the personal injury

industry, and in some cases made access to legal assistance more complex for claimants. It has therefore never been more important for solicitors to make the process as transparent, available, and caring as possible. Having the right case management software means that we will be able to extend our service level, and the whole customer experience, ahead of our already very high standards. This is imperative if firms are to thrive in the new legal landscape.”

For further information, please contact Darren Gower (Marketing Director) at darren.gower@ eclipselegal.co.uk, or call 01274 704100.

Alternatively, visit www.eclipselegal.co.uk

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