Modern Claims Magazine 10 by Charlton Grant

Linking the Industry Together

November 2014 | Issue 10 | ISSN 2051-6495 The burden of proof: John Pyall explains to what extent reinsurers must adhere to settlements and what happens when an insurance contract does not have to follow a settlements clause. The Claims Journey: Emma Holcroft outlines why outsourcing investigations to an independent expert, can lead to surprising outcomes for insured parties.

Modern Claims Magazine | November 2014 | Issue 10

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“The introduction of fixed costs for some fast track cases will put FOIL, MASS and APIL in a much closer space in terms of aligned interests. It will be interesting to see how that plays out in the future as there are certainly going to be more opportunities for the organisations to work together moving forward” Supported by Charlton Grant

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Welcome to A

s this issue of Modern Claims arrives at your door, I have no doubt that you, like me, will be preparing for weeks of excessive Christmas merriment, over-indulgence and â&#x20AC;&#x201C;hopefully - a well-earned break! As the end of 2014 approaches (it really has flown!), there is time to reflect on the past year and look forward what the future holds for the claims industry.

Things at Modern Claims HQ are certainly not quietening down as we approach our 2-year anniversary; 2015 will see us launch the brand new Modern Claims Awards, which will take place on 30th April 2015 at New Dock Hall, The Royal Armouries, Leeds. Nominations are open now and I would urge you to have a look at the website for further details: http://www.modernclaimsawards.co.uk/. We also have the second of our annual conferences coming up on 19th May, which will return to its home, Chelsea FC, further details coming soon!

Our cover star, David Johnson, now approaching the end of his Presidency of the Forum of Insurance Lawyers (FOIL), spoke to me about the changing role of the organisation in an increasingly fast-paced sector and explains what FOIL are doing on the ground to understand the needs and concerns of the profession (pages 13-15). Andy Whatmough explores the role of Non-Executive Directors in delivering business vision and strategy approaching the New Year (page 55) and Tom Blackburn also considers how the claims sector is waking up to possibilities for nonlawyer management and outlines what the sector can learn from the business world (page 50).

So before the Christmas rush takes hold, sit back, relax and enjoy this issue of Modern Claims. If you have any comment, or would like to contribute to a future issue, drop me a line on 01765 600909 or e-mail me via charlotte.parkinson@charltongrant.co.uk.

Charlotte Charlotte Parkinson, Group Editor, Modern Claims Magazine

Dates for your Diary: The Modern Claims Awards, 30th April 2015, New Dock Hall, The Royal Armouries, Leeds The Modern Claims Conference, 19th May 2015, Chelsea FC, Stamford Bridge, London

Modern Claims Magazine

Issue 10 November 2014 | ISSN 2051-6495

Project Director Kate McKittrick

Group Editor Head of Sales Charlotte Parkinson Rachael Pearson

Production Victoria Lang-Burns

Accounts Director Karl Mason

Events Director Julia Todd

Design Matthew Phillis

Project Manager Ben Longbottom

Modern Claims Magazine is published by Charlton Grant Ltd ÂŠ2014. 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 // November 2014

CONTENTS 07-08 INTRO & THE NEWS 7 Anthony Hughes talks news

The Managing Director of Jackson Hughes Consulting takes a look at the burning issues impacting the claims arena and explains why those who ignore change ultimately, risk failure.

11-20 THE INTERVIEWS 13 Interview with... David Johnson

The current President of the Forum of Insurance Lawyers (FOIL) relinquishes his role at the end of November. He spoke to Charlotte Parkinson, Modern Claims, about the changing role of FOIL in a fast-moving sector and how the organisation is working to understand industry concerns, on the ground.

17 Interview with... Ed Rochfort

21-48 THE OPINIONS 23 On the horizon...

Craig Budsworth, MASS

23 Growing your own...

Andy Thornley, BIBA

25 Surprising results?

David Williams, AXA

25 The road to profitability...

Michael George Davidson, Parabis

27 Language services for the Insurance

Industry

Suzy Stevenson, RWS Translations

27 Survival of the fittest

Alistair Schuberth, Willis Group

29 Getting the job done

Nicola Klimkowski, LAMP Services Limited

29 Solid Foundations

Darren Gower, Eclipse Legal Systems, part of Capita plc.

31 From survival to success

Scott Whyte, Watermans

31 The turning tide...

David Simon, Triton Global Limited

35 Times are changing...

Andrew Chadwick, Ultimate Costs

EDITORIAL COLUMNISTS Alan Nesbit Managing Partner Nesbit Law Group & Chairman, ARC Alistair Schuberth Associate Director, Claims Defensibility, Risk Management Willis Group

Charles Cox CEO TLMG

Derek Cooper Managing Director Veracity Claims Solutions

Janet Tilley National Managing Partner Colemans-ctts Solicitors

Craig Budsworth Chairman Motor Accident Solicitors Society (MASS)

Dez Derry CEO mmadigital

John Pyall Head of Facilitated Claims Unit Munich Reinsurance UK General Branch

Andrew Chadwick Costs Manager Ultimate Costs

Darren Gower Marketing Director Eclipse Legal Systems, part of Capita plc

Andy Thornley Public Affairs Manager BIBA

David Johnson President FOIL

Andy Whatmough Director S&G Response

David Kidman Partner BLM

Anthony Hughes Managing Director Jackson Hughes Consulting

David Simon Chairman Triton Global Limited

Bruce Bourne Commercial Mediator Bruce Bourne Associates LLP

David Williams Managing Director, Underwriting AXA

MC // November 2014

Donna Scully Partner Carpenters Emma Holcroft Director 2020 Investigations Gerry Lee Senior Partner P R Hanna Solicitors, Belfast Hilary Meredith CEO Hilary Meredith Solicitors Ian Ambrose Director Amber Claims Management

Nicola Klimkowski Head of Business Control and Development LAMP Services Limited Rob Smale Claims Director Ageas

Lisa Beale Head Checkaprofessional.com

Scott Whyte Managing Director Watermans

Lynn Everson Managing Director Lifeline Language Services

Suzy Stevenson Operations Manager RWS Translations

Matthew Avery Head of Research Thatcham

Tom Blackburn General Manager Compass Law

Michael George Davidson Head of Business Development Consumer Law Parabis

Zoe Holland Managing Director Zebra Legal Consulting

35 Great expectations

Dez Derry, mmadigital

37 Sunshine through the gloom...

Ian Ambrose, Amber Claims Management

37 Ready to respond

Rob Smale, Ageas

39 Just around the corner?

Janet Tilley, Colemans

39 CMA Investigation – what next?

Derek Cooper, Veracity Claims Solutions

41 Identifying and meeting demand...

Zoe Holland, Zebra Legal Consulting

41 Creative vision...

Hilary Meredith, Hilary Meredith Solicitors

43 A growing trend..

Lisa Beale, Checkaprofessional.com

43 Regulation outside England & Wales

(E&W) – a timely update

Gerry Lee, P R Hanna Solicitors

45 More Than Words – how to profit

56 The burden of proof John Pyall explains to what extent reinsurers must adhere to settlements and what happens when an insurance contract does not have to follow a settlements clause. 59 The Claims Journey Emma Holcroft outlines why outsourcing investigations to an independent expert, can lead to surprising outcomes for insured parties. 61 A New Trend The latest figures from the MOJ’s Claims Portal show that personal injury damages have been increasing in recent months and there are now reported murmurings from defendant representatives, that savings made since the introduction of the Jackson reforms are reducing. Jon Gouldsmith reports.

62 5 minutes with... Peter Horton 62 Bakers Solicitors Award winning full-service firm sees superb growth with Proclaim.

from language

Lynn Everson, Lifeline Language Services

45 The direction of travel...

Andy Whatmough, S&G Response

47 Control and confidentiality...

Bruce Bourne, Bruce Bourne Associates LLP

47 Food for thought

Charles Cox, TLMG

49-62 THE FEATURES

50 What every business must know Tom Blackburn explains how the claims sector is waking up to possibilities for nonlawyer management and outlines what the sector can learn from the business world. 52 Legal Opinion Modern Claims’ legal experts, Donna Scully, Alan Nesbit and David Kidman tackle the burning issues facing the claims industry today. 55 Non-Executive Directors & Executive

Decisions

Andy Whatmough, Managing Director of S&G Response, explores the role of NonExecutive Directors and how they can help a management team to deliver their wider business vision and strategy.

61 MC // November 2014

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Anthony Hughes talks news

ANTHONY HUGHES TALKS NEWS...

The Managing Director of Jackson Hughes Consulting takes a look at the burning issues impacting the claims arena and explains why those who ignore change ultimately, risk failure. Insurers report success of Jackson I was interested to see the recent comments from insurers about the benefits of Jackson; • Claims frequency down by 10% • Cost per claim down 33% saving circa £112 m • Premiums down by 19% This announcement was followed by confirmation that insurers are using this extra cash to support their policyholders in the fight against fraud. The point is illustrated by the case of Fish v Hillman, where the inconsistency of the claimant evidence led to the judge making a finding of fundamental dishonesty and awarding costs. As this may well have led the ATE insurers to avoid the policy it remains to be seen if those costs will ever be recovered. Whiplash reform Reform, reform, reform. ‘Will it ever end?’ I hear people ask. No sooner has one change come in than another is being proposed. God forbid that the market would ever be allowed to settle down and the impact of change be assessed. The government have decided that there is the potential for undue influence on medical experts so there should be wholesale change to the way they are instructed in relation to low value motor claims. Despite opposition from across the claims community, these changes are now certain to become a reality. Indeed the CPRC have all but accepted the new draft rules, even though the MOJ are yet to formally respond to the consultation! The headlines include; • Expert selection being taken away from practitioners • Claimant access to the QUE PI database • The formation of a new MedCo, akin to PortalCo • Accreditation for individual experts • Accreditation for MRO’s. Of major significance will be the random selection of experts, albeit on a restricted basis, which the government believes does not cause them competition law problems. No doubt, if others disagree, there will be a challenge, but if the JR that followed the Jackson reforms is anything to go by, it could get short shrift.

as the old world. I can well imagine the extra workload falling on the lawyers when it comes to; • Making the bookings • Catering to specific requirements of the client e.g. day of the week • Dealing with changes to the appointment • Accessing the claimant’s records.

A huge issue to be dealt with is how MRO’s will operate in the new world. The larger agencies have become slick BPO operators who rely upon volume to keep prices low allowing them to invest in technology and process efficiency. If this is lost, where does that leave the new fee regime? Of course, that regime was negotiated in what could now be described

The main driver is to break any financial links between those who represent claimants and the agencies that source the expert evidence which does carry a certain logic but then again, in the world of ABS’s, group structures were surely anticipated. What does seem inevitable is that as and when these changes become a reality it will force rapid MC // November 2014

Anthony Hughes talks news

‘I had to smile when I saw the letter from the ABI to the Transport Select Committee complaining about the outcome of the CMA review. Insurers have won so many of the battles of late that not to get their own way must have come as a shock to the system’ consolidation in the MRO market. Indeed, it is hard to see how small agencies serving only their Lord and Master can survive. No one should underestimate the potential impact of these reforms especially when we are told the MOJ want to implement them by January 2015. Ambitious to say the least when the IT specification still wasn’t finalised at the time of writing. My fear is that this could be a huge backward step undoing years of hard work to improve efficiency all because of a perceived problem. I recall Jackson LJ wanted reform based upon evidence; clearly, this has now fallen by the wayside. Accreditation (of both the experts and the MRO community) will be vital to the success or failure of this project. Make it too onerous and experts could walk away creating a supply chain problem; be too slack and it will all be a waste of time. I know stakeholders are working hard to achieve the right balance but the fact that a sub-committee (working behind closed doors) will make the final decision is a cause for concern. CMA I had to smile when I saw the letter from the ABI to the Transport Select Committee complaining about the outcome of the CMA review. Insurers have won so many of the battles of late that not to get their own way must have come as a shock to the system. The Law of Tort is such a nuisance when it gets in the way! I accept that there are dysfunctional elements to the nonfault repair and replacement vehicle markets. However when you look at the true cost of credit hire to the insuring public, it is negligible and hence the CMA comment that there were no remedies available to it “which would be both effective and proportionate” to overcome the problems it had identified in the market. If some of the voluntary steps recommended are adopted effectively then the cost could be diluted further. A huge issue, especially for the large composite insurers, is competing on service. The fact is that when it comes to factors, such as speed of response, those insurers struggle to match some of the best Accident Management Companies and Credit Hire Operators. Maybe the solution is to work with them for the good of the consumer rather than try to destroy them because they are good at what they do. M&A in the legal market place As someone who works in this sector, M&A continues to fascinate me. Many have been surprised that the pace of consolidation has not been faster. I think one reason for that is the fact that many legal businesses are in a poor state, especially when you get under the hood. I have been advising a number of law firms on both acquisition and

MC // November 2014

disposal options and as a result, I have become all too aware of the issues in the market; • An unrealistic expectation as to capital value • A reluctance to accept real corporate governance • Disproportionate levels of debt • PII and successor practise problems • Excess value being placed on soft issues such as independence. Despite this, those who know their way around the M&A scene are making headway and will continue to do so. However, for some of the reasons quoted above, others are simply not attractive to the active consolidators. Sole practitioners can be particularly problematic; I recently experienced one insurer de-railing a deal at the 11th hour as they refused to become a successor practice. In the SME sector there is no stopping Neil Hudgell who recently announced yet another deal, this time with Rapid Solicitors. He has demonstrated the value of having a plan and sticking to it. He knows what he wants, what he is prepared to pay for it and how to run a transaction; the results speak for themselves. The bigger corporates such as Irwin Mitchell and Slater & Gordon also continue to march on. IM have appointed Chris Belsham, who is ex-KMPG and someone I have had the pleasure to work with in the past, as Head of Corporate Finance. This is quite some statement of intent and illustrates a very professional approach to their acquisition strategy. The equally professional S&G have announced their intention to consolidate during FY 15 but this appears to mask a desire for further growth, as illustrated by the potential deal with Leo Abse Cohen in Cardiff. I suspect their strategy is to create real critical mass in every major UK city so we are likely to see them making more acquisitions in the consumer sector over the next couple of years.

‘The bigger firms with a strong capital base and greater resources will exploit every opportunity they can, more than likely at the expense of smaller businesses’ Information from the Law Society shows that the Top 30 law firms grew 7% in FY 14, whilst smaller firms declined by 1%, an ominous statistic and one I expect to become more stark with time. The bigger firms with a strong capital base and greater resources will exploit every opportunity they can, more than likely at the expense of smaller businesses. Remember that circa 85% of law firms are four partners or less and unless they have good routes to market I fear for their future. This period of consolidation will not continue indefinitely and I expect that in the next five years we will have a very different market, one that is likely to be polarised with the big players accounting for an even larger proportion of the revenue. Those who ignore the changes and refuse to adapt risk failure. Anthony Hughes is Managing Director at Jackson Hughes Consulting.

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Interview with... David Johnson

Interview with... DAVID JOHNSON The current President of the Forum of Insurance Lawyers (FOIL) relinquishes his role at the end of November. He spoke to Charlotte Parkinson, Modern Claims, about the changing role of FOIL in a fast-moving sector and how the organisation is working to understand industry concerns, on the ground. David Johnson David is a partner at Weightmans LLP. He has worked with insurers for more than a decade, focused predominantly on personal injury litigation but with experience in other areas such as health and safety prosecutions. Since being made partner in 2007, he has specialised in dealing with large loss claims, i.e. personal injury claims exceeding £500,000 in value. He regularly represents clients in respect of claims concerning brain damage and spinal cord trauma. His particular areas of expertise include the quantification of foreign care packages. During his time at Vizards Wyeth, David held a position on the firm’s steering committee for major clients. Subsequent to Weightmans’ acquisition of the Vizards Wyeth insurance team in 2011, David has gone on to take up a leading role in Weightmans’ chronic pain group, advising insurers on their strategic approach to tackling the increasing prevalence of chronic pain claims. David originally became involved with FOIL as Regional Representative for London & the South East. Subsequently he spent four years as a Lobby Officer on the FOIL executive, before being appointed Vice President in November 2012. Outside of work, David is a long suffering Tottenham fan. He is also a keen runner and lives with his wife and two daughters in Kent.

What have been the biggest challenges for FOIL as an organisation over the last year?

One of the aims that has been high on the FOIL agenda over the last few years has been to build a bigger presence in other jurisdictions – particularly in Scotland and Northern Ireland. We want to present a better offering to them and make sure they are a bigger focal point for FOIL. In recent years, the Taylor review in Scotland and the Daniel review that is currently underway in Northern Ireland has widened the scope of opportunity in this regard. My Predecessor, Rod Evans did some sterling work in Scotland and this year we have focussed more on Northern Ireland. Both Scotland and Northern Ireland are an important part of what FOIL does and this must remain high on the agenda. Of all the things we have done this year, that has been one of the most important and the most challenging objectives for the organisation.

How has the ‘big conversation project’ (which ran from 20072008) changed the way FOIL operates?

The big conversation gave FOIL the scale and the resources to realise its potential in a way that was not possible before. I do not mean to put down the work that was done prior to 2008, which was important and effective, however, the way in which the organisation was structured and the way it was funded at that time meant it restricted and limited the breadth of what it could do. Since 2008 FOIL has become a larger and

MC // November 2014

Interview with... David Johnson

‘The introduction of fixed costs for some fast track cases will put FOIL, MASS and APIL in a much closer space in terms of aligned interests. It will be interesting to see how that plays out in the future as there are certainly going to be more opportunities for the organisations to work together moving forward’ better resourced organisation and as a result it is able to present and work in its member’s interest more effectively, it has also increased the number of different areas it is able to work in.

What is FOIL doing on the ground to understand the needs and concerns of the insurance/legal sectors?

This is a constant challenge for FOIL as ensuring we effectively represent the views of our members is one of the most important aims of the organisation. We get it right the majority of the time and the way FOIL is now structured has been key to that. The organisation has a Chief Executive, Laurence Besemer and beneath that we have a diverse range of sector focussed teams, Laurence is very diligent in ensuring there is fair representation for members across those teams so that we get to hear from all our members and they all have an opportunity to feed their views into the FOIL policy. We have been concerned to make sure we meet with insurers, as well as working with the ABI to ensure we do get it right. We are not just speaking as an executive body but as the voice of the constituents that make up our members; this is and will remain FOIL’s fundamental priority.

‘FOIL itself is also unique in the fact that it speaks for more than just one firm and as an industry body, it has the scope and remit to do things that individual firms cannot replicate, irrespective of their size’

How are relations between FOIL, the Motor Accident Solicitors Society (MASS) and the Association of Personal Injury Lawyers (APIL), currently?

The relations between FOIL, MASS and APIL are good and are probably far more amiable and close than is sometimes suggested in the press. Immediately prior to my taking up the position of President in November 2013, there was a joint conference with MASS, APIL and FOIL about how we can better work together. This is demonstrative of the fact that there is a recognition that we need to work together in as many areas as we can. All three organisations have since been involved with the government’s whiplash reforms progress and have worked together with the government’s core stakeholder group in that respect. FOIL and MASS have also both put their names to joint papers in the context of reforms. FOIL has also worked directly with APIL when it comes to the review of the multi track code and improving that protocol. Looking to the future, it is interesting that the

MC // November 2014

introduction of fixed costs for some fast track cases will put FOIL, MASS and APIL in a much closer space in terms of aligned interests. It will be interesting to see how that plays out in the future as there are certainly going to be more opportunities for the organisations to work together moving forward.

Do you expect the number of FOIL members to reduce in coming years, in light on consolidation in the market? As consolidation continues, the number of firms in the market will diminish but the number of individual fee earners is likely to remain static or even expand, unless there is a significant reduction in claims frequency. FOIL has expanded its focus and activities over recent years so it covers more than personal injury, this process is continuing as the organisation makes further inroads into areas of insurance law. As that continues, those who have not historically viewed the organisation as relevant to what they do, are now seeing it as increasing relevant. FOIL itself is also unique in the fact that it speaks for more than just one firm and as an industry body, it has the scope and remit to do things that individual firms cannot replicate, irrespective of their size. When speaking to the government and other organisations, we do so as a body that represents the defendant industry as a whole. There will be a continued relevance and role for FOIL and if it is astute in the way it focuses itself, I see no reason why it shouldn’t continue to thrive.

Has the FOIL ‘voice’ now been established as a meaningful one within the industry (given increasing involvement with government consultations), or is there still further to go?

FOIL is now recognised as an organisation with a distinctive voice and one that makes decisions which the legal sector need to take account of. In my year as FOIL Vice-President, we were invited to give evidence to the Transport Select Committee (TSC) and in my year as President so far, we have been invited to give evidence in front of the Civil Justice Council’s (CJC’s) Costs Committee and the governments’ public bills committee. I have been working closely with the Ministry of Justice (MoJ), on the whiplash reforms as a member of its core stakeholder group. I have also represented FOIL on the CJC’s Jackson working group. FOIL is certainly very much the go-to organisation for those who need to get the insurer-legal perspective on any given issue, the organisation has gone from strength to strength and although more work can always be done, we strive to maintain the progress we have made going forward.

Interview with... David Johnson

‘I do have some concerns around QOCS and whether the judiciary will be robust enough in their approach to QOCS to make it work in the manner it was intended to’

What will your involvement be with FOIL when your term as President comes to an end?

I will have the year after the term ends as Immediate Past-President and I will continue to attend the executive meetings, so I will be involved in that respect. I have devoted quite a number of years to FOIL and I have very much enjoyed working with the organisation and will continue to do everything I can for FOIL in the future.

April this year marked one year since the implementation of the Jackson reforms, are the reforms working in practice and what are your biggest areas of concern?

In broad terms, they are working in practice and they have been largely successful. The industry is still finding its way in some areas, in particular, Qualified One Way Costs Shifting (QOCS). I do have some concerns around QOCS and whether the judiciary will be robust enough in their approach to QOCS to make it work in the manner it was intended to; the early signs are positive and I am optimistic about it. I do have some concerns in relation to costs budgeting, of all the reforms costs budgeting has not landed easily with the sector and given the option, most people would like to see it removed. The approach behind costs budgeting is fundamentally right and costs should be kept in check from the start of each case. Costs budgeting is an essential part of the interlocking package of reforms which must not be allowed to fall by the wayside.

will feature more prominently on the agenda in future. The discount rate is a very important issue for claimants and compensators and it is a decision that will have significant repercussions for all those involved in Personal Injury law. We will be active in respect of looking to influence the outcome and the government’s decision. We also need to carefully consider the Criminal Justice and Courts Bill which needs to be carefully considered, particularly issues around fundamental dishonesty and injustice, we will continue to lobby the government on this in the hope of achieving a positive outcome.

What have been the biggest challenges during your tenure as President of FOIL, so far? Do you have any regrets?

Improving FOIL’s communications with its members was a big issue for me at the outset of my Presidency; I wanted to put more effective ways of communicating in place in order to demonstrate the good work that has been done. The visibility of our coverage in the press has also improved and we strive to promote our members best interests. I have also laid the foundations for FOIL to start making use of social media in a way that it has not done before. I have taken up opportunities to work with government and the judiciary to have a real impact on current issues, bedding in the Jackson reforms and a review of the hourly rate and utilising existing processes, such as the multi track code as well as shaping reforms that are coming round the corner, such as the Criminal Justice and Courts Bill, the SARAH Bill and the Whiplash reforms. The aim of any incoming President must be to leave the organisation in as good-a-condition, if not better than when they took up the post and I hope that, when I come to relinquish the role, others will agree that I have achieved that.

The discount rate is a very important issue for claimants and compensators and it is a decision that will have significant repercussions for all those involved in Personal Injury law’

What is in the pipeline for FOIL, now and in the future?

The focal point is on the MoJ Whiplash reforms, we have had some initial changes in relation to fees around expert reports and we are now shaping how expert accreditation and allocation is going to work. This is a very complex issue and must be carefully thought through; it is also a process of reform that the government is pushing forward at a pace, which heightens the challenges and difficulties. Looking to the future, the discount rate has been an issue that has rattled on for a long time and the announcement by the Lord Chancellor, stating that he will appoint financial advisers to carry out some background research, seems to suggest that this

MC // November 2014

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Interview with... Ed Rochfort

Interview with... ED ROCHFORT

Charlotte Parkinson, Modern Claims, spoke to the Product Director at Carrot Insurance about how telematics has changed the insurance industry, particularly for young drivers and his predictions for innovation in a rapidly developing market. Ed Rochfort Ed spent the formative years of his career working in commercial insurance, where he developed a number of innovative products, which used risk management techniques such as driver training, forward facing accident cameras and telematics to reduce vehicle accident rates and ultimately reduce premiums for fleet customers. This worked to such an extent that fleets that had once been almost uninsurable became profitable for insurers; with the customers themselves benefiting from significantly reduced premiums. Given the escalating costs of motor insurance for young drivers, Ed saw an opportunity to use similar risk management techniques to develop a way of offering responsible young people a method of demonstrating their safe driving ability through telematics technology. In 2011, he joined Nick Corrie in forming Carrot Insurance. Ed is a complete technophile and believes the ability to analyse and interrelate large datasets is the key to achieving better results for insurers and a better deal for young drivers. He thinks young people are unfairly stereotyped in many ways and wants Carrot to be the champion of its customers.

How has innovation around telematics and black box technology changed the insurance/claims process for responsible young drivers?

The main areas would be a reduction in the number of claims, which is caused by improvement in driving behaviour. Customers have access to their own online dashboard and this offers them tips, which are particularly

focussed on making sure people are driving responsibly, which ultimately lowers the number of accidents. When an accident does occur, the telematics technology gives us an immediate notification through the impact detection process which is incredibly useful as we are able to react immediately. We also then have access to granular data about what actually happened, rather than having to rely on witness statements. Telematics can also benefit the

underwriting process as they can utilise the behaviour-based data, as opposed to traditional insurance rating factors such as postcodes.

What are the key benefits of telematics technology?

The key benefits are the ability to see how people are really driving, rather than having to guess using proxy factors as has historically

MC // November 2014

Interview with... Ed Rochfort

‘The biggest priority is engaging with our customers, we do not want an ‘only call you if I need you’, relationship with our customers’ been the case. Being able to see what someone is really doing with a car is quite illuminating and this data can then be used in a number of ways, for example, when assessing the premiums we are going to charge our customers and to provide us with evidence during the claims process. Telematics are also a great tool when it comes to renewal, because we can accurately assess which of our customers we really want to renew their policies. We also like to use telematics information from a marketing perspective to generate loyalty and generate rewards. For me, the biggest priority is engaging with our customers, we do not want an ‘only call you if I need you’, relationship with our customers. We have frequent ongoing contact with our customers and can see that they check their data constantly, allowing the customers to do this creates a different dynamic and is certainly working for our business. Utilising telematics also means there is less opportunity for fraud and people misunderstanding and misinterpreting circumstances, it gives us a much better level of clarity and the ability to act quicker when it comes to a claim and first notification of loss (FNOL). We have seen a big reduction in claims, the more engaged customers are and the more frequently they look at their driving data, the less often they have accidents. Bearing in mind the majority of our customers are young drivers, there have been studies done by TRL and the government and the sense is that experience is fundamental to driving; for young drivers, the key thing is getting them behind the wheel earlier and for more hours, as they then present less of a risk. For us, telematics is about giving the customer a tool that will help them understand their driving better and the people who check that data learn more from it and tend to perform better, reducing the risk of accidents and claims.

How does Carrot champion their customers and what sets the Carrot insurance offering apart?

Before we launched the business we conducted a number of focus groups and pitched the

MC // November 2014

idea of putting black boxes in their cars to those who attended. The overwhelming response at the time was that people did not trust insurance companies (bearing in mind this was a few years ago, at the height of the financial crisis). They assumed that, if insurers put black boxes in their cars, we would find a way of using the information against them. We therefore wanted to create a model which is centred around rewards and this lead to the Carrot Card. This is not a credit card but a payment card, which allows customers to spend money in any of our partner retailers, such as Topshop and receive cash back for spending the money with that retailer. It is all designed to give people the incentive to be better drivers and an average customer will earn about £170 a year from this rewards scheme.

‘Telematics is about giving the customer a tool that will help them understand their driving better and the people who check that data learn more from it and tend to perform better, reducing the risk of accidents and claims’

Q A

Why do you think penalising poor driving should be avoided, what is the viable alternative?

Some of the penalties that have been discussed by the government and other insurers over the last few years include curfews and a restriction on the number of people that can be taken in a vehicle by a young driver. We are not keen on any of those because we feel that they will increase the pressure on young drivers, rather than making them feel comfortable. The problem relates to better education and training, which is why we support initiatives such as the ‘Under 17 Car Club’. This club aims to get young people in cars as early as possible in controlled conditions to give them the chance to gain experience of driving from an earlier age so they

are more prepared by the time they take their tests. Telematics is useful in that process because it provides the extra comfort blanket for young drivers taking their first steps. The key focus should be around the number of hours people spend behind the wheel before they get on the road and drivers should be unconsciously competent when they begin driving on the roads.

How is Carrot supporting National Road Safety Week?

We are doing a lot in terms of communicating with our customers and followers on social media. We are providing tips for winter driving and our work with accident detection methods continues. One of the most important things we are focussing on is calling for a reduction in Insurance Premium Tax (IPT) for any young drivers who opt for a telematics based insurance product. The problem with IPT is that it adds a 6% levy to any insurance premium and young drivers will already be paying a hefty premium in comparison to the average driver; they can probably expect to pay on average £1,500 for their first year and 6% on top of that is a lot of money. That is a regressive way to tax people and we are suggesting to the government that it would make more sense to encourage young people to opt for a product that will make them a safer driver in return for a voidance of the tax.

How important are initiatives such as these within the claims sector to the interest of consumers and their safety?

They are pivotal because anything that can be done to increase road safety has to be a positive, especially as the nights start to creep in and winter takes hold. We are doing everything we can to support these types of initiative.

How have advancements in technology aided with risk management and how has being able to measure impact, live, helped Carrot?

Impact detection is something we have worked on for about 5 years and one of the fundamental things we wanted to do when we launched the business was to develop

Interview with... Ed Rochfort a piece of technology to detect an accident at the time it happens. This is an incredibly difficult thing to do because there many factors on the road that can cause impact on a vehicle, such as potholes and kerbs but the science is fishing out the real accidents amongst the noise of the other forces that can be applied to a vehicle. We have achieved this with our current software and when we are notified of an impact detection, we make an outbound FNOL phone call and are able to speak to our customers immediately after the accident, on a 24 hour basis. This has enabled us to help our customers enormously, whether that is through sending out the emergency services or parents out to young drivers who have had accidents in rural areas. The key differentiator, which technology facilitates, is being able to make an outbound FNOL call, as opposed to having to rely on the customer to make an inbound call. This has a huge impact on claims handling generally because the sooner we are aware, the sooner we can intervene and take control.

What are your predictions for the future of telematics technology and what other factors will change the face of the claims industry as we know it?

In terms of telematics, over the next 5 years there will be a step change as the adoption of data based insurance policies increases. I do not think this will be driven by black boxes because they are restricted to markets like young drivers and are expensive in the context of insurance premiums. In the next few years, there will be a lot of development of Smartphone Apps, which will try to do the job of the telematics box. The challenge here is that it is very difficult to do anything with claims data on a Smartphone, although quite a lot can be done around driver behaviour, it is difficult to monitor impact detection with Smartphone’s as they currently stand.

Finally, what is your take on autonomous vehicles?

From a geeky, human perspective, I am really excited and I want one! From an insurance business perspective, they could be seen as a threat as there could be confusion around whether claims would be made on an individual liability basis or whether we would have to sue Apple and Google, should anything go wrong. This is a long way off but I do think we will start to see autonomous vehicles on our roads within the next 5 years and it will be interesting to see how this plays out for the insurance industry.

Keeping Your Customers Safe Carrot Insurance has identified a 6.2% increase in accident frequency since the start of October, which can be primarily attributed to the onset of more hazardous driving conditions as the daylight hours shorten and the weather conditions turn more wintry. To help young drivers stay safe as the roads become more challenging, Carrot has prepared the following winter driving tips: • Maintenance is key: during the winter months, drivers should use their car instruction handbook. The handbook’s instructions enable the driver to perform standard vehicle checks, such as examining the oil and coolant levels. Simple maintenance can be key to preventing a breakdown or accident • Light up: encourage young drivers to check that all exterior and dashboard lights are working correctly and that headlights are pointing in the right direction • Watch your beam: advise customers not to dazzle other drivers with a high beam. Drivers should be aware of those directly in front of their car and those driving in the opposite direction, and lower the beam when necessary • Decrease speed: wet and icy conditions will increase the time it takes for a driver to break. Educate drivers of stopping distances in case they should have to break in an emergency and advise them to travel at a reduced speed if necessary • Checking tyres: inexperienced drivers may not be aware that they need to check the conditions of their tyres in advance of any long journey. The legal tread depth for cars is 1.6mm and they should also be inflated correctly • Keep a clear view: to ensure good visibility, window screens should be clear and make sure that all wiper blades are in top condition, with no splitting. Washer fluid levels should also be checked and the washer jets adjusted correctly • Don’t drink and drive: in the run-up to Christmas, there may be temptations to drink and drive. Always communicate that people should organise alternative travel or don’t drink at all • Traffic congestion: with people visiting family and friends over the festive period, the roads are likely to be more congested, so advise drivers to practice good lane discipline • Take a break: Tiredness is a killer. If drivers are feeling fatigued, they should stop somewhere safe, get a coffee or have a sleep - this is the best way to counteract tiredness. To find out more, visit www.carrotinsurance.com or follow Carrot on Facebook https://www.facebook.com/ carrotinsurance.

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The Opinions

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THE OPINIONS

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Sector Soapbox

Sector Soapbox On the horizon...

he ancient Greek philosopher Heraclitus is credited with saying, “The only thing that is constant is change”. No, I had never heard of him either, but thanks to this age of instantly available wisdom, I thought this was an apt place to start when discussing the latest changes to personal injury at the beginning of October. Change in the sector has indeed become seemingly constant and as practitioners, we must all wonder when it will end. In the longer term, Heraclitus is undoubtedly correct, but in the short to medium term, claimant solicitors must be hoping for a respite sometime soon. We have known for several months that an accreditation system for medical experts in whiplash claims was in the pipeline, and the first stage in the process has been implemented with the new Civil Procedure Rules (CPR) that came into force on 1st October. The significant changes are the introduction of a mandatory fixed fee for the first medical report in soft-tissue injury RTA claims; provision for the defendant’s version of events to be given to the medical expert in cases where the defendant’s version differs from the claimant’s; and a rule rendering the report

fee irrecoverable, where the medical expert providing the report or any individual or business associated with that expert has provided treatment to the claimant. In Modern Claims Issue 9, I expressed MASS’s continuing concerns about the approach to pre-medical offers and the “random allocation” process for medical experts and reporting. The revised RTA Protocol (paragraph 7.44) states “any offer to settle made at any stage will automatically include, and cannot exclude” full portal costs and the fixed fee for a medical report. There is a new rule providing that adverse cost consequences in relation to a pre-med offer will arise only after a fixed cost report has been served. More changes are on the horizon for January. Perhaps Heraclitus was right after all. Craig Budsworth, Chairman, Motor Accident Solicitors Society (MASS).

Growing your own...

ack in 1968, a young Alan Titchmarsh was setting out upon his career in gardening. He began working life not as a TV host, but as an apprentice gardener for Ilkley Council. Fast forward 46 years, and the green-fingered Yorkshireman is still tending to his flower beds, being paid considerably more one would imagine.

There are countless other examples of achievers who started their working life as apprentices, however getting over the stigma of an apprenticeship – which many still have the misconception to be only for blue-collar labours – has been an obstacle that the insurance industry has been trying to hurdle. In 2013, the insurance industry signed an agreement with HM Treasury, called the Insurance Growth Action Plan; a blueprint for growing the insurance industry. In the document, there is a pledge by the industry to double the number of technical apprentices by 2018. To help achieve this, BIBA, together with the CII, ABI and Aon, have developed an apprentice standard, which has now been signed off by Government. This is a high-level operational

profile covering the knowledge, skills and behaviours required from an apprentice undertaking a role as an insurance practitioner – including those dealing with claims. It is designed to be transferable from role-to-role to enable a candidate to take their skills and experience and apply them to other positions. A number of firms have already signed up to be the first to implement this for their new intake. The students that firms are looking for are the highachieving A-Level students who could go to university, but are choosing a viable alternative start to their career. Succession has always been an issue for the industry however, the development of this standard creates an opportunity for insurance firms to take advantage of a joined-up approach – bolstering the industry’s desire to be a profession of choice, rather than one that people ‘fall’ in to. This standard will provide fertile ground for firms to grow their own talent, and growing your own is certainly something that Mr Titchmarsh would endorse. Andy Thornley, Public Affairs Manager, the British Insurance Brokers’ Association (BIBA).

MC // November 2014

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The Opinions

Surprising results?

The road to profitability...

The recently published final report from the Competition and Markets Authority (CMA) has called for an end to exclusive deals on comparison websites. Does the report go far enough and what impact will its findings have on the sector?

How can the cost of managing and handling claims be reduced for the end consumer?

fter spending millions of pounds of public money, the CMA produced a report that, to many, looked like a complete waste of time; ‘Damp Squib’ being one of the politest and most regularly used descriptions. Whilst thinking that correcting the inequities of Credit Hire Fees wasn’t worth the effort (what’s £75m+ per annum after all!), on a more proactive note it did see ‘Most Favoured Nation’ (MFN) Clauses as being anti-consumer and therefore outlawed these from Cost Comparison sites (Aggregators). Showing further that maybe the CMA didn’t ‘get it’ however, was the suggestion that aggregators are demanding that insurers offer them the best price regardless and that this has stopped insurers offering cheaper prices direct. The real impact however, could be much wider than that.

arely have insurers been under so much pressure to ensure maximum process efficiencies to achieve profitability and remain competitive.The backcloth is higher than ever in terms of demand for competitive premiums; renewed regulatory pressure and spiralling claims costs. The motor industry last made an underwriting profit back in 1993 and actually incurred a £53m loss in 2013. Claims typically account for up to 80% of an insurer’s costs, making the way the claims process is managed key to a company’s profitability. Even more so during times of economic uncertainty, with growing pressure to settle claims faster with transparent fairness – but with limited resources. Unfortunately, the claims process is typically time-consuming and labour-intensive, often involving multiple systems and outdated technology. This results in inconsistent processes and inefficient data management, which drains resources and slows turnaround times.

Whilst aggregators talk a good game on fraud detection and data enrichment, my own belief is there has not been sufficient motive for them to really do something to help. A £75 fee for a fraudulent policyholder is as good as a £75 fee for an honest one, after all. Now however, insurers will be able to vary prices to aggregators, as they do to other intermediaries, based on the performance of that book of business. That means if aggregators invest in fraud detection, data enrichment or other advances, they should be able to offer a better proposition to insurers who will then be able to reflect that in their pricing. Further (and I admit maybe this is stretching things a little), whilst currently everyone in the chain is paying fees for data enrichment and external data feeds, maybe if the aggregators could do this once for all parties involved, it would reduce the costs of unnecessary duplication and again there could be premium savings which could be passed on to the end customer.

There are many factors behind high claims costs especially within motor; personal injury has been well documented. Some commentators suggest that since the LASPO reforms kicked in premiums have come down. Fraud is a major factor in high claims costs throughout the industry, accounting for costs of around £2.1bn pa, which equates to an average £50 on every policy.

So in my opinion there is a small opportunity in an otherwise very disappointing report. If all concerned respond appropriately, we could see some real benefit to the end consumer. It’s just a shame that the CMA didn’t realise and push this aspect more, but then again based on their comments and lack of activity on the other aspects investigated, maybe I shouldn’t be surprised at this at all!

Choosing the right strategic partner is critical - one able to navigate concerns around quality, reliability, contingency, regulation and governance. Insurers must improve the operational efficiency of their claims organisations and create operating models capable of minimising claims costs as well as eliminating unnecessary expenses associated with claims handling, if they want to be successful. Those insurers who can offshore basic non-voice claims processes efficiently with the right partner will be at the forefront of industry leadership and innovation and, perhaps, back on the road to profitability.

David Williams, Managing Director, Underwriting, AXA.

A review of car insurance premiums as a percentage of total claims costs revealed 29% of costs were attributed to repair and hire costs; 26% to staffing and overhead costs; and 20% to whiplash pre LASPO. Some costs issues such as fraud, supply chain costs and injury awards require sector-wide solutions and action. However, one area over which insurers have direct control is staffing and overheads, in particular where an offshore/outsourcing strategy could substantially benefit and, in some instances, could return a 20%-40% cut in total claims costs.

Michael George Davidson, Head of Business Development, Consumer Law, Parabis – winners of the FT Innovative Lawyers 2014 Legal Industry Pioneer Award.

MC // November 2014

The Opinions

Language Services for the Survival of the fittest Insurance Industry In the changing landscape, what are the most effective

ll businesses require the ability to market, to inform or simply to interact with their customers in their own language. The results of the 2011 National Census identified that 49 main languages are spoken throughout the UK and in London alone 100 different languages are spoken in almost every London borough. As the results of the census indicate, even for businesses not operating globally, companies are increasingly seeking out professional translation and/or interpreting services to ensure this is done well and to help navigate cultural and linguistic pitfalls. However, proven linguistic proficiency only goes so far. We recognise that many industries, especially the insurance industry, have their own lexicon comprising specific terminology and acknowledged used wordings. This also needs to be mastered and RWS Translations understands the importance of providing fit-for-purpose translations. Whether you wish to represent your company, protect and promote your company’s name, increase revenue or open up market opportunities in new territories, we can help. We understand, however, that translation can be an unfamiliar area for many. Our dedicated team of Project Managers know that every client’s needs differ and work to understand the ultimate purpose of each translation. They offer advice on best practice and solutions suitable for you. They ensure the translation follows the necessary quality procedures, co-ordinate every aspect of the project and keep you informed along the way. Our translators are tried and tested and work in over 200 language combinations. After passing stringent recruitment testing, their work is regularly assessed and graded as part of our continued commitment to quality assurance. At RWS, we place equal importance on the ability to write well with an excellent command of the language, and our capacity to harness our proven experience and knowledge of your industry. In that regard, amongst our panel of insurance specialist translators are former brokers, risk management consultants, portfolio managers and underwriters. To complement our written translation services, RWS caters for all aspects of language support. In particular, we have a specialist interpreting division which provides conference interpreting, one-to-one interpreting for meetings and instant telephone interpreting, as well as full typesetting and quality control of brochures and marketing collateral. Suzy Stevenson is Operations Manager within the Commercial Translation Division of RWS Translations. She has over 10 years experience in the translation industry.

ways for claims professionals to find and keep clients?

he term ‘claims professionals’ can be interpreted to include wide range of parties involved in the claims process such as brokers who may receive initial notification of a loss, insurers, claims handlers, and solicitors who handle litigated claims.

Whilst each of these categories may have some unique elements required to identify new clients and retain current ones there are three basic principles that apply universally. Service is the most vital element to retaining clients; this includes ensuring the client is happy with the service provided but also providing additional benefits that a client may not receive if they switch providers. Just as many of us do in our personal lives, clients are less likely to switch if they feel this would cause them to lose something they particularly like about their current provider. Value is also vital. This goes beyond simply cutting costs to the lowest level possible. Some clients may decide solely on the cost of a transaction but the majority include other factors. Similar to service, if a provider can offer something unique either in the package of services included for the fee or in their approach, this may be more effective at retaining and attracting new business rather than slashing fees. A significant drawback of the latter option is the devaluation of the work and the impact this may have on service levels. Reputation is crucial in attracting new business and is heavily influenced by the above two points. In certain sectors of the market there are limited numbers of clients and providers, this means bad reputations spread rapidly, often causing long term damage. However, providing good levels of service and value should ensure a good reputation. I have focussed on these three areas as most organisations I speak to changed their provider on the basis that they were not receiving the benefit of one or all of them, indicating that mistakes in these core areas remain common. Providers also need to ensure however, that they are up to speed in other areas such as communication, the use of new technology, and relationship management. Only the fittest providers will survive in an industry that impacts so significantly on its clients’ balance sheet and reputation. Alistair Schuberth, Associate Director, Claims Defensibility, Risk Management, Willis Group.

MC // November 2014

The Opinions

Getting the job done

Solid foundations...

Are interim managers a viable option for small and medium sized insurance companies, or should they look in-house before looking to take on external management/ consultants?

Is the claims sector tech-savvy enough to operate, perform and deliver clients demands?

o assess whether interim managers are a viable option for a small and medium sized insurance companies will depend on the task in hand. If there is the right skill set in-house and people have capacity, it is sensible to consider that option. Interim management can offer an immediate, effective solution for one off projects, strategy development, and crisis management, invigorating a business or dealing with an unexpected problem. An insurance company will benefit from skills and expertise at short notice, as certain projects will require specific skills that are not available in-house. The interim manager will be able to discuss, plan, advise and implement within a specific time frame, as they are used to working under pressure and taking responsibility to deliver and to see the project through to a conclusion. This external resource will provide an insurance company with a fresh pair of eyes and complete focus on the task in hand, without distractions an employee may experience. They are also removed from in-house politics. A high-level introduction into the company will need to be provided, but they do not need time to settle in, as they will hit the ground running. The interim manager will need to perform a diagnostic test of the project and engage with various stakeholder groups to understand the current situation. It is possible that the desired solution is very different to the proposed solution. This may give rise to challenge, but ultimately the interim manager will propose the most effective solution. An interim manager will or should charge a premium for their skill set and ability to get the job done very efficiently, meaning their daily rate will be more expensive than an employee’s daily rate and this needs to be considered when budgeting and planning. It is critical for an insurance company to invest time to research the right person for the project. You need to be confident that this person will bring that value and expertise you seek and they must have a proven track record of skill in their chosen sector. Interim managers are a viable option for an insurance company, as they can be helicoptered in quickly; engage with the various stakeholders, deliver and leave. Nicola Klimkowski, Head of Business Control and Development, LAMP Services Limited.

raditionally, the claims sector has been one of the quickest of the legal services industries to adopt change. Some of this change is forced (by a myriad of legislative amendments and pressures for example!) and some occurs by market forces.

Largely, the claims sector deals in high volume, fast turnaround processes - with not only the client as the final ‘contact’, but also a range of other stakeholders. Through the life of a claim, multiple bodies can be involved and will all require fast and reliable access to information - medical agencies, insurers, law firms, car hire organisations… the operational web can become reasonably convoluted. And it’s here that technology really plays a role - where the most tech savvy operators can bring value and deliver what clients are really hoping to receive. How can all of this data, this information, be both managed appropriately across multiple sources, and delivered in a timely and understandable fashion to the end-client? The firms who will lead the charge (and indeed have led the charge) are those that create a solid IT foundation that caters for back-end processing, front-end client service, and inter-agency communications. This is a potent mix if done right, and the best-placed organisations currently are increasingly getting a handle on this range of needs. The three tech cornerstones are all as important as each other, and getting the balance is vital: • Back-office processing: ensuring that data is captured, pushed through the ‘chain’, and is done so in a way which strips out administrative overheads and the risk of human error • Inter-agency communications: enabling relevant (and that’s important) data to be shared, in both directions, with all affected parties - empowering them to make the right decisions and action ‘next steps’ in a timely fashion • Client management: the overall ‘experience’ for the end client - is the process transparent for them? Are they kept informed regarding process? Is it easy for them to get in touch and make a connection with relevant people at relevant times? Your technology and your case management systems should be able to handle these requirements with ease. Can yours? Darren Gower, Marketing Director, Eclipse Legal Systems, part of Capita plc.

MC // November 2014

carpenters

The Opinions

From survival to success

The turning tide...

How can law firms ensure they drive their business plans forward in an increasingly competitive market and should firms be considering alternative business streams, if so, what?

Is the claims sector tech-savvy enough to operate, perform and deliver clients demands?

f there is one thing the personal injury claims market is not good at, it’s standing still. That can be either an advantage or a disadvantage (or sometimes even both) depending on where you and your business are at any given time. 2014 has been no exception to this and I am sure that 2015 will not buck the trend as we continue in the changing landscape of an industry, which is still adjusting to life post-LASPO south of the border. The industry is still awaiting further investigation reports from the various bodies set in to try and sort out the murky world of motor insurance. Added to that we continue to see many firms merging, expanding and in some cases collapsing as a barometer to indicate who is faring best in riding the uncertain tides. The market remains highly competitive and with the decreasing number of road and workplace accidents (which my moral conscious tells my business head is a good thing), the need to be leaner and fight keener has probably never been so great. Legal skills and expertise are no longer enough to survive – they are now just the pre-requisite. Law firms therefore need to continue to streamline their processes and ensure that they have the appropriate level of seniority dealing with cases. Fee earners must be fee hungry and able to balance efficiency with costmaximisation in order to keep their files turning over on a regular basis. The improvements we make in our firm’s processes can not only get us from survival to success in what we presently do but can also open the door to other case managementsled legal services such as debt recovery, which in turn can offer additional and welcome income streams. There is no doubt that the past few years have presented firms with significant challenges and there is unlikely to be no end to this trend. The response we give to these challenges and our willingness to both embrace and anticipate change will be a major factor in determining the success or failure of law firms everywhere. Scott Whyte, Managing Director, Watermans.

s I am not “tech-savvy” myself, I enlisted the aid of someone who is. One of our companies, 3Sixty Systems, is a bespoke supplier of IT software and systems for the insurance sector so I asked Dean Watmough, the marketing manager at 3Sixty for his take on this question. His starting point is that the insurance sector is beleaguered by legacy software systems that inhibit progress and stifle productivity. However, it appears the tide is turning and investment in IT is high up on the agendas of many of the larger players who are already in the process of implementing new policy administration and claims systems. A bigger question mark hangs over the efforts of many smaller insurers, MGAs, brokers and self-insured organisations. Are they geared up to manage claims effectively and deliver the levels of service that are demanded of them? Unfortunately, claims management is still heavily reliant (to an alarming degree) upon time consuming, paperbased manual administration and repetitive data input. The fact is that many organisations simply don’t have the systems in place to record and manage claims efficiently and there is still a lot of double-keying going on out there. All commentators agree that access to information is critical to making better decisions. Accordingly, the inability to produce meaningful and real time management information comprises a genuine business risk, with reports often taking several days to compile manually. According to Dean: “What we are striving to do is to take the drudgery out of the claims process so that claims personnel focus on more productive tasks, delivering added value to the business. Automating and streamlining processes increases staff performance, staff morale and job satisfaction. It empowers the claims team to deliver higher levels of customer service” We strongly believe that having a claims system that automates processes, introduces workflows, flags overdue tasks, records all claims and policy related information and delivers instant claims reports, has an immediate impact on team and business performance and plays an important part in preventing financial leakage. It also demonstrates to regulators that claims are managed in a proper and efficient way. We find that claims managers are perfectly capable of operating such a system. What has held back development has been conservatism in management spheres, together with a reluctance to invest in the systems to replace those beloved old spreadsheets. The message from 3Sixty is that you don’t have to break the bank to implement claims technology and with the claims function now being recognised as a priority for the insurance industry in terms of cost, customer retention, and regulatory compliance, automation is not a choice, it’s a necessity. David Simon, Chairman, Triton Global Limited.

MC // November 2014

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Nominations Close: Friday 12th December

The Opinions

Times are changing...

Great expectations...

Looking forward to 2015, where should claims professionals be placing the biggest investment?

Is the claims sector tech-savvy enough to operate, perform and deliver clients demands?

n this forward thinking, innovative industry, we have to place a particular emphasis on technology and embracing new technology in the future, to allow businesses to obtain the upper hand over their competitors. Integration of case management software and paperless working are factors which will undoubtedly speed up efficiency and reduce cost. I have always paid particular interest in the people who work for me, as they are an investment and the life blood of an organisation. Finding, training and keeping good staff, will allow businesses to grow. I have always placed emphasis on growing our own and taking the time to mentor and coach the people we have. When staff buy in to an organisation, they feel part of the process, meaning they will take a much greater interest in helping the business go from strength to strength. Here at Ultimate Costs, we recently rolled out an e-learning platform to allow staff to engage with online training modules to enhance their skills and knowledge, which is something I would recommend to other practitioners. Our e- learning modules were created by our existing staff and feedback was excellent as it not only included work relating solely to the services we provide but also modules on customer service, which I believe is key. I would also advise on integrating investment in technology and people and offering remote working. Such are our systems that we allow remote access working for staff, which enables us to cast our net wider for the hand-picked staff we employ, whilst also meaning they have direct access to cases if at a JSM or Court. Cash flow will always be vital to any firm however; I’m a strong believer that if you invest in your staff and the inhouse technology, then the quality and quantity of work will flow, thus ensuring your business thrives in the potentially challenging times ahead. Whilst the times are changing, they are also exciting times for those companies willing to invest in the right areas. Andrew Chadwick, Costs Manager, Ultimate Costs.

hange is a term that is often affixed to the claims industry, and never more so than in recent years. With technology advancing at an astronomical rate, the need to meet evolving customer requirements is very much at the forefront. From the need to increase efficiency by decreasing manual steps in a claims process, to staying on top of fraud; all eyes are on high quality software and systems. Motor industry advancements for example, in particular telematics systems, are evidence of this. Vehicles that are fitted with devices such as the ‘little black box’, feed information to insurers about how, when, and where a car is driven, including details about the driver’s speed and braking habits. At a time where false personal injury claims are costing the industry billions, this product is paving the way for lower premiums, decreased costs and higher levels of accuracy. As well as helping to quickly determine liability, telematics are proving that increased customer expectation and can be equalled with new levels of customer service. For instance, from tracking a stolen car with GPS, to aiding the FNOL process, the claims sector are utilising the latest technology to improve service delivery and settle claims faster. This has a drastic effect on the laborious nature of the claims process, aiding upgraded claims management systems that assist back offices with speedy data collection. This is emphasised with quality case management systems that enable an insurer to better manage the handling of claims, and the service provided to customers. Whilst controlling costs and ultimately maintaining premium levels, insurers who run the most sophisticated case management systems help to provide overall better service and enable forecasting and trend analysis. These impacts can both be direct and indirect. From advancements in voice and number plate recognition; helping to reduce motor crime and tax evasion, to communication innovations like web portals and SMS based contact, we see a healthy move forward in delivering a more efficient and beneficial customer experience within the claims sector. However, there is still a long way to go and if insurers want to consistently perform, they will have to innovate and pour even more money into development to keep up with customer expectations. Dez Derry, CEO, mmadigital, online marketing for modern law firms.

MC // November 2014

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The Opinions

Sunshine through the gloom

have managed a regulated claims management company for 6 years. We have always provided a full service solution to consumers, whether that’s repair-only using our own funded scheme, replacement vehicle or personal injury advice in conjunction with our vetted firm of lawyers.

We recognise that we are representing the individual or business that has recommended us and we take that responsibility seriously. Amber Claims Management has always had a service-lead ethos. We even added our own medical agency in 2011 to compound the continuity of our service and improve the consumer journey. So, in the not too distant past, everything was going well for us and our clients. The process of easing them back towards normality following an incident was very familiar to us. Then LASPO appeared and became common practice. This was followed by a review of the dysfunctional British motor insurance market, which unfortunately affected the other areas of our business - credit hire, repairs, and the work carried out by our medical agency. It was a near perfect storm for most businesses associated with claimant work. A hint of sunshine came through the gloom when the hard work carried out by the Credit Hire Organisation was recognised with agreement by the CMA that the existence of credit hire represented only nominal impact on policy cost; so in the round it remains. So is the tide turning? After all, the claimant industry has had such a poor run of form. Probably not! The focus of defendant insurers will no doubt look again at the small claims limit. Currently £1,000, it has remained unchanged for circa 15 years. The rate of inflation, if that were the only factor to consider, would support an increase, however caution towards change should be heeded. Suggestion that it should remain unchanged was confirmed in previous Government consultations. This will doubtless be ignored and despite the genuine and real risk of access to justice to the consumer, there will be a challenge on the limit. So a message now; look at your processes and be harsh about where efficiencies can be made. Talk to peers and discuss what changes are yet to come, finally, consider options for diversification. There are almost certainly difficult times ahead, so when is the best time to prepare? Now? When you have some time to implement improvements, or when it’s upon you? Plan for the worst and hope for the best is the old adage, the claimant industry should take particular heed.

Ready to respond What lessons have been learnt from the 2013/2014 floods?

ast winter was the wettest on record but one of the biggest lessons the whole of the industry can learn is that weather events such as the St. Jude storm and the floods in the South West, should not be treated as extraordinary. Sadly, they are becoming more frequent and we need to have the skills and resources at the ready no matter the scale of the event - being there for our customers on the ground as well as at the end of the phone. But equally, we need to ensure we are constantly learning and finding ways to improve. At Ageas, our whole approach is focused on doing things right the first time, treating our customers as individuals and finding solutions for each of their particular needs and situations. When the UK was battered in October, we had already taken lessons learnt from the 2012 storms and had put in place an end to end claims handling process, entirely in-house, which meant that all employees could deal with any claim from First Notification of Loss (FNOL) to settlement. Following a pilot phase, the new process was rolled out in September 2013, giving us the enhanced ability and agility to respond to the surge events experienced at the end of 2013 and beginning of 2014. With a shorter and more simplified claims process, the lifecycle of storm claims reduced from 67.7 days in 2012 to 36.3 days in 2013 and storm claims settled on the first call rose to 11.2% in 2013, from 8.5% in 2012. Key to this initiative is empathy and understanding of each customer’s predicament - putting ourselves in their shoes. This was the prime objective of a training session for our claims handlers at the National Flood School this September. They saw the devastating impact of flooding and the processes and methods used to dry out homes. This training underlined the importance of asking customers the right questions at FNOL stage in order to help the contractors to take the relevant equipment, preventing any delays to the claims process. With a strong, scaleable team of knowledgeable, empathetic and pro-active claims handlers on the frontline, empowered to make decisions, and backed by a team of experts on the ground, we feel confident that whatever this winter brings, we’ll be ready to respond. Rob Smale, Claims Director, Ageas.

Ian Ambrose, Director, Amber Claims Management.

MC // November 2014

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The Opinions

Just around the corner? Is the Claims Sector tech-savvy enough to operate, perform and deliver clients demands?

or many, embracing technology stops at a good case management system, which includes, developed workflows and a capability to automatically transfer data to and from the Claims Portal. Providing the system ticks all the boxes, case management has generally been regarded as “fit for purpose” i.e. transacts the matter in hand to a reasonable level of client satisfaction. In the new post LASPO world, I would question whether the legal claims industry has recognised and embraced the changing needs of the client and whether a reasonable level of satisfaction is in fact enough to keep pace with consumer need. Am I the only one thinking todays consumers are looking for something more? In a competitive environment, it is not just about knowing the case but knowing the client. Do we know how clients want to be communicated with? One dimensional communication, letter, E-mail and even text is not the interactive experience our clients enjoy in other industries. In a world, were clients are taking back control in terms of speed, communication and claims direction, how many industry players offer a truly interactive experience? Are we also missing a trick if we believe all that matters is the transaction in hand? Have we embraced the difference between knowing the case (it is not called case management for nothing) and knowing the client? In a world where we are sold complimentary products to meet our needs in all walks of life, it amazes me how few are able to meet the legal needs and demands of those we service. If we are tech savvy then the days of stand alone case management are probably over and above platforms that enable us to manage the relationship with the client in a flexible and need specific way. Our client’s are no longer impassive but demanding consumers of legal services. If we are unable to meet those demands maybe “Legal self service” is not as far away as we like to think! Janet Tilley, National Managing Partner, Colemans-ctts Solicitors.

CMA Investigation – what next?

o after 3 years (including the year the OFT spent investigating) and estimates of around £2m of tax payers’ money being spent, the CMA has finally published its report into the private motor insurance market. No plans for radical change and a fair degree of unhappiness from the insurance industry that the ‘problem’ of credit hire isn’t going to be fixed. That was perhaps always wishful thinking - the adverse economic consequence was only £3 per policy (although the credit hire industry argues it is actually lower) and to make any change would have required fundamental changes to the tort laws. In addition, as much as they don’t like to admit it, most insurers benefit from credit hire referral fees and some insurers also run their own differential no-fault / fault repair pricing models. There is talk of an appeal by the Lloyds market. However, after 3 years and tens of millions of pounds likely to have been spent on legal and other professional fees, the sensible approach would arguably be to look forward and try and improve current processes. So how can this be achieved? A portal for credit hire claims, which mirrors what has happened in the PI market, leads the way. Much work has already been done on planning this and indeed roughly 40% of claims are already processed by one of the existing third party portal systems. A beefed up and more robustly enforced and adhered to GTA makes sense, as do bilaterals and protocols, which sit alongside this. Much of this is evolution, (not revolution) can deliver real benefits and cost savings to insurers, credit hire companies and the consumer. All of this will take some management and a forward looking approach. However, this is something insurers should look to implement and move forward, possibly in conjunction with outsource partners who can deliver a flexible and MI rich solution. These companies are also well placed to provide a turn-key and cost effective solution for claims that will fall out of any portal or new process. The Government and regulator and not going to provide the ‘fix’ so the industry as a whole needs to do so, which we should do in a positive and proactive way! Derek Cooper, Managing Director, Veracity Claims Solutions.

MC // November 2014

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The Opinions

Identifying and meeting demand...

here is clear evidence that the claims sector is embracing technological innovation. Some of the change has been, in part, enforced upon the sector, while many organisations have welcomed new technology, including web-based software. The key driver in this change has been the client with an increasing insatiable thirst for finger tip accessible knowledge regarding their claim, together with the need for firms to drive profitability and cash flow post LASPO. In the round, you could look at the sector and say that it is more than capable enough of identifying and meeting the demands of technological innovation. That said, it is evident to us that there is a growing divide between the ‘haves and the have-not’s’ in terms of technological capability. Some firms are pushing the boundaries, with Apps, Case Management Systems, client self-service modules and significantly developed workflows via systems such as Proclaim. Others are barely keeping up with the pace of change, worried about the capital cost of hardware, software and I.T. related staff hitting their bottom line. Those who have succeeded in addressing the techdemands of their clients, are those who have applied the core-concepts of strategic planning to their process of assessing their clients demands and whether they could be adequately met with more (or less) technology, namely; 1. Strategic Analysis of the clients demands; Looking at what you do, don’t do and want to do as a business, achieved by Internal and External Analysis; 2. Strategic Choices for the Firm to address those demands; Looking at the analysis findings, achieved by strategic mapping of those findings, analysis of the marketing mix, and engaging people with the right knowledge; 3. Strategic Implementation; Looking at implementing the choices that have been made, achieved by good project planning and timetabling and using the right people.

Creative vision... How can law firms ensure they drive their business plans forward in an increasingly competitive market and should firms be considering alternative business streams, if so, what?

e lawyers are great at complaining, “It’s the end of justice as we know it!”, “We may as well close shop!” Yet we never do, we are intelligent survivors who can adapt and overcome. If there is one word I would use to describe a way to survive and succeed it is “creativity.” It is no longer sufficient to merely be a good lawyer, a creative vision is required. The questions you need to be asking are: What is your business plan? What do you want to achieve? Have you set targets and do you monitor your goals? How will you communicate your message to your clients and match their yet unmet needs? Where is your market and who are you trying to reach? Legal services are, after all, usually a distressed purchase. We have to reinstate our brand and message so that when that time of need arises the client will turn to us first. Communication needs to be fast and effective, soothing the client whilst identifying the most important immediate concern. Like it or not the world is consumed by marketing messages, whether it’s a commodity or service. We have to communicate to our clients in a way that the new generation understand. They are consumer savvy and expect immediate responses. We need to take a look at every aspect of our business. For example, which nonlegal services do you currently outsource that you could potentially build in to a company yourself? Law firms need to be able to constantly move and reshape like liquid mercury. We need to be able to react to internal and external forces, and make quick decisions. Creativity is the key. There’s no time to look back. Hilary Meredith, Owner, Hilary Meredith Solicitors.

Each Firm must assess its own requirement for technological advancement by reference to its own clients’ demands and operational and financial needs of the business. It is knowing how to use technology to improve client experience, client service, and delivery of good quality legal service. Using this strategic approach, on the whole the sector is more than savvy enough when the right people are engaged, to assist all sizes of firm to meet demands. Zoe Holland, Managing Director, Zebra Legal Consulting.

MC // November 2014

The Opinions

A growing trend...

ver the last few months, there have been a growing number of news reports about fraudsters who have conned clients out of thousands of pounds, by pretending to be qualified Solicitors and Barristers. In one reported incident, a Hertfordshire man was conned out of £735,000 purchasing what he thought was going to be his dream home. The gentleman and his family moved into their new home, only to find out that the money was sent through to a bank account owned by the fraudsters when the completion took place. The BBC’s One Show has also reported on other incidents, where fraudsters had posed as Solicitors and there are similar reports now appearing in many national newspapers. The BBC’s One Show and expert lawyers in property fraud have provided some advice to those looking to engage in Legal Services, which makes complete common sense and shows how the growing trend of those searching for professional services, such as Legal Services are starting to make their choices in a much more informed, researched way. Here are just two of the suggestions: • Choose a solicitor recommended by a friend, family or work colleague. • Don’t search the internet for the cheapest legal fees. Buying a home is a big transaction, so it’s worth spending a little extra to get peace of mind. Over the coming years, it will become common practice for prospective clients to be looking for third party, completely independent reviews. As it is so easy for anyone to build a website and place on the site anything they wish, it will not be enough to reassure a prospective client. Checkaprofessional.com has witnessed this growing change in clients searching their growing website, but has knowledge of people searching on their better known sister site Checkatrade.com. It is very much a growing trend and we are more than aware of the need for this service, which will start people asking why a particular service provider is not on the website. Lisa Beale is Head of Checkaprofessional.com.

Regulation outside England & Wales (E&W) – a timely update

t is over a year since I last gave an overview of the regulatory framework from the view point of Ireland and with the recent Scottish referendum now is a good time to review matters.

The Legal Services Regulation Bill in the Republic of Ireland (ROI) that is currently at the report stage within the legislative process contains the prospect of ABSs being introduced to Ireland. This is causing widespread debate and perhaps, as one might imagine, some concern within the legal profession. Back in February of this year, the President of the Law Society of Ireland, John Shaw, viewed the prospect with trepidation saying ‘inter alia’ the independence of the legal profession is threatened and “he who pays the piper calls the tune”, with untold conflicts awaiting the new Legal Services Regulatory Authority. In Scotland, the Government has recently passed the Court Reform (Scotland) Bill. This increases the threshold for cases being heard in the Sheriff Court from £5,000 to £100,000. Our Scottish practitioners will already be aware of the proposals put forward in the Sheriff Principals Taylor Report designed to change the system of expenses and funding of civil litigation. The findings seem to reinforce the subtle but important differences that exist in Scotland. For example, referral fees should not be banned but only regulated bodies should be entitled to charge a referral fee. In all civil litigation, parties should be under an obligation to disclose to the Court and intimate to all parties the means by which the litigation is being funded at the stage proceedings are raised. The only significant change in NI over this period is the publication of the draft Legal Complaints and Regulation Bill (NI) 2013 that was envisaged as part of the Bain Report back in 2006. The Northern Ireland Law Society submitted their views back in January of this year. Overall, with the exception of NI, it seems that more (not less) regulatory changes are in the offing and the ‘Legal regionalisation’ of the UK and Ireland now appears to be set in stone. The changing political landscape of these Islands seems almost designed to reinforce the fissures that currently exist and if anything to create new fault lines. The one certainty to result (thankfully) is the absolute requirement for appropriate and precise regional legal advice. Gerry Lee, Senior Partner, P R Hanna Solicitors, Belfast.

MC // November 2014

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The Opinions

More Than Words – how to profit from language

f you’re reading this, you’re almost certainly a professional in the UK insurance world – the publication is after all entitled “Modern Claims”, a name that itself suggests the pace of change in the claims world merits ongoing updates.

One accelerating change is language. Over the 25 years Lifeline Language Services has been delivering interpreting and translation to the fast-moving insurance industry, the mix (and location) of languages in demand has constantly evolved ensuring that to stay ahead of the game we’re always on the lookout for more, wellqualified professionals in the next “happening” language. As the world changes and migration – forced and voluntary – accelerates, we can expect the UK’s language gap to worsen, impacting many public-facing industries and services. Insurance will feel the effect more than many; since cars and property are essential parts of everyday UK living we can increasingly expect these new arrivals to be driving cars and buying goods before they’ve had a chance to become fluent in English – and as we all know, where there’s cars and property, there’s insurance claims, meaning non-English claims handling will be on the rise. It’s easy to see the need to work in other languages as an expensive, time-consuming burden; however, it may well be that the insurance sector represents a significant opportunity for those willing to seize it. How can this hassle and cost be an opportunity? Simple; if you can do what others can’t or don’t, you’ll access market share that others will not. The ability to handle language seamlessly makes your claims handling more attractive and differentiates your operation from the rest, pulling-in prospects unavailable to others. You‘ll see this effect in our cities every day, with accountants, solicitors, hairdressers – and insurance brokers - specialising in “their community” to attract clientele – and it works very well. In an increasingly competitive and challenging market, the willingness and ability to embrace language diversity will really distinguish your offering in the multilingual insurance world.

The direction of travel... Looking forward to 2015, where should claims professionals be placing their biggest investment?

f 2015 shapes up to be like 2014, then the one fairly safe bet is that there will continue to be a downward trend on revenue and margins. In the last 12 months we’ve seen the legacy of LASPO begin to bite and there are challenges in the near-term with medical process. Indeed, the only positive from the claimant’s perspective seems to have been a win with the Competition and Markets Authority report. The direction of travel seems clear though – we’re going to need to get slicker still. It’s not just macroindustry pressures that will demand this but also the ever-increasing competition for work demanding new innovation and business differentiators. It all points to continued and ongoing capital expenditure into initiatives that can drive value into a business. And such initiatives need to take advantage of key influencers: 1) Technology – its vogue to think of technology as the key enabler to our sector. That’s certainly true, in part, but it’s only ever as good as the design and delivery, and that comes down to... 2) People – nothing works without the right people to design, deliver and oversee the plan. Selection is critical and not only of those who can design the “vision”, but those who will translate that and implement an executable strategy with full buy-in. And that requires… 3) A little bit of “self belief”! The sector is going through a period of change and it is only right that people should be asking some pretty serious inward looking questions. Generating a common sense of purpose and direction requires serious investment in terms of time, both thinking it through in the first place and then getting collective buy-in. However, it’s probably the most important first step. Andy Whatmough, Director, S&G Response.

To close, here’s a few numbers from the Office for National Statistics: - 22 per cent (1.7 million) of London residents used a main language other than English. - 4 per cent of households (1 million) had no residents with English as a main language. - 138,000 people could speak no English at all. That’s a lot of market opportunity. Lynn Everson, Managing Director, Lifeline Language Services.

MC // November 2014

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An elegant solut ion: Peer to Peer is fast becoming lending a viable alternativ traditional fund e to ing routes for law firms and, as Ivor Freedma n explains, it is here to stay. Nicholas Beva n talks news: Nicholas Beva explains why, n if properly unde rstood, Delaney v Secre tary of State for Transport [2014] EWHC 1785 (QB) is noth ing less than a game changer.

“The multi-dis ciplinary offering presen a huge advant ts such the client in parage to circumstance ticular s and the introductio more varied mo n of dels, offering the clie greater choice nt , can only be good” Shirley Brookes

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The Opinions

Control and confidentiality...

n my contact with solicitors, I am always hearing of delays and sometimes mistakes made by our overstretched court system. This is not a reflection of any specific court or area but is a countrywide epidemic and is a result of the time and cost pressures that have been put on the system over the last few years.

Last week, I was mediating a case and was told it would not reach court for a year due to delays in the system. This is an ideal situation for a mediator to use ‘one of their tools’; ‘you could take the £100,000 now or, if you win in court, you could receive £130,000 but it will take you a year to receive the larger amount’. This long delay is not beneficial to the parties or the reputation of the court system. In another case, a solicitor told me he had submitted the Precedent H forms on time but it had been lost by the court. This again did not reflect well on all concerned and resulted in a waste of court time. The courts appreciate the delays and cost constraints and now look to the parties to try to resolve the dispute themselves, through a form of Alternative Dispute Resolution (ADR), before arriving at court. The three most widely used ADR processes are Arbitration, Adjudication and Mediation. Each of them has their own place and merits depending on the matter and parties. Mediation is the most underused and underrated and is not only an alternative to court but often produces a better outcome for both parties. The advantages of Mediation are well known, the parties remain in control of the decision making process, it is confidential, cost effective and will end the dispute more quickly. If Mediation fails to achieve a settlement, the judicial process is still available to the parties but mediation has made them more aware of the costs and risks of this option. Statistics show that if a matter is mediated at the right time by a good mediator the matter does not need to use ‘the over-stretched and under-resourced court system’. The parties benefit from a quicker resolution with lower costs whilst maintaining control and confidentiality. Bruce Bourne, Commercial Mediator, Bruce Bourne Associates LLP.

Food for thought Looking forward to 2015, where should claims professionals place the biggest investment?

till today many businesses look at marketing as a need for when things ‘go wrong’ or when the customer barrel is running dry. As claims professionals look forward to 2015, consider this for a moment; marketing is ‘food’ for your company, it creates business, it nourishes and feeds you with work; and keeps it coming. Don’t realise this too late and start what you should have been doing a long time ago. - Always consider your target market - Your business is no doubt constantly evolving and improving, so be sure not to leave your target market behind. Keep them at the forefront of your marketing strategy, after all these are the people that can help to keep your business going. - Keep up with the times – Don’t get left behind with out of date marketing activity. As you evolve so should your marketing. - Try something new - Put the time and effort into trying new opportunities in the market place. You don’t know if something will work unless you try it. - Dare to be different – Although you may have had campaigns that have worked in the past, the reality is views and habits change. Test your marketplace; be diverse and maybe even controversial with discussions. Stand by your company ethics and personality and remember to be noticed; sometimes you need to be different. - The future of your marketing - Ongoing marketing can secure your company’s future. You may have a lot going on right now, but what about in six months? A year? Three years? Don’t leave your company’s future up to chance. - Shape and define your reputation – There are many online marketing channels available, effectively leaving businesses under threat of scrutiny. Use these channels to help you monitor and react to your clients. The opportunity is out there for you to shape and define your company’s reputation, so don’t leave it to the last minute and wait until it’s hopelessly out of sync with your competition. - Don’t expect results over night – Results from marketing can take a while to come into fruition. Ensure that you have a varied marketing strategy that involves, short, medium and long term campaigns to keep your business in the forefront of the clients mind. Charles Cox is CEO of TLMG, providing forward-thinking marketing for the professional services sector.

MC // November 2014

The Features

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THE FEATURES

The Features

WHAT EVERY BUSINESS MUST KNOW Tom Blackburn explains how the claims sector is waking up to possibilities for non-lawyer management and outlines what the sector can learn from the business world.

hen I was asked to write this article, I immediately began thinking of the corporate, visionary, buzz word filled articles that we often see (not in this esteemed publication I must add), mentioning technology and key phrases -‘togetherness’ this, ‘streamline’ that. So, I decided to be a bit more personal: an apology if this is an ‘over share’.

when Mr Ellis got on the bus and silence fell, you could feel the anger radiating from him. Suddenly he cracked a beaming smile and with his broad north Walian accent said “Boys, that was the best game of rrrugby (in Welsh you roll you ‘r’s) I’ve ever seen in my entire life. You stood up for yourselves, but more importantly, you stood up for each other. I’m proud of you”.

Let me start near the beginning. I was awful at school. Really terrible. If my mother reads this, I’m sorry and I don’t know how you managed. Not ‘naughty’ in the urban sense of the word (I grew up in a small town Montgomeryshire, Powys – there were 3 churches, a chapel, 3 pubs and 1 shop). But in the sense that in secondary school, I didn’t do any homework for a period of roughly 5 years. It was not that I was deliberately trying to be bad, just that schoolwork didn’t seem important. What was important? Team sports.

That is what being part of a team is and business management no different. At your lowest ebb, in the most difficult times, knowing that you have people you can rely on and trust completely, all working towards the same goal.

Looking back, I loved two things about team sports – winning (and often that didn’t happen), and being part of a team; winning together, losing together. The Americans use the phrase ‘team spirit’. We don’t like it, but I think it aptly sums up knowing that, if something terrible happened, there were 10 (football/cricket) or 14 (rugby union) teammates who would go through it with you and share the pain. An example - our rugby coach was Mr Ellis. He was also the Deputy Headmaster as well as the preacher at the Welsh Chapel. When we were 14 or 15 we played a rugby match against our local rivals – Llanfyllin. They were coached by their Headmaster, who happened to be Mr Ellis’s twin brother (mid Wales is a bit like that). It was a horrible match from the start. Long story short, the game was eventually abandoned in the 60th minute due to, what can only be described as, a mass brawl. We left without showering or changing and

MC // November 2014

None of this has anything to do with Law, however, that’s the point. The best thing non-lawyers bring to legal management is their diversity and nonlegal experience. Experience of different industries, of different working methods and processes. They look at certain things and say (used correctly its one of the most powerful questions you can ask) – “Why do we do it that way?” Whilst cases can be inspiring, beautifully constructed (I was lucky enough to see Lord Sumption in action in his penultimate case before being raised to the bench, it really was poetry in the form of submissions) and intellectually brilliant – legal work is a product like any other. Whether you sell shoes or you sell your intellect as a lawyer, you sell a product. There are certain things about that product that every business must know: • The cost of the product to the business; • The quality of the product; • Why the product is better/different/ inferior to other similar products in the marketplace.

The Features

‘Firms have long suffered from the affliction of assuming that their top billers are destined for a top management job’ There are lots more of those bullet points; the hardest part is acting on them, challenging the norm, changing processes. How do firms attract more clients, yet compete on price, whilst increasing profitability? It sounds impossible doesn’t it? It’s not. Let me finish by pointing out how similar I am to Jose Mourinho (a joke). He started his career as a mediocre footballer, who then gave up and began training for management, aged 24. Jose has brought to football, what non-lawyers are bringing to law firms: you don’t have to be the best lawyer to be the best managing partner, far from it. Firms have long suffered from the affliction of assuming that their top billers are destined for a top management job but who would assume just because you are talented at one thing, you would be brilliant at something totally different which requires a completely different skill set? And that’s what managing a law firm is, it’s different to the product.

understood this for years – the CEO of Cadbury’s may leave to become the head of H&M overnight, yet he or she is not expected to be an expert in either field. The legal world is now opening its eyes to these possibilities and it’s a great time to be working in such a talented sector which is waking up to new ideas. Tom Blackburn is General Manager at Compass Law.

Did Alan Sugar programme Amstrad computers, or Richard Branson make records? Yes, they understood their industry, but they managed processes and people and both are key to any business. I have a hunch that they would also have been very good as a manager of any sports team (not as good as Mr Ellis), just like Jose, who should perhaps think about managing a law firm. The business world has

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Legal Opinion

Legal Opinion Modern Claims’ legal experts discuss some of the key issues in the claims market at the moment. Donna Scully, Partner at Carpenters explains how brokers can maintain a diligent approach when selecting their claims management providers and what they should look out for during the selection process. David Kidman, Partner at BLM asks whether the marketing of e-cigarettes is blowing a cloud of smoke over the true health risks and Alan Nesbit, Managing Partner at Nesbit Law debates how law firms can ensure they drive their business plans forward in an increasingly competitive market.

Opportunity knocks... How can brokers maintain a diligent approach when selecting their claims management providers and what should they look out for during the selection process?

he most important requirement for a broker when selecting a claims management provider is knowledge – specifically a full and detailed understanding of the range of regulatory and legislative changes that the claims management industry has gone through since April 2103. This approach should ensure a selection that not only provides the best service for the brokers’ clients but also does not present any risk to the image and brand of that broker. Historically, when selecting a claims provider, brokers have considered law firms or CMC’s who can deliver the right customer service and generate competitive levels of income. Regulatory compliance, good governance and an ethical approach were often just assumed or not closely examined at all. Indeed, for many brokers, financial considerations were the most important selection criteria and for some, the reliance on claims derived income led to choices that many would have considered less than ethical. Accusations around claims farming, costs inflation and the selling and mining of client data have been common. Following Jackson, LASPO, the FCA thematic review and a broad range of other reviews, now more than any other time both regulators and brokers own panel insurers are scrutinising who brokers use for claims management. They are also examining whether who the broker appoints for their claims handling, is at odds with the insurers views and values, where MI suggests that choice is damaging to loss ratios, or where that providers approach simply appears to be non-compliant. MC // November 2014

Many expert commentators have suggested that a number of CMC’s and PI firms appear to be in breach of the referral fee ban, doing little to change how they operate their business other than giving referral fees at the point a claim another name. Elsewhere, a range of models exist that may not be considered strictly unlawful but have been labelled as being against the “spirit of the legislation”. Simply taking a provider’s assurance that their chosen model is compliant should not be considered adequate. For the sake of the brokers own reputation and critically, to ensure it is not at risk of being in breach of legislation itself, brokers should arm themselves with the facts and then obtain reliable independent advice and ask whether or not the law firm or CMC has discussed its model and sought approval with the appropriate regulators. We have an opportunity to clean up our market and improve its reputation – we don’t want to miss that. It also goes without saying that the customer must always be at the centre of everything we do. Donna Scully, Partner, Carpenters.

Legal Opinion

Is marketing of e-cigarettes blowing a cloud of smoke over the true health risks?

obacco companies are spending millions on glamorous advertising of e-cigarettes, presenting them as a ‘healthy’ alternative to cigarettes. They have a legitimate role to play in quitting smoking, but claims that they, for example, ‘contain none of the tar, additives or carcinogens found in tobacco based products’, or that users are only inhaling water vapour, risk misleading the general public as well as employers responsible for determining workplace rules. The World Health Organisation (“WHO”) cautions that ‘the chemicals used in electronic cigarettes have not been fully disclosed, and there is no adequate data on their emissions’. A report published by Public Health England found traces of carcinogenic substances including formaldehyde as well as toxic metals including lead. The US Food and Drug Administration has reported on wide variations in quality control amongst different producers and issued warnings to five companies as a result. The BBC found diacetyl to be present in one brand’s flavour, a substance which is the subject of successful ‘popcorn lung’ litigation in the US. Marketing methods have also been criticised for being appealing to children. One US billboard showed Santa Claus enjoying an e-cigarette. Some products, with names like “Rodeo Drive” and “Bombshell”, come with free gifts such as a sterling silver charm necklace. Flavours include black forest gateau and bubblegum. Except for clear cases of injury arising from explosion of e-cigarette batteries, claimants will have difficulty proving causation of injury or disease. Proving that lung cancer was caused by e-cigarettes (particularly from a specific producer) will be difficult, particularly if the user had a history of traditional cigarette smoking. Nonetheless, producers, distributors and retailers (and their insurers) should be cautious about the information and warnings given to consumers. Employers must assess workplace practices, and may wish to follow the lead of companies such as the BBC, Standard Life and JCB in banning indoor use, particularly following a recent WHO report proposing this. Anticipated regulatory changes should lead to greater quality control and more moderate marketing, reducing the likelihood of successful claims, but in the meantime a precautionary approach should be taken.

On the horizon... How can law firms ensure they drive their business plans forward in an increasingly competitive market and should firms be considering alternative business streams, if so, what?

t is a phrase that has been used a lot, but “get big, get niche or get out” is the mantra that many commentators in the legal industry have espoused. I am not sure that is entirely correct, as I believe there remains a space for exceptionally good local businesses to thrive, however they will need to be able to advertise themselves locally in an effective manner and deliver exceptional service to give them a chance of competing with the much larger and wealthier national competitors. Nevertheless getting big to enjoy the economies of scale available to the large players, or joining with a larger group of companies or large ABS type entity remain viable options going forward. However, there are only so many large groups of companies and rich benefactors out there, so this is obviously for a limited pool only. Therefore having a niche role in any market remains an effective route to market and a chance to remain profitable as a company. The efficacy is entirely dependent on how niche the market place is and whether you can keep your strategy in line with any further changes coming on the horizon. Will, for example, the raising of the small claims limit, which seems to have come back on the agenda for the ABI at least be the death knell for many business models? Previously there were a number of additional business streams that firms could look at, and one would think with the proposed relaxation of the separate business rules and the advent of ABS’s that would be easier. However, for PI providers those who legitimately took commissions on ATE and Medicals can no longer do so. Those firms that developed their own medical agencies are now concerned over the future due to the MOJ’s plans for MedCo and potential random choice of medical reporting. It seems that the channels for attempting to consider the traditional alternative business streams is certainly on the wane and it will be for innovative practices to come up with new lines. Alan Nesbit, Managing Partner, Nesbit Law Group LLP.

David Kidman, Partner, BLM.

MC // November 2014

The Features

NON-EXECUTIVE DIRECTORS & EXECUTIVE DECISIONS Andy Whatmough, Managing Director of S&G Response, explores the role of NonExecutive Directors and how they can help a management team to deliver their wider business vision and strategy.

hen I look at our business, there are probably only three things I can be certain of. Firstly, we’ll never achieve everything we want to by ourselves; secondly, we’ll never know it all and lastly, we’ll get it wrong just as often as we get it right. It was for this reason that we took the decision several years ago to bring as much experience to the senior management team as we could. And the quickest, most efficient and cost effective way we could think of was to bring in non-executive directors to both advise and assist in managing growth whilst also holding the Board to account. It was one of the best decisions we took and the investment has paid dividends. The right high calibre of industry experienced, non-execs bring real benefits.

‘A board of non-execs with knowledge of the funding pressures and where to go for expansion capital can resolve many headaches before they start’ They have done it before In owner-managed businesses, one of the challenges of growth is finding the time to stop working in the business and allocate time to work on it. It can be hard to find an objective balance and having a group of people who are able to say “that won’t work” or “what about this?” can be invaluable. One of the most important things we wanted to get from our non-execs was the ability to learn from them. We wanted people who had run companies which we knew were bigger than ours. We also wanted people who had run companies that we thought were better than ours. We were therefore lucky when Ken Lane (who built Nationwide Accident Repair Centres into the UK’s largest bodyshop network with a turnover of £140M) agreed to join us. The experience of managing a business of that scale, whilst also having been through the stresses of growth, is invaluable. His twin emphasis on managing debt and the human consequences of growth have pre-empted numerous problems.

More recently, when Anthony Hughes joined us, we found immediate benefit from his experience of building a business through acquisition. Trying to buy somebody else’s business is fraught with issues and can be phenomenally time-consuming. Therefore, having the guidance of someone who has been through the process on numerous occasions has been both critical and educational (planning the post acquisition plan is just as important as the deal negotiation). They have the address book Of course, one of the benefits of having done it before is that a good non-exec’s address book is to die for. And that’s not just necessarily from a sales perspective but can provide value to all aspects of the business. Some of the key benefits of employing non-execs are the following: a) Different experiences, viewpoints and new ways of thinking - the day to day can be like living in a bubble. It becomes comfortable and easy to assume that everything is going as well as it should be. The risk of that is complacency. Having a fresh set of eyes on a problem or opportunity can open up a new direction of travel, or set of solutions, which may not have been considered. b) Finance & Funding - access to working capital has to be top of the agenda for any board. Whilst the claimant space is particularly cash intensive, especially in credit hire and repair, all businesses need to wrestle with this challenge. A board of non-execs with knowledge of the funding pressures and where to go for expansion capital can resolve many headaches before they start. c) Compliance - the claims sector is a regulated market (whether that is by the SRA, FCA, or MOJ); the greater the knowledge around the table of the regulatory framework can only be a business benefit. Some may view non-executive directors as an expensive luxury, but for us, they have repeatedly proven themselves to be a critical part of the management decision making process. They deliver a level of insight and acumen that is difficult, if not impossible, to grow internally and will remain a key component of our expansion strategy. Andy Whatmough is Managing Director at S&G Response.

MC // November 2014

The Features

THE BURDEN OF PROOF John Pyall explains to what extent reinsurers must adhere to settlements and what happens when an insurance contract does not have to follow a settlements clause.

hen determining a substantial claims settlement, insurers must often consider the extent to which their reinsurance protection will support any payment made on a claim. If the reinsurance contract does not have to follow the settlements clause, an insurer has to show that the reinsurer is liable to indemnify it. Effectively, the insurer would have to prove that it was liable for the settlement both under its insurance policy and that it is also covered under the reinsurance. This would prove extremely arduous and hence most reinsurance contracts provide a ‘Follow the Settlements’ clause.

‘The burden of proof lies on the reinsurer to show that the claim has not been handled in a business like fashion or within the terms of the insurance policy’ A ‘Follow the Settlements’ clause would contain language similar to:

John Pyall Munich RE Claims Shared Services – MR London Head of Great Lakes Facilitated Claims Unit • The creation of a unit to handle facilitated claims written via the Great Lakes operation. • To manage a broad direct and facultative reinsurance account comprising of engineering, property and casualty business written by Great Lakes. • To determine rules and procedures for the unit to operate within, timelines, process flows, mandates for employees. • Manage the interface between Munich head office Corporate Insurance Partners department (principle stakeholder) and the Munich RE Shared Services department. • Claims governance to ensure that Great Lakes is regulatory compliant and we have effective claims management for all lines of business. • Development of an effective wordings unit for the Great Lakes and Munich Re UK operations to assist underwriters with wordings issues and provide regular updates on the current legal issues and statutes which could potentially impact underwriting.

‘All settlements by the reinsured shall be binding upon reinsurers, provided that such settlements are within the terms and conditions of the original policy and within the terms and conditions of this policy.’ The question is; ‘What impact would this have on reinsurers’ obligation to follow insurers’ settlements?’ Following the case of Insurance Company of Africa v Scor, the test was that the reinsurer was bound to pay the claim except in two circumstances: (a) where the reinsured can be shown not to have taken proper or businesslike steps in making the settlement; or (b) where the relevant claim does not fall within the risks covered by the reinsurance policy as matter of law. Provided that the reinsured can establish: (a) that it has paid its underlying insured; and (b) that its claim against the reinsurer falls within the reinsurance policy, the burden of proof lies on the reinsurer to show that the claim has not been handled in a business like fashion or within the terms of the insurance policy. Lord Justice Mance in Gan Insurance Ltd v Tai Ping Insurance Co Ltd considered for a “proper and businesslike settlement”, the insurer cannot settle a claim without real regard to its merits simply because it will be covered by reinsurance. Therefore, an insurer must be able to show they appoint any

MC // November 2014

The Features

‘If there are genuine issues with the coverage either in the underlying or the reinsurance then it would be a good idea to discuss the matter early with reinsurers’ expert they use such as loss adjusters, supervise them and adjust the claim in a businesslike manner. In Hiscox v Outhwaite (No. 3) [524] Mr Justice Evans had stated that the effect of the proviso was that: “The reinsurer may well be bound to follow the insurer’s settlement of a claim which arguably, as a matter of law, is within the scope of the original insurance, regardless of whether the Court might hold, if the issue was fully argued before it, that as a matter of law the claim would have failed.” The Court of Appeal judgment in Assicurazioni Generali SpA v CGU International Insurance Plc went even further to determine that any settlement only ‘arguably’ needed to fall with the cover of the reinsurance. This line has been followed by the recent Tokio Marine Europe Insurance Ltd v Novae Corporate Underwriting Ltd case as well. Therefore, if insurers’ settlement can be argued to be reasonable in the circumstances, then it is difficult for a reinsurer in a back-to-back reinsurance not to follow such a settlement. However, insurers do have to be aware that Courts will not impose an obligation on reinsurers to follow a settlement regardless.

In Wasa v Lexington, the courts held that the reinsurance contract could not be reasonably construed to mean that it would respond to any liability, which “any court of competent jurisdiction within the United States” would determine. The recent case of Amlin Corporate v Oriental Capital 6 also indicates that the courts will not impose liability on reinsurers where the reinsurance contract clearly does not envision it. So, the question that must now be asked is: ‘Where does this leave insurers when contemplating how their reinsurance will react if they reach a settlement on the underlying?’ If the settlement is ‘business like’ as opposed to ‘commercial’, then if it falls within the terms of the underlying policy and no exclusions exist in the reinsurance, with a ‘Follow the Settlements’ clause, there should not be an issue. However, if there are genuine issues with the coverage either in the underlying or the reinsurance then it would be a good idea to discuss the matter early with reinsurers. Normally if reinsurers are involved, at an early enough stage, a sensible resolution can be attained with reference to costly and time-consuming litigation - similar to that referred to in this article! John Pyall is Head of Facilitated Claims Unit at Munich Reinsurance UK General Branch.

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The Features

THE CLAIMS JOURNEY Emma Holcroft outlines why outsourcing investigations to an independent expert, can lead to surprising outcomes for insured parties.

The Crash You are driving when you reach a small roundabout. There are three exits on the roundabout; one you are entering from, one straight on and one to your right. To the left are some bushes. You are aiming straight on. You slow down looking right as you reach the junction. You see a red car in the distance but you know you have time to be out the way before it gets anywhere near. You pull out looking straight ahead at the road in front, when, bang! Your car is thrown into a spin. Your body jolts right to left. You slam your brakes on in panic. You are in shock. You are now facing the direction you have come from and see the red car, its nose in the bushes. FNOL After exchange with the Third Party and emergency services at the scene, you manage to get home in your now damaged vehicle. Back in the calm of home you ring your insurers. Whilst on hold you start to go into a daydream. The greeting of an advisor interrupts your thoughts. You give all the details requested and admit liability. You misjudged the situation, pulled out when it wasn’t safe and you want to use your comprehensive policy to get everything sorted. The advisor agrees you are at fault. The next day you receive a call back from your insurers. They have now received a claim for injury from the Third Party and have instructed investigators to get in contact with you to take a statement. You receive a call from the investigators that same day.

The Statement The investigator greets you at your door. He makes you feel at ease giving off an air of confidence and competence. He asks questions about the accident and you find yourself talking about it more in depth. He is thorough whilst being sensitive to the fact it has been an ordeal. He prompts you and it brings back memories that you hadn’t been able to recall in detail previously. He starts to ask more detailed questions about the first time you saw the red car, where it was positioned, the areas and extent of the damage to the vehicles, the end positions, witnesses and involvement of the emergency services. You read through the statement once it is complete and are surprised with the detail, the understanding and accuracy of events. You go outside where he takes photographs of the damage to your vehicle. The Locus The investigator isn’t satisfied that it is as simple as you pulling out on the Third Party. After the appointment, he attends the accident scene to do some further investigation. The Third Party’s car is still round the corner from the scene, photographs are taken of the damage. He takes photographs from both party’s views on the approach to the roundabout, views at the junction, overviews of the collision point and the ending points. He takes measurements of the road widths and draws a detailed sketch of the accident scene. Investigator Report to the Insurers The investigator writes his report on his findings. Although the insured feels they are at fault for the incident, the investigator suspects otherwise. The area of damage to the insured’s vehicle is to the offside rear. It was a heavy impact causing the vehicle to spin. The damage to the Third Party vehicle is to the front offside corner and scraping along the offside. The damage is not consistent with the assumed version of events. From the Third Party’s direction of travel, he can only go left or right at the roundabout. The Third Party ended up

in the bushes after the impact facing straight on. This would not have been possible if he was turning right. To be able to check to his right at the entrance to the roundabout, the Third Party would have had to come almost to a stop before proceeding to ensure nothing was coming due to limited visibility. He should not have been able to enter the roundabout at the speed he clearly did. The investigators provide the insurers with evidence gathered. They raise their suspicions to the insurance company, suggesting they defend their insured pending further investigation. They recommend they allow them to obtain a copy of the police report, make enquiries into CCTV footage and interview witnesses identified in the police report. Final jigsaw pieces The insurers dispute the claim as recommended. As it was still early days, there was CCTV footage which showed the insured pulling out from their exit and being established on the roundabout for some time, when at speed, the Third Party entered the roundabout. No brake lights were illuminated on the Third Party vehicle and no attempt to swerve was made. The police report came back listing two independent witnesses to the collision. Both provided statements in favour of the insured. Conclusion Thorough investigation brought all of the pieces of the puzzle together to make for a strong defence for the insurers. The evidence was presented to the Third Party’s solicitors and insurance company. The Third Party’s claim was dropped and the insured was able to make a full recovery from the other side. Although on the surface it appeared to be straight forward and the insurers could have admitted liability, by outsourcing investigations to an independent and specialised company they were able to successfully and efficiently defend their insured. Emma Holcroft is Director of 2020 Investigations.

MC // November 2014

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The Features

A NEW TREND

The latest figures from the MOJ’s Claims Portal show that personal injury damages have been increasing in recent months and there are now reported murmurings from defendant representatives, that savings made since the introduction of the Jackson reforms are reducing. Jon Gouldsmith reports.

he first question that should be asked is: why have damages been increasing and, perhaps more importantly, what does this have to do with the claimants solicitor’s costs? Claimant solicitors have no doubt been fighting harder to ensure all appropriate heads of claim are included, e.g. psychological damage, but on closer examination of the Claims Portal’s figures it can be seen that the number of claims proceeding to Stage 3 has also gone up. This suggests two things: first, and most obviously is that claimants are being more resolute in their negotiations and have been rejecting Stage 2 settlement offers in greater numbers; but secondly it also suggests that defendants’ offers have been, and will no doubt continue to be, too low. With the level of damages recovered and the number of Stage 3 hearings increasing simultaneously, clearly the courts are awarding levels of damages at a higher value than was being agreed through Stage 2 settlements. So, claimants solicitor’s costs must have increased as more Stage 3 costs have been paid by defendant’s insurers, and because of the rise in success fees, as a consequence of the level of damages their clients recover, going up. A clear majority of firms are applying a 100% success fee to their CFAs, but informing their clients that they will only deduct a maximum of between 20% to 25% of the final damages. With such a strategy, every extra £500 recovered in damages results in an increase of £125 in success fees. Funding the claim through a CFA with success fees linked to damages recovered is actually a very neat way of funding personal injury claims. It means the claimant’s solicitor will naturally balance the risks of any offer received very carefully. They will not wish to continue working on a file on which a reasonable offer has been made that they know is unlikely to be beaten. There is no financial incentive, they are risking

their future WIP and are not going to recover any increase in success fee than what is already available. They do, however, have a vested interest in advising their clients to reject a low offer because the increase in damages will increase their success fee, which must be to the claimant’s advantage. There is also now the claimant’s risk to take into consideration when an offer is being considered, and no doubt defendant insurers expected that the threat of adverse costs by way of Stage 2 settlement/Part 36 offers would limit the claimant’s appetite to reject offers and allow them to keep control of the negotiation process. With the threat of losing some of their damages by rejecting a well pitched, but under value offer, it would be expected that most claimant’s natural instinct would be to take the offer that is available, rather than risk losing damages by rejecting it and pushing on. So what is causing claimants to be so gung ho in recent months? Why are claimants seemingly more prepared to reject offers and proceed to Stage 3 settlements? Well it might be ATE insurance. There was a drop in take up of ATE insurance policies immediately after April 2013, but we have seen policy purchases increasing steadily since as more and more solicitors come back to ATE, for the obvious benefits of disbursement cover. This takes the financial burden from them, and ensures their clients are protected against adverse costs to avoid complaints and/or failure, to comply with Chapter 1 of the SRA Code of Conduct 2011. Where a client has ATE protection, there is no reason for them to accept an under value offer. They can reject the offer and continue negotiations in the knowledge that if they do not beat it their damages are protected and the ATE insurer will pay any subsequent adverse costs order. With more ATE policies now being issued, it might be that Claimants are more prepared to proceed to a Stage 3 hearing, indeed, why wouldn’t they? Therefore, the recent trend of claimant’s solicitor’s costs being in decline can be reversed through more aggressive negotiations and by taking claims to Stage 3 or beyond. It is the support of an ATE insurer that allows you and the client to make decisions on offers without themselves getting involved, whilst still paying out on any claim where costs are incurred, that is the key. Jon Gouldsmith is Director and Head of Legal Support at Box Legal Limited.

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5 minutes with...

5 MINUTES WITH... Peter Horton

Q: Has the Industry changed drastically since you started working in it? A: Yes, in so many ways. Customers shop around a lot more for insurance and so we have to be more competitive to keep the best risks. Social media has also helped force companies to improve their speed of service, which has improved service across the board. The Financial Environment has also changed dramatically. Historically, expected investment returns were around 5% but now the expectation is around half that rate, which is forcing companies to increase their rates and focus on their costs, to make an underwriting profit. There has been huge growth and changes in the digital space, including self-service and access to data, which has forced companies to transform their businesses and move away from their legacy systems. Sadly, we see

more instances of fraud and organised crime has increased in many areas across the country. We have also seen an increase in whiplash-type personal injury claims, despite steady accident rates. However, there’s much more focus on what’s right for the customer, creating the right products and offering good service, both in terms of what the industry now does and increased regulation. The way we are regulated has changed a lot over my career, especially since the change was made from the FSA to the PRA and FCA. There is definitely an improved focus on financial prudence of companies and making sure customers are protected, which is good for all. Q: What has been the key positive or negative impact of change in your area of the market? A: For me, the most positive change has been the increased focus on service to our customers. Our claims service is, after all, the moment when our customers really need the product they’ve bought from us. The most negative change has to be the nature

and sheer volume of fraudulent activity we now see, which is exacerbated by some dishonest market practices. Q: Who inspires you and why? A: Richard Branson; he is still so energised and focused on people, service and culture. He is constantly challenging boundaries, with great results overall despite the occasional ‘hiccup’! Q: Have you had/got a mentor? If so, what was the most valuable piece of advice they gave you? A: Yes, I have had a mentor and the best single piece of advice I have had was: make sure you paint the picture as you see it - for others who may just be seeing a brick wall. Q: If you were not in your current position, what would you be doing? A: What I would like to be doing would be working with newly set up companies, to help them succeed. Failing that, I would be enjoying a beach bar in the Caribbean! Peter Horton is Operations Director at LV=.

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MC // November 2014

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