Modern Claims Magazine Issue 16

Linking the Industry Together

November 2015 | Issue 16 | ISSN 2051-6495 MedCo: where next? Charlotte Parkinson, Modern Claims takes an in-depth look at the MedCo panel session from the annual Motor Accident Solicitors Society (MASS) Conference.

How Artificial Intelligence can transform Insurance: Jonathan Crane explains how early adopters of artificial intelligence (AI) technologies could reap the benefits in a competitive industry.

“Where a CMC continues to break the rules, it could face further sanctions including suspension and, where necessary, closure” Modern Claims Magazine | November 2015 | Issue 16

Kevin Rousell

Russell Atkinson “If the review into CMCs is undertaken properly, the outcome should be better for consumers and boost their confidence in the sector” Supported by Charlton Grant

Association of Regulated Claims Management Companies

Sponsored by

A CENTURY OF PROFESSIONALISM

03

Welcome to I

n this issue of Modern Claims, I speak to our cover star Russell Atkinson, the Chief Executive of one of the UK’s largest claims handlers - National Accident Helpline (NAH), about the impending review into the regulation of Claims Management Companies (CMCs), and initiatives established by NAH to promote ethical marketing, within a sector widely associated with adopting unscrupulous marketing practices (from page 13). I also caught up with Kevin Rousell, Head of Claims Management Regulation at the Ministry of Justice (MoJ) about the approach they are taking to those who do adopt dishonest practices and whether the new powers given to the Claims Management Regulation Unit by the government, to impose tougher sanctions, go far enough (page 17-18).

One of the most talked about subjects in the industry at the moment is how Artificial Intelligence could impact the claims industry. This is a discussion which will continue into 2016 which is why Jonathan Crane, Chief Information Office at technology specialists, IPSoft, explains how early

adopters of artificial intelligence (AI) technologies could reap the benefits in a competitive industry (page 52-53).

Also in this issue, Kate Sweeney, a Partner at Stephensons Solicitors LLP explains why, for many personal injury practitioners, branching out into noise induced hearing loss (NIHL) work in the New Year will be risky, expensive and far from the “cash cow” the ABI suggests (page 57).

I would like to thank everyone who has helped to put this issue of Modern Claims together. If you have any feedback or ideas for a future edition, please get in touch with me via: charlotte.parkinson@charltongrant.co.uk or call 01765 600909. I hope you all have a restful Christmas and a very happy New Year.

Charlotte Parkinson, Group Editor, Modern Claims Magazine.

01765 600909 | charlotte.parkinson@charltongrant.co.uk @modernchar

Dates for your Diary: Doctors Chambers Modern Claims Awards | 28th April 2016 | New Dock Hall, Leeds Doctors Chambers Modern Claims Conference | 15th June 2016 | Old Trafford, Manchester United

Modern Claims Magazine Project Director Kate McKittrick

Group Editor Charlotte Parkinson

Events Director Julia Todd

Production/Editorial Assistant Ebony Lawson

Issue 16 | November 2015 | ISSN 2051-6495 Project Manager Rachael Pearson

Modern Claims Magazine is published by Charlton Grant Ltd ©2015.

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 2015

04

CONTENTS 07-08 Intro & THE News 07 Hugh Koch Talks News

The Managing Director & Lead Clinician of Hugh Koch Associates looks back at 2015 and sets the quality scene for 2016 for lawyers and experts.

11-20 THE INTERVIEWS 13 Interview with...Russell Atkinson

Charlotte Parkinson, Modern Claims, spoke to the Chief Executive of National Accident Helpline (NAH), about why he wants to adopt a collaborative approach to clamping down on rogue players in the claims industry, and the purpose of the Ethical Marketing Charter, which launched this year.

17 Interview with...Kevin Rousell

As the government prepares to review the regulation of Claims Management Companies (CMCs), and opens its call for evidence, Charlotte Parkinson, Modern Claims, spoke to the Head of the Claims Management Regulation Unit (CMRU) about their toughened approach to CMCs who adopt unscrupulous practices, and whether their engagement with CMCs is proportionate.

17

21-48 The Opinions 22 Sector Soapbox

Modern Claims’ resident panel of industry Associations, including the ABI, ARC, BIBA, FOIL and MASS, tackle the burning issues in the claims industry.

25 Spotting risk trends

David Williams, AXA Insurance

25 The reality of increased IPT

Niraj Shah, Ageas Insurance Limited

23

27 Your best marketing tool

Lisa Beale, Checkaprofessional.com

27 Funding and the risks

Martin Doyle, Amberis ATE

29 Changing perceptions

Victoria Rawlings, TRS Claims

29 Telematics: suspicious minds?

Phil Hodgkinson, Pure Legal Costs

31 Managing expectations

Janet Tilley, Simpson Millar LLP

31 The appetite to lend?

27

Zoe Holland, ZebraLC

33 Funding: a solid track record

David Simon, Triton Global

Editorial Columnists Adèle Coates-Lyon Managing Director Medical Records UK Alan Nesbit Chairman, Association of Regulated Claims Management Companies (ARC) Managing Partner, Nesbit Law Group LLP Darren Gower Marketing Director Eclipse Legal Systems, part of Capita plc David Simon Chairman Triton Global Limited David J Williams Managing Director, Underwriting AXA Donna Scully Partner Carpenters

MC // November 2015

Duncan Rutter Vice President, Forum of Insurance Lawyers (FOIL) Partner, DAC Beachcroft LLP

Lesley Graves Managing Director Citadel Law

Niraj Shah Chief Actuary Ageas Insurance Limited

Sucheet Amin Managing Partner, Aequitas Legal Founder, inCase™ mobile app

Martin Doyle Director Amberis ATE

Phil Hodgkinson CEO Pure Legal Costs

Mark Hartigan Client Services Director Just Costs Solicitors

Phil Swinburn Head of User Experience Slicedbread

Susan Brown Chairman Motor Accident Solicitors Society (MASS)

Mike Dobson Partner BLM

Robin Selley In-house lawyer Box Legal

Miles Keeble Non Executive Director Veracity Claims Ltd

Scott Whyte Managing Director Watermans

Jonathan Crane Chief Commercial Officer IPsoft

Nicola Klimkowski Head of Business Control and Development LAMP Services Limited

Stas Mintowt Sales & Marketing Director Audatex

Keith Tracey Managing Director Aon Risk Solutions

Nik Ellis Managing Director Laird Assessors

Emma Holcroft Director 2020 Investigations Gerry Lee Senior Partner P R Hanna Solicitors, Belfast Hilary Meredith CEO Hilary Meredith Solicitors Janet Tilley Director of Volume Services Simpson Millar LLP

Stephen Ward Managing Director Clerksroom & Clerksroom Direct

Tara Shelton Founder & CEO I-COG Claims Management Victoria Rawlings Media and Marketing Manager TRS Claims Zoe Holland Managing Director ZebraLC

05

33 Levelling the playing field

Emma Holcroft, 2020 Investigations

35 Get it right and replicate

Stephen Ward, Clerksroom Chambers

49-58 The Features 49 My flight was delayed. Why haven’t

35 A golden opportunity

Stas Mintowt, Audatex

37 Fixed Fees are coming whether we

like it or not

Adèle Coates-Lyon, Medical Records UK

50 Legal Opinion

37 Can access to justice be helped by

eBay?

Gerry Lee, P R Hanna Solicitors

39 A collaborative approach

Nik Ellis, Laird Assessors

Mark Hartigan, Just Costs Solicitors

41 Gaining ground?

Hilary Meredith, Hilary Meredith Solicitors Phil Swinburn, slicedbread

43 As the first begin to fail

Lesley Graves, Citadel Law

43 Meeting the needs of the modern

customer

Miles Keeble, Veracity Claims Ltd Robin Selley, Box Legal Limited

45 The perfect partners

Nicola Klimkowski, LAMP Services Limited

46 Technology, Disruption and Risk

Tara Shelton, I-COG Claims Management

Jonathan Crane explains how early adopters of artificial intelligence (AI) technologies could reap the benefits in a competitive industry.

The annual Motor Accident Solicitors Society Conference took place on 8th October at the Hilton Hotel, Deansgate, Manchester. Charlotte Parkinson, Modern Claims takes an in-depth look at the MedCo panel session.

Kate Sweeney explains why, for many personal injury practitioners, branching out into noise induced hearing loss work will be risky, expensive and far from the “cash cow” the ABI suggests.

52

58 5 minutes with...

Professor Dominic Regan.

58 Centenary Solicitors chooses

Keith Tracey, Aon Risk Solutions

46 Diversify and innovate, together

transform Insurance

57 Falling on deaf ears

45 Not all CMCs are the same

45

55 MedCo: where next?

41 Telematics: from niche to necessity

Modern Claims’ panel of resident legal experts, including BLM, Carpenters and Nesbit Law, address hot topics in the claims industry.

52 How Artificial Intelligence can

39 In focus: costs management

I been paid yet?

With aviation claims increasing, David Bott explains the difficulty that comes with each new judgment, when more and more clients assume that they are automatically entitled to compensation.

Proclaim Practice Management Solution

Hosted Proclaim system implemented by leading law firm

47 Rough ride or silver lining?

Sucheet Amin, Aequitas Legal & inCase™ mobile ap

47 Standing out in the maze

Scott Whyte, Watermans

48 Unique selling points...

Matt Hogg, Accredita (UK) Ltd

57 MC // November 2015

carpenters

Hugh Koch talks news

07

Hugh Koch Talks News...

The Managing Director & Lead Clinician of Hugh Koch Associates looks back at 2015 and sets the quality scene for 2016 for lawyers and experts.

M

odern Claims Magazine has showcased during 2015 the wide variation of activity in legal practices around the UK, endeavouring in each issue to display good practice and innovative ideas. The range of its many articles attests to this. These articles illustrate how enthusiastic many lawyers are about their involvement in 21st Century Law in the UK. Government and professional changes abound in this industry but, to my mind, there are three key exciting issues which will face lawyers in the coming year: their understanding and practice of ‘continuous quality improvement’; their relationship with other ‘players’ e.g. experts, judiciary and, of course, their clients, and the development of dispute resolution and mediation innovations.

Towards ‘Continuous quality improvement’ There is a growing interest in how the UK Justice System can develop its many processes, covering cost control, access to justice, quality and perceived outcomes. The ramification and benefit of the CPR changes implemented over 15 years ago have started to percolate through, and agendas for further development and training discussed. Experience at a recent international conference on law in Vienna illustrated that in many ways the UK Justice System has developed many processes, both legal and medico-legal, that are ahead of what is practised in other European and North American systems.

The financial downturn and recession have affected clients and law firms alike and made law firms, which have survived, even more conscious of the need to address the quality component of their business strategy with greater enthusiasm and focus. Whereas many firms rely on Lexcel (the Law Society’s practice quality mark for excellence in client care), many lawyers have been looking for an approach which reflects how to interface process improvement, customer responsiveness and, at the same time, motivate and energise their staff through empowerment and

involvement. It has been suggested that the practices of Total Quality Management (TQM) and, the rather American-style phrase, Therapeutic Jurisprudence (TJ), are of potential usefulness here, to supplement existing quality practices.

Total Quality Management has been comprehensively researched in the 1980’s and 90’s in the manufacturing industry and Health Care. It is essentially an approach to the effective management and running of any organisation, ‘operationalising’ what many would say is ‘common sense’. TQM addresses the development, planning and operation of continuous process improvement, customer responsiveness and staff empowerment and training. As such, there is considerable overlap between Therapeutic Jurisprudence and Total Quality Management.

Therapeutic Jurisprudence (developed in the 1980’s in the USA), is based on the practical premise that information from the behavioural sciences, predominately psychology, can inform and improve how litigation is carried out, encouraging wellbeing, win-win conflict resolution and positive, effective communication. There are many examples around the world where a Therapeutic Jurisprudence approach has been successfully implemented (problem solving courts (US), drug treatment courts (US), homeless courts (US), abusive betting court (Nevada, US), child advocacy centres (US and Scandinavia). All these involve multidisciplinary collaboration.

Each type of law firm has specific processes, which are idiosyncratic to that firm (internal processes) but will also have generic processes which most, if not all, firms will have. Both internal and generic processes need to be: • Explicit • Measurable, where possible • Monitored and controlled for variability reduction • Designed well • Continually improved.

This requires the explicit setting of standards and clearly understood

‘There is a considerable opportunity for lawyers and experts to learn from Therapeutic Jurisprudence and Total Quality Management’ and agreed processes. The larger the law firm, the larger the number of processes and potential for error unless the above mentality of measurement/design/control/ improvement is fully adopted, within the context of positive customer and staff focus.

Relationship with other ‘customers’ The key players in civil litigation are shown in Figure 1. Clearly there are systems, organisations within systems

MC // November 2015

08

Hugh Koch talks news

‘The lawyer needs to be accessible, efficient and an effective communicator with his B2B colleagues’ and organisations which operate relatively independently of each other but still interface in what is called a business to business (B2B) way (e.g. Judiciary and Court administration, law firms, insurers, experts (individual or collegiate) and medico-legal agencies).

Although each law firm might articulate its core values and aims differently, they should all adhere to or aspire to the values of customer focus.

Figure 1: The Key Players in Civil Litigation

Claimant Experts (medical and other)

Claimant’s Lawyers

Barrister/ Counsel

Other Witnesses

Judiciary

The recipient of varied services from lawyers – the ‘customer’ in market place terminology increasingly expects a good, if not excellent, service from any one particular ‘provider’.

For example, a law firm provides a service, primarily to its external customers who are either individual members of the public (claimants) or, alternatively, insurers, representing the defendant. The lawyer’s responsiveness to either customer is judged in terms of accessibility (by telephone, letter, email and face to face contact), style and effectiveness of communication, and timeliness and outcome of the lawyer’s interventions. In the judicial system, there are several professional internal customers with whom the lawyer interacts and ‘does business’ – these include experts (medical and other), other lawyer’s, barristers, court administrators and the judiciary. As with the first concept (customer responsiveness), the lawyer needs to be accessible, efficient and an effective communicator with his B2B colleagues.

Specific examples of Lawyers customer responsiveness A key B2B interaction amenable to ‘continuous quality improvement’ (CQI) is the interface between lawyers and the experts, who are commissioned through them to provide expert evidence to the court.

Some of the key facets, which should be addressed include:

Defendant Insurer and Lawyer

Court Administration Medico-Legal Agencies

Figure 2: Core Values of TQM Putting the customers first

Anticipating and knowing customer expectations

Getting the service ‘right first time’

Meeting and exceeding customer expectations

Reducing the costs of poor quality

Reinforcing good staff performance

‘The lawyers I work with are positive and have a ‘bias for action’

MC // November 2015

• Understanding expert opinions • Understanding expert impartiality and neutrality • Understanding the expert’s framework (for example, diagnosis, causation, attribution, prognosis) • Managing effective case discussions and conferences • Responsibilities for assessing truthfulness and reliability.

Resolving apparent conflict Much of legal and medical-legal practice involves the gathering of evidence by two separate parties with the inevitable potential for real conflict which needs resolving.

The approach of Joint Statement compiling and discussing between opposing experts, in existence prior to the CPR changes in 1998/9 is not available in other legal jurisdictions around the world and is something which works, and which lawyers and experts are rightly proud of.

This has more recently been adapted into ‘Hut Tubbing’ which encourages a more informal, open-ended debate by the professionals involved, with the aim of focussing constructively on the key evidential differences between parties.

So, my resolutions for 2016?

The practice of law in the UK continues to be under court pressure to reduce legal fees. I believe that law firms which implement a Total Quality culture will lead the way for change, because certainly the lawyers I work with are positive and have a ‘bias for action’ I look forward with excitement to 2016 and working with my legal colleagues to apply Total Quality Management.

I also recommend the greater consideration of the developments in win-win dispute resolution and mediation, which are currently being discussed.

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Interview with... Russell Atkinson

13

Interview with...

Russell Atkinson Charlotte Parkinson, Modern Claims, spoke to the Chief Executive of National Accident Helpline (NAH), about why he wants to adopt a collaborative approach to clamping down on rogue players in the claims industry, and the purpose of the Ethical Marketing Charter, which launched this year.

Q A

The Chancellor, George Osborne announced a review into the regulation of CMCs in July’s Summer Budget. What do you expect the outcome of this review to be and what potential impact could it have on CMCs, insurers and claimants?

We welcome the announcement of the review overall because it ought to lead to an improvement in standards across the industry. We welcome any initiatives that could help clamp down on rogue players or poor activity. The terms of reference the government are using for the review are broad in scope, which means they are considering a range of issues, including unethical marketing, strengthening regulatory oversight and addressing poor conduct. As long as the common thread through all that is improving the outcome for the consumer and preventing fraudulent claims, then we are very supportive of the review. Ultimately, if the review into CMCs is undertaken properly, the outcome should be better for consumers and boost their confidence in the sector. We intend to engage fully with the relevant parties and we will be taking a proactive approach to share information with Carol Brady who is leading the review with the Ministry of Justice (MoJ) and the Treasury.

Q A ‘If the review into CMCs is undertaken properly, the outcome should be better for consumers and boost their confidence in the sector’

Are the government doing enough to prevent cold calling?

There is certainly more that could be done. We have never cold called and have been campaigning on that issue since 2012. Cold calling is an aggressive marketing tactic that can cause real distress and harm. This has been proven recently through a survey carried out by Trading Standards, which showed that 40 per cent of phone calls are received by elderly or vulnerable people, so clearly this needs to be addressed. The Information Commissioners Office (ICO) receives 180,000 complaints about cold calling every year and Which? estimates that only about 2 per cent of people report nuisance calls – so that figure clearly represents a small tip of a very large iceberg. The government have taken action; they have reduced the ‘burden of proof’ that the ICO needs to take action on rogue claims and we have seen record fines that have been handed out of late. The government have also announced £3.5m in the budget to help invest in call blocking technology, which is another positive step forward.

Something we believe would help is establishing a one-stop complaints process, so that it is easier to report nuisance calls and texts and the process of making an effective complaint is

MC // November 2015

14

Interview with... Russell Atkinson

‘In relation to emails, there should be simple, clear and consistent opt-ins to email marketing that doesn’t trick or confuse customers, rather than opt-outs’ clear. There is real confusion for consumers about where they need to go to complain and whether they need to use call blocking or sign up to the Telephone Preference Service (TPS).

Stronger legal action should also be taken against cold calls that are coming from international numbers and the relevant parties should work more effectively so that regulators can prosecute those who make domestic cold calls. In relation to emails, there should be simple, clear and consistent opt-ins to email marketing that doesn’t trick or confuse customers, rather than opt-outs. We welcome the steps that are being taken they need to be taken more quickly.

Q A

Do you feel the potential cap on the fees CMCs can charge (as proposed by the government) is appropriate?

This is one of the areas that is a key focus of the CMC review. There have, over the years, been lots of allegations in the media about CMCs overcharging their customers, particularly relating to PPI and financial

Q A

Can you explain the purpose of the Ethical Marketing Charter, which NAH launched in July this year?

The Ethical Marketing Charter is part of our mission to ensure the customers have trust in the industry. We founded the Charter to tackle the use of unethical marketing practices in the sector. We are in an industry which has adopted these practices in the personal injury sector and it frustrates us because for years we haven’t utilised these tactics, yet we are tarred with the same brush. This initiative is really about those companies who have a commitment to ethical practices and those who don’t. The Charter signatories stand very firmly against nuisance marketing, they never cold call or send spam texts or emails and do not believe in the unethical purchasing of data for marketing purposes and that accident data should never be used to pressure people to make claims. They also do not believe in misleading advertising that induces people to make claims by making false or misleading promises. Further, they recognise the importance of being clear and upfront with clients about any charges, or what might be excluded from a claim. We have been very pleased with the success of the Charter and have had 50 firms sign up so far across a broad spectrum of specialities. We have also secured support from a number of MP’s, along with the Claims Management Regulator (CMR), the Legal Ombudsman (LeO), Association of Personal Injury Lawyers (APIL), the Motor Accident Solicitors Society (MASS) and are continuing to promote it. However, it is important that it is seen not just as an NAH initiative but as an industry initiative. Just recently, we held a Roundtable in Parliament which brought together the signatories, MP’s, Shadow Ministers and Regulators, to discuss the Charter to consider and how best to take it forward. A cohesive claimant industry position has been missing up until this point and it is hoped that the Charter will fill this gap and strengthen the work the government are doing.

MC // November 2015

services. At NAH, we never contract with the consumer and we don’t take money from them directly, so we can’t comment directly on the extent of the problem because we don’t do it ourselves.

Q A

Are the rights of those claimants who are genuinely injured adequately protected under the current redress system?

There have been many changes made to the civil justice system in recent years and the last government implemented a comprehensive package of reforms, which was a major overhaul in the way the injury claims processes work. The system (in theory) provides an effective route to access to justice because people can still (where they feel they have a claim), make a claim. Our role in this is to be an approachable third party, as many consumers feel intimidated by the claims process and are not confident about speaking to lawyers and insurers. Part of our role is giving the genuine claimant the confidence to claim if they are entitled to do so. It is important to ensure the system does continue to give the same protection and that we ensure the previous reforms are properly understood before any more alterations are made. Many law firms are still yet to fully work through the claims that were submitted prior to LASPO, and there are several other schemes such as the MedCo Portal, that have only recently been introduced.

Q A

What other initiatives are NAH currently focussing on to drive up standards in the industry?

The Ethical Marketing Charter will be our key focus throughout 2016. We do continually work with the government, regulators and other businesses to help drive up standards in the industry. We have been a key contributor to the Insurance Fraud Taskforce, working with key insurers and law firms to help uncover the root causes of fraud and make sure fraud is never seen as acceptable by consumers or rogue firms. We sat on the Taskforce and the Personal Injury Working Group and looked closely into the potential weaknesses in terms of the claims process in relation to fraud.

Q A

What are the core challenges associated with operating as a large scale CMC in the current market?

As one of the leading players in the sector, NAH has to be responsible for leading and setting the benchmarks of professional practice and we take that extremely seriously. What is critical to us is preserving our trusted brand and ensuring that consumers receive the best possible service when they find themselves in the unfortunate situation of having to pursue a personal injury claim. There are consumers out there who do have right and need for redress and that

‘Part of our role is giving the genuine claimant the confidence to claim if they are entitled to do so’

Interview with... Russell Atkinson

15

Russell Atkinson Russell is the chief executive officer of the Group. He joined NAHL in 2012 and had a pivotal role in implementing its strategy postLASPO. His responsibilities include developing and implementing the overall strategy of the Group, and ensuring delivery of budgeted financial performance.

Prior to joining NAHL, Russell held managing director roles at international firms including UK managing director of Lebara Mobile Limited from 2009 to 2012; managing director of Blackhawk Network (UK) Limited, a division of Safeway Inc., from 2006 to 2008; and director of e-payments at Travelex UK Limited from 2000 to 2006.

Russell holds a Bachelor of Arts from Leicester Polytechnic and a diploma in marketing from The Chartered Institute of Marketing.

is why we are so passionate about initiatives such as the Ethical Marketing Charter and making the distinction between those who operate ethically (of which there are many) and those who don’t, so that the consumer can make a more informed choice.

Q

NAH does not use cold-calling methods to win new business, yet the company revealed it receives up to a thousand complaints every year from consumers who have been called by companies purporting to be NAH – how are NAH approaching this challenge?

This is a very frustrating issue, we are regularly impersonated by people trying to use our brand recognition and reputation. We even had a call to our call centre from a company saying they were National Accident Helpline! We are not the only brand to have this problem and we tackle it by working with the regulators by reporting all of these incidents to the Claims Management Regulator (CMR) and ICO. In total, we have reported about 768 counts of cold calling to the CMR and 710 to the Information Commissioner. We are one of the most proactive organisations in the sector and we have been recording these incidents

A

since January 2013 when we received about 80 calls so the issue has sharply increased since then. We are now never below 125 calls each month and that is really only the tip of the iceberg.

Q A

How has the Underdog character (created in 2010), assisted NAH in generating genuine leads for its Panel member firms?

The creation of Underdog is linked to consumers feeling daunted by dealing with lawyers and insurance firms. The Underdog character represents somebody who knows what it feels like to be the ‘little guy’ and that makes people feel they are able to talk to us and get advice about whether or not they have a claim. This is why the character has been so effective and is the core part of our consumer advertising strategy and because of its nature, it allows us to look and feel a bit different.

We undertook an ‘Ad Watch’ survey back in 2014, which showed that 40 per cent of people remember our adverts and given the sector we are advertising in, this is a good level of recognition. The Underdog has been very successful in building our awareness and resonates with the consumer who doesn’t feel comfortable approaching a lawyer or insurance company.

Q A

What does the future hold for NAH?

NAH is still at the core of the NAHL group and is our main consumer-facing brand so we are certainly looking to continue to grow it over the coming year. We are always looking to expand, both organically and through acquisition (if the right deal becomes available), but we are not acquisition junkies - it has to be the right sort of business. We will continue to look at other potential acquisitions in both personal injury, conveyancing and other areas of consumer law as and when they may appear. We acquired Fitzalan Partners, which is in the conveyancing and surveys markets, and that has been a successful acquisition.

Bush and Company was our recent acquisition just a few weeks ago, and that broadens our scope for dealing with personal injury claims (specifically higher value, clinical injury claims), all be it that that business is run completely separately and is totally independent of NAH. We will continue to build our brand, look for opportunities and follow the same ethos for our ethical standards and professional approach to offer the legal profession (our customers), the best in service.

MC // November 2015

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Interview with... Kevin Rousell

17

Interview with...

Kevin Rousell As the government prepares to review the regulation of Claims Management Companies (CMCs), and opens its call for evidence, Charlotte Parkinson, Modern Claims, spoke to the Head of the Claims Management Regulation Unit (CMRU) about their toughened approach to CMCs who adopt unscrupulous practices, and whether their engagement with CMCs is proportionate.

Q A

What initiatives are the CMRU currently undertaking to promote the interests of consumers and the public?

Building on our recent package of reforms, which included tougher conduct rules and a new power to impose financial penalties, we are developing proposals to cap the level of fees that regulated CMCs can charge their clients. We are looking in particular at restricting bulk financial claims such as PPI to more proportionate levels than have been typical in the industry. The aim is to help make sure that consumers who decide to use a CMC to handle their claim, receive more value for money from CMCs and keep a higher proportion of compensation awarded. A cap on charges should also help to reduce incentives for CMCs to collect marketing leads and as a result reduce the vast number of nuisance calls that consumers are subjected to. We plan to consult by the end of the year.

Q A

The number of CMCs has fallen sharply since 2011, do you anticipate this number to reduce any further?

Since 2010 we have removed the licences from over a thousand firms, including 300 last year. We have already seen signs of the claims market stabilising, particularly in the personal injury sector, and expect this trend to continue.

The personal injury sector has begun to adjust to the effects of the referral fee ban and the other major civil justice reforms introduced in 2013, but this sector is now the smallest it has ever been since the early days of regulation in 2007. Although we had anticipated a continued contraction in the personal injury sector during 2014/15, the rate at which this has occurred has slowed. The number of CMCs active in the financial claims market has fallen by a similar amount seen last year with just under 900 CMCs now in operation at the end of September 2015. While some CMCs have been exploring new claims areas we do not expect the financial claims sector to grow further – the amount of redress paid out each year for mis-sold PPI has begun to fall together with fewer potential customers who have yet to make their claim.

Kevin Rousell Kevin Rousell became Head of Claims Management Regulation at the Ministry of Justice (MoJ) in August 2007. He is responsible for the policy and operation of the regulatory and legislative system, taking statutory regulatory decisions on behalf of the Justice Secretary.

Such decisions include suspensions and cancellations of claims management companies’ authorisation.

Kevin’s main civil service career began at the Department of Work and Pensions as an advisor on occupational pensions and services for older people and editor of the Annual Report, amongst other roles. In 2001 he joined the then Lord Chancellors Department to lead its legal costs reform work, simplification of no win no fee and policy on legal expenses insurance and pro bono legal services. Kevin managed the policy team which developed Part 2 of the Compensation Act 2006.

‘A cap on charges should also help to reduce incentives for CMCs to collect marketing leads and as a result reduce the vast number of nuisance calls that consumers are subjected to’

MC // November 2015

18

Interview with... Kevin Rousell

‘Where a CMC continues to break the rules, it could face further sanctions including suspension and, where necessary, closure’

Q A

The CMRU issued its first fine (of £220,000) to CMC The Hearing Clinic in August this year, has the regulator issued any fines since then?

Yes, fines since then include £91,845 against Complete Claim Solutions Ltd for unlawful unsolicited marketing, and £570,000 against Rock Law for coercing clients into signing contracts without giving them enough time to understand the terms and conditions before taking unauthorised payments. Companies should be in no doubt that if they break the rules they will have to pay.

Q A

Are the current sanctions for CMCs who adopt unscrupulous marketing practices tough enough?

I believe our recent package of regulatory reforms have put claims management regulation in the strongest position it has ever been in terms of having the necessary tools, resources and resolve to get the job done. Our first fine against a CMC was for unlawful marketing and restrictions were added to their licence around calling numbers registered on the Telephone Preference Service and using data from third-party companies.

Our third fine against a CMC was also for unlawful unsolicited marketing.

Where a CMC continues to break the rules, it could face further sanctions including suspension and, where necessary, closure. Also we increased the capacity of our specialist nuisance calls/marketing team which audited 102 CMCs, investigated 9 and warned 30 CMCs during 2014/15 in order to tackle the non-compliant marketing highlighted by the intelligence we receive.

‘We have also recently tightened the authorisation and annual return process to require CMCs to identify whether they intend to operate in the NIHL market’ MC // November 2015

Q A

From January this year, the Legal Ombudsman (LeO) has handled complaints regarding CMCs, do you believe this is helping consumers seeking redress?

Yes, I’ve certainly started to see consumers benefit from the wider powers of redress now open to them where their complaint is upheld by LeO. LeO recently reported that they had resolved 478 complaints in the first 6 months of operation. This has resulted in consumers receiving refunds for fees already paid in 11% of cases, consumers having their fees waived/limited in 20% of cases and orders for compensation in 14% of cases. Prior to LeO, consumers who received poor service from a CMC only had access to a complaint handling regime with a limited remit to handle consumers’ complaints.

Q A

The MoJ has recently granted the CMRU additional powers to impose tougher sanctions on CMCs, do the new measures go far enough?

The Claims Management Regulation Unit’s (CMRU) commitment to driving out bad practices by CMCs remains stronger than ever and we have made great strides in dealing effectively with rogue companies, including fining those that continue to break the rules.

This power to impose such financial penalties has brought us broadly in line with similar, but independent, regulatory bodies. Our recent reforms have made sure that claims management regulation is in a firm position to better protect consumers, to deter CMCs from predatory marketing practices, and to help organisations that are on the receiving end of fraudulent or unsubstantiated claims. The extent to which CMCs are prepared for change and their appetite for compliance remains to be seen. However, what is clear is that the CMR Unit’s new powers to fine and LeO’s expanded jurisdiction give us the power to tackle misconduct in a way that we have not seen before. Building on these measures, a fundamental review of CMR is currently underway which will consider the resources and powers required for a strengthened regulatory regime. We’re also looking to consult later this year on proposals to cap the charges CMCs can apply to their clients, particularly in bulk claim areas such as payment protection insurance.

Q

The MoJ and CMRU have engaged with several CMCs including First4Lawyers and National Accident Helpline (NAH) with regards to the regulation of the sector, but is the balance still too insurer-focussed?

No not at all, we engage with a wide range of stakeholders which includes CMCs from across the different claims sectors, insurers, banks, trade associations, consumer bodies, ombudsmen and other regulators. The majority of our stakeholders are members of our Claims Management Regulatory Consultative Group, which was established from the beginning of regulation to ensure effective involvement of interested parties in the development and operation of the regime. Our engagement with CMCs is proportionate to our operational and strategic priorities. In addition to our work with the personal injury claims sector, we have begun to put in place relationship management arrangements with a number of large CMCs with a significant market share in the financial products and services sector. This has allowed us to actively address compliance issues directly with them and pre-empt any problems.

A

Q A

What are the CMRUs views on the number of Noise Induced Hearing Loss (NIHL) claims?

We are taking a tough line with CMCs seeking out leads to pass to solicitors in the personal injury market, particularly NIHL claims where we have witnessed some growth. We have already audited several CMCs involved in this area – some working exclusively in NIHL claims. Those businesses had generated a large number of Ofcom complaints and became a high priority for us. We issued our first of £220,000 against The Hearing Clinic following hundreds of complaints from members of the public who have received speculative calls about claims for NIHL. We have also recently tightened the authorisation and annual return process to require CMCs to identify whether they intend to operate in the NIHL market. Given that such claims are likely to be a growing market, this will enable us to monitor CMCs undertaking direct marketing for these kinds of claims more closely.

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The Opinions

21-48

The OPINIONS

21

22

Sector Soapbox

Sector Soapbox Changes afoot?

The Government will undertake ‘a fundamental review of the regulation of claims management companies (CMCs)’ starting early in 2016. The review will include proposals for the introduction of a cap on the charges that CMCs can apply to their customers, and will consult on how this will work in practice. What impact could the review have on CMC’s, claimants and insurers?

T

he process has begun and Stakeholders met in London at the end of September for an introduction.

It is not clear whether it is a ‘wipe the slate clean’ process and start again or simply adjustments to what we already have, however the agenda is clearly wide open.

There was a mix of attendees, predominantly Financial Services and Banking related, with a scattering of Claimant representatives and of course the ABI and FOIL came mob-handed. Interestingly, they thought the coverage should be opened to include CHO’s and MRO’s in the field of play. It is not clear how receptive government will be to this, but it is difficult to see where they fit into the regulatory framework. It was also interesting that the question of this being the only regulator that is not independent of government was

raised and it is not clear how that may play out either.

Much will depend on whether the status quo remains in place for the Small Claims Limit in personal injury cases. If it is raised, then it is likely CMCs will move into the space to deal with claims on a Contingency fee basis, possibly up to 50% of damages. This will change the dynamic with the regulator and bring the focus sharply back on the personal injury side and away from the financial side of claims. One good thing for CMCs if other sectors are brought into the regulations is the issue of fees. The more parties paying for regulation, the lower the likely fees. With the number of CMCs being currently lower than they have been in a long time, this has meant the vast majority of fees have come from few large CMCs. This could change if MRO’s and CHO’s are brought in.

Alan Nesbit, Chairman, Association of Regulated Claims Management Companies (ARC).

Claims – A Market Initiative

I

t is a brave organisation which does not have its customers at the heart of everything it does in this world of heightened awareness to consumer issues. The consumer lobby has never before had the opportunity to be heard quite as effectively. But perhaps more importantly, the advent of social media has given the person in the street the ability to give instant praise or criticism to service received; commentary which has the potential to go viral in minutes.

Insurance does not escape this phenomenon and the recent FCA thematic review of commercial claims has further focussed the industry towards the aim of improving the customer experience still further.

The Industry Claims Initiative, made up of Brokers, Insurers, Loss Adjusters and Assessors, industry representatives from BIBA, the ABI, Airmic, CILA, MacTavish and others were looking at improving claims even before the FCA had reported. Issues such as the customer journey, improving the overall experience of claims and discussing the problems faced by the industry in delivering better service through innovation along with emerging issues have all been discussed.

The group does not have all the answers at this stage, but it provides a platform for healthy debate and discussion from issues ranging from how we will deal with the issues raised by the FCA review to the emerging issues such as

MC // November 2015

the implementation of FloodRe, Cyber risks and the sharing economy.

To date, the output has been good with the production of guides to assist the consumer and explain better how the industry works, with future emphasis being aimed towards the promotion of how clients can avoid being under insured and just what it will mean if a client is under insured. BIBA also assisted in the writing of the “Small Business Insurance for Dummies” and is currently working on a guide to provide guidance to Brokers on how they should approach this issue with Clients. BIBA has worked with AXA and have provided customer focussed guides on raising awareness on the commom reasons for claims repudiation, as have Aviva.

We should not forget that this industry pays a phenomenal amount of money out in general claims every day, so we are clearly doing something right. However, we cannot be complacent, and where we see that improvement can be made, we must take the opportunity to change. The Claims Initiative group provides the platform for healthy and constructive discussion to help us achieve what we as an industry, the FCA and most importantly the customer wants us to achieve.

If there any issues you would like to bring to the attention of the group for this or future meetings please email claimsinitiative@biba.org.uk Andrew Gibbons, Chairman of BIBA’s Claims Working Group.

Sector Soapbox

23

Opportunities on the horizon

E

very day, insurers pay out £27m to repair vehicles and cover personal injury claims. With human error accounting for 90% of road accidents, autonomous vehicles could significantly reduce the number and severity of accidents that cause these claims.

While it may be many years before truly driverless cars have widespread consumer appeal, the Government wants the UK to be a world-leader in this technology. It is right, therefore, to begin thinking about how society will have to adapt.

Equally important is to reap the safety benefits of autonomous elements that – even with a driver still ultimately in control of a vehicle – have the potential to reduce accidents, both the serious life changing accidents and smaller collisions that, nevertheless, cause huge claim costs.

The insurance industry wants to see safer vehicle technology, tried and tested and understood by the public.

A great example of this is Autonomous Emergency Braking (AEB), which is proven to reduce the kind of low-speed accidents where most claims occur by 20%. Insurers have enthusiastically embraced AEB – allowing vehicles with this as standard to enter a lower group rating, significantly lowering the cost to insure them. Insurers agreed to this

even before they had claims history on the effect of AEB – a reflection of their confidence in autonomous technology and the benefits it will have for road safety.

And that’s why insurers are watching the development of highly-autonomous vehicles and driverless cars with such interest. The ABI is working with the Department for Transport and a wide range of other stakeholders (including manufacturers) to create a framework where this potentially life-saving technology can be developed, tested and used to reduce accidents.

At the moment, there are two key issues that insurers are seeking to resolve – firstly, the question of a possible transfer of liability in the event of an accident and secondly, ensuring consistent access to vehicle data. These questions will be complex – but I am confident they can be solved.

Insurers should see new opportunities from using the more sophisticated claims notification platforms, allowing the rapid processing of a claim alongside the quick recovery of the vehicle and provision of a replacement. The insurers who make use of the increasing volumes of data building policies to recognise the shifts of risk - are likely to move ahead of their competitors and find opportunities in what is – and will remain – a very competitive market.

Ben Howarth, Policy Adviser, Motor & Liability, The Association of British Insurers (ABI).

What you lose on the swings, you make up for on the roundabouts

T

he Government’s consultation on reducing legal costs in clinical negligence claims has not yet been published but this hasn’t stopped critics of fixed fees, including the President of the Law Society, defending the status quo.

One of the key objections raised by opponents of change is that clinical negligence claims can be complex and imposing fixed fees will reduce access to justice by discouraging more experienced practitioners from dealing with these claims (although none of these objectors suggest what rich pickings these practitioners will turn to instead). Indeed that objection seems to be raised as a matter of principle and without any consideration for the appropriate level of fixed fees in such cases. FOIL is committed to access to justice but not at any price.

There can be no doubt that costs are out of control in these claims. NHS Litigation Authority (NHSLA) data shows that Claimant costs in claims worth up to £50,000 on average exceed the value of the claim and that average Claimant costs are 83% of damages for claims worth between £50,000 and £100,000, and on average 57% of damages for claims worth between £100,000 and £250,000.

It has long been held that legal costs should be proportionate to the amount of damages in issue. As far back as 1996, Lord Woolf argued that a system which allowed Claimants to recover as much in costs, if not more, than in damages would not command public confidence.

In 2009, the then President of the Queen’s Bench Division, Sir Anthony May, said ‘It is more important that a defendant should not be at risk of a grotesquely disproportionate costs order than that claimants should be enabled to conduct risk free litigation.’

Insurers and the NHSLA have successfully operated fixed fees for a number of years. I am not aware of any complaints that this has led to reduced access to justice.

The advantage of fixed fees is that they can be used to ensure proportionality and they also give experienced practitioners dealing with large numbers of similar claims the ability to subsidise more complex cases with profits from the straightforward ones.

As in many other areas of law, fixed fees will become a fact of life for many clinical negligence practitioners. The successful ones will be those who embrace the change not those who fight it.

Duncan Rutter, Vice President of the Forum of Insurance Lawyers (FOIL) and a Partner at DAC Beachcroft LLP.

MC // November 2015

24

Sector Soapbox

Sector Soapbox An opportunity to make a difference

T

he issue of claims management companies (CMCs) and nuisance calls and texts has never been off the agenda, but it has dramatically risen up the rankings of hot topics in recent months. The House of Commons even debated the problem of nuisance calls again recently. It is, however, the appointment of Carol Brady, a board member of the regulator, to conduct a full review into the regulation of CMCs that has been concentrating minds recently. It will hopefully provide an opportunity for a full and careful analysis of the issues, challenges and problems.

There are still around 1000 authorised specialist CMCs operating in the claims market out of over 1,700 firms.

This is, however, the lowest number of firms in the sector since regulation began in 2007 (there were over 1900 in 2013). They had a combined turnover of £310 million in 2014/15 – only second to financial products and services - an increase of 27% from 2013/14. Authorised and fully regulated CMCs are obviously perfectly entitled to conduct their business and clearly have a role to play in the sector.

What is the scale of the problem though? An Ofcom

study in 2013 suggested that only 2% of all nuisance calls were for accident claims, way behind the 22% for PPI claims, 10% for energy, 10% for market research and 8% for general insurance. This doesn’t appear to fit with common perceptions. Most of us seem to receive numerous calls about personal injury claims, sometimes asking about a specific accident we have actually had, others where they appear to be simply fishing to find people who have had an accident.

The vast majority of these calls are likely to come from unauthorised CMCs that appear to regenerate shortly after being shut down with alarming alacrity, telesales companies and CMCs originating offshore that escape any kind of regulation.

The review clearly has a lot of ground to cover in a relatively short period of time before it must prepare its report. There is the thorny issue of the regulatory structure itself. And there are the complex issues of enforcing existing data protection legislation and reviewing data privacy issues, which go way beyond CMCs and the claims sector. The review has a real opportunity to make a difference and we wish it well in its deliberations.

Susan Brown is a Chair of the Motor Accident Solicitors Society (MASS) and a Director of Prolegal.

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The Opinions

25

Spotting risk trends

The reality of increased IPT

Importance of risk trends: Are underwriters able to cope with the task of risk trend analysis or is it best left in the hands of outsourced specialists?

Is the hike in Insurance Premium Tax (which was announced in July’s Budget and comes into force on 1 November), a good move for the UK economy in the long term, and what does the increase mean in practice for insures/brokers?

S

potting risk trends is what will make an insurer a healthy profit, or if they get things wrong, lead them in to very unfortunate circumstances.

Changes are happening much quicker now than ever before, and sometimes the magnitude of these changes, and the associated change in risk profile, can transform the risk landscape almost overnight. For this reason the executive teams of insurance companies are taking a much greater interest in emerging risks and other trends, and a small industry has developed around this. Even before we start considering options outside a company, the biggest area of FTE growth within most companies has been in risk, teams of often over cautious actuaries speculating with the positive intention of making sure there are no big surprises financially.

Whilst I have no problems with this per se, it does worry me that if someone else assumes responsibility for a particular topic, there will be a natural dilution of the understanding of underwriters in this area. Underwriters are the ones that assess risk, try to price or apply terms appropriately, if they don’t really understand the detail about risk trends, how on earth can they do their jobs properly?

The reality is however that Underwriters do need help in keeping abreast of these trends, the world and its risks are now so inter connected it is barely possible for one human being to keep completely up to date across even a relatively restricted portfolio. This is where specialist companies can provide a great service and I would recommend subscribing to whatever risk bulletins, newsletters and services you can that are appropriate to your line of business. That combined with the views of your own dedicated risk teams should more than cover off your needs, and that interaction and debate will make sure things are highlighted promptly.

My one request however would be never abrogate responsibility for truly understanding risk, as an underwriter, it is you who chooses to accept or decline a proposition, what terms to apply, and usually also tailoring the broader proposition for your customers. If you don’t fully understand risk trends you simply cannot fulfil that function appropriately, and the consequences for your company, and the customer, can be very poor indeed.

David Williams, Managing Director, Underwriting, AXA Insurance.

O

ver the past few years, the Government has made great strides to help insurers tackle some of the costs that have served to drive up insurance premiums for motorists. The introduction of the LASPO Act and civil litigation reforms have enabled insurers to pass on savings of £1.1bn through lower premiums according to the ABI. In fact, the average annual motor premium for private motor fell by 12% between Q1 2012 and Q2 2015, to stand at £367.

Premiums appear to have levelled out with the downward trend coming to an end and will be exacerbated by the increase in IPT from 1 November.

The IPT hike certainly seems to fly in the face of all the efforts to reduce motor insurance premiums and will have a direct impact on household budgets. And this could be the first in a steady rise in IPT hikes under the current Government.

Younger and older drivers could be disproportionately hit given these groups can have higher premiums due to the additional risks they represent. The cruel irony is that they are also the groups least likely to be able to afford the hike.

In terms of older drivers, increased insurance costs may force some older drivers into having to sacrifice their car or to cut back on other household costs to keep their car on the road. At Ageas, we’re part of an Older Driver Taskforce working with the Road Safety Foundation looking at the greater needs of these drivers to improve safety and to help them maintain their independence and quality of life.

In our Making Road Safety Pay campaign with the Road Safety Foundation, we also call for the removal of IPT on younger driver policies, in order to incentivise the take up of telematics as a safety recommendation.

Whether it’s a good move for the UK economy remains to be seen but the IPT increase is likely to undo much of the good work done over the past few years to make motor insurance more affordable.

Niraj Shah, Chief Actuary, Ageas Insurance Limited.

MC // November 2015

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The Opinions

Your best marketing tool

J

ust like many other businesses, CMC’s have competition and like many businesses who provide a niche service, many have marketed themselves to take their position as a market leader, with sometimes heavy, hard hitting marketing tactics. Offering a free service, which helps consumers and gives them access to a possibility of winning a case which includes a financial reward, was always going to be a head turning service, but as the sayings go; ‘Nothing in life is truly free’ and ‘Nothing lasts forever’.

We appear to have followed our American friends and have become a nation open to claiming against employers, councils and lenders but as always, consumers soon get to hear what is going on behind the scenes and how some companies are mistreating prospective clients, by bombarding them with unsuspecting texts and phone calls.

In business, you have to be forward thinking and go out and ask for the business, but receiving texts about an accident that has not happened, is a bit like placing divorce lawyer services, at a wedding outfitters. For prospective clients it is a little uncomfortable and for some an invasion of privacy.

Making claims and the use of misleading marketing by some CMC’s has spoilt and tarnished what is for some consumers a much needed lifeline to making a claim, without any initial expenses. Cost is obviously an issue, but if a client needs access to making a claim but has no money, it is still an avenue they will travel down, providing they can access information about the CMC they are speaking with.

Consumers are very quick at picking up on what to watch out for. For CMC’s, why wait to change the way business is won? Give clients what they will be looking for now. If you know you give good value, a good service and can back this up with client feedback then do so! Your biggest advocates will be those who have used you and have been happy with your services. Don’t waste your biggest marketing tool!

We want to speak with you and help prospective clients view the way you do business, by those who have used your services. Visit us at www.Checkaprofessional.com or call Free 0800 093 8414.

Lisa Beale, Head of Checkaprofessional.com

27

Funding and the risks

C

urrently the ability to expand and grow has never been more challenging. Increases in costs, such as, issue fees along with a reduction in income postLASPO can create a strain on cash flow. Many therefore are looking to source additional funding to propel their business forward.

Naturally, the first step would be to approach your bank.

Bank funding can be advantageous in terms of quantity, ease of access, and competitive interest rates. However, it is generally a lengthy process requiring significant preparation and delivery of management information including financial records and projections. They will also look to secure the funding by way of personal guarantees or assets of the business, which will impact on future and existing lending such as your overdraft facility.

Post-LASPO banks have been extremely cautious when it comes to providing funding for growth due to perceived market flux and greater risk. Using specialist consultants to assist in this process is sound advice.

Alternatively, third party litigation funding has grown in amount as well as willing participants. Everything from large value commercial to bulk volume cases can now be funded.

Generally, their understanding of the market is greater allowing them to shape the terms around the opportunity. Usually you will see much more flexibility and a common sense approach. While many offer great terms, the general feedback is the appetite lies in funding high value litigation rather than more volumous mainstream cases. Beware that most funders will rely on Personal Guarantees to secure the lending so the risk extends further than just your firms future.

Your short and long term goals will have a bearing on the type of funding required whether it be practice funding or case specific, preparation as well as specialist support is essential.

Your plan is the most important element in attracting new funds into your firm whether that be to support the payment of increased fees and large cases or to aid overall growth.

Martin Doyle, Director, Amberis ATE.

MC // November 2015

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The Opinions

Changing perceptions The Chartered Institute of Loss Adjusters (CILA) has recently awarded Cunningham Lindsey training accreditation for its professional qualifications training support scheme. Will other organisations look to secure accreditation (not just by the CILA), and is this something we are likely to/should see more of in the sector?

Yes. The popularity of these types of schemes continues to grow with the government pledging to support 3 million higher apprenticeships in the next 5 years, why wouldn’t anyone take up this option? Creating these opportunities is of the utmost importance, with the number of those opting to stay in higher education increasing. The importance and interest for young blood in the industry is even more apparent, with insurance having a pretty dull and uninspiring image, it is time for innovation.

At TRS, we see it as developing talents and securing their future within the industry.

During my apprenticeship interview with TRS a few years ago, the CEO asked me why I was interested in Marketing within the insurance industry; I believe he was genuinely puzzled. I stated that I found insurance boring; the job was offered to me on the spot. When I accepted, I never quite understood the extent of the job possibilities available to me and the doors which have opened. Two years in, life at TRS couldn’t be more exciting. It seems more organisations are encouraging young professionals to take opportunities through apprenticeships, graduate programmes and insurance specific qualifications and from conversations I have had, all have benefitted.

We have developed the TRS Centre of Excellence in offering Level 3 and above qualifications in a broad number of subjects ranging from Software Development and Claims Handling, to Accountancy and Social Media. 40% of the workforce is in training, creating an enthusiastic, vibrant and young team all with the willingness to learn. Given their attitudes and work ethic, we have employed 100% of those that have joined us, each becoming a key member of the team within the business and all challenging for managerial positions. We currently have our fingers crossed for members on our team that have been shortlisted for awards.

Their drive has inspired more senior staff and been embraced by all. Reading Insurance Times comments, it is no longer just a ‘white, male, managerial sector’, the majority may have stumbled and stayed within insurance but headed by myself, we wish to change that image and reputation.

The coverage of these schemes and programmes are everywhere and from someone who has benefitted immensely personally, I’m glad to see other organisations following suit.

29

Telematics: suspicious minds?

New research published by Consumer Intelligence has revealed that 49% of people who took part in the survey said telematics would become known in relation to insurance but that it would stay a niche product. Do you agree or disagree and why?

I

agree entirely that telematics will remain a niche product, for the foreseeable future. Telematics is a fabulous product for young drivers, particularly those under the age of 25. Having their driving constantly monitored and paying Insurance Premiums commensurate with how safely they drive, can only be a good thing.

It has been proven to reduce the number of accidents involving young drivers, and also has had a very positive effect on road safety generally in the younger driver, no doubt saving numerous lives. From a completely hypocritical stand point, I will insist that my son has telematics in his first car, it is a necessity for the young driver, and their parents.

We then move on to the rest of the population…

It is a well known fact that we live in an ever ageing population, with a higher percentage of over 40’s than ever before, and with that brings the issue of suspicion.

If you were to survey a large cross section of our over 30/40 population of drivers regarding telematics, I believe that most would be vehemently against it. This cross section of the population is convinced that the Government would simply use telematics as a way of handing out speeding fines electronically, thus reducing their freedom and increasing the growing ‘big brother’ way of life.

Whilst I have no doubt that telematics would save lives and reduce accidents on the roads, I personally would not have a telematics box fitted to my car (I know, I am being hypocritical), nor do I know of any of my peers who would either, I would not feel comfortable knowing that my every move was being watched and scrutinised.

For those reasons, telematics will remain very much a niche product for at least 20 years, unless it is made compulsory.

Phil Hodgkinson, CEO, Pure Legal Costs.

Insurance just got interesting.

Victoria Rawlings, Media and Marketing Manager, TRS Claims.

MC // November 2015

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The Opinions

Managing expectations

The appetite to lend?

How can legal partners ensure the expectations of their JV partners are met, while delivering services in the best interests of the customer?

Business funding: if you have plans for growth in the claims sector, are these being enabled by external investors or banks – is there appetite for lending?

L

aw Firms enter in to joint ventures for a whole variety of good commercial reasons. Recent well-publicised joint ventures include those with financial services organisations, accountants, joint ventures between English and overseas Law Firms, and even a joint venture between a Lawyer and a Marketing Agency. In each case, the expectations of a joint venture partner will be different. This article focuses upon ABS-licenced joint ventures between Lawyers and “introducers”, principally insures, insurance intermediaries, and claims management companies.

There are two important components to a joint venture between the Lawyer and the introducer. The first is the joint venture agreement itself, and the second is the ABS licence. The former will provide the legal framework for the relationship between the parties, and the latter will provide the regulatory context within which that framework must operate. It is important that the joint venture agreement reflects the regulatory conditions which have been imposed on the JV, and that in drafting the JV Agreement, proper consideration is taken both of the regulatory constraints and of the commercial objectives of the JV Partners, and professional obligations of the legal partner to deliver services in the best interest of the customer. It should not however be assumed that the obligation to act in the best interest of the customer rests solely with the legal partner.

If the joint venture partner is an insurance company or an insurance intermediary regulated by the FCA, there is a statutory obligation to treat customers fairly.

The legal framework is however only the starting point. It is important all parties involved in the delivery of the service have in mind all of the interests of the JV partners, as well as those of the client. The lawyers must be robust in adhering to their professional obligations, not only because it would be them (rather than the joint venture partners) who would face any sanctions for failure to adhere to those standards but also because the failure to deliver proper customer service would impact upon the reputation and therefore the commercial viability of the joint venture. They cannot however ignore the commercial expectations of their joint venture partners, which will be to realise acceptable and usually pre-defined financial outcomes from the JV. The way to achieve this is, in common with many business outcomes, to ensure that expectations are properly and clearly managed from the outset, and that those expectations are consistently managed in a way consistent with the original objectives of the joint venture, through the life of the joint venture enterprise.

31

B

anks, funders and investors have (understandably) in recent years taken stock about the approach to lending in the legal sector. The failure of some notable law firms has left banks and investors thinking more cautiously about the sector.

This is not to say that there isn’t an appetite to fund in the market. The impact has driven the desire for a more forensic and granular view of law firms’ finance and performance.

The sector has seen and continues to see investment to fund growth with both Switalskis and Express Solicitors (both of which have been granted ABS licenses from the SRA) having secured significant funding earlier this year from high street banks. Express Solicitors was reported to have secured a £10.6m funding package from Royal Bank of Scotland.

Of primary concern to external funders within the personal injury sector is the security of the law firm’s WIP asset. Financial stability of the law firm depends upon the ability to generate cash from the WIP asset.

In order to secure funding, law firms will have to demonstrate the risk profile of their WIP, coupled with cash conversion and collection procedures.

In ZebraLC’s experience of auditing of law firms’ WIP, case level data is critical in understanding of the risk profile of WIP. Whilst some firms have a forward thinking approach to management information data and use case management systems to drive key KPIs, others are yet to grasp the importance of detailed data analysis.

There are a number of factors that can adversely affect a firm’s WIP risk profile, including poor or unrealistic recording of WIP; unrealistic valuation of WIP; previously unidentified issues in relation to retainers and funding; acquired cases and acquired WIP; poor technical ability with increased indemnity risk; poor case screening at the outset; poor risk assessment and/ or optimism bias, and delays in case progress resulting in increased number of cases with protective issue of proceedings or adverse costs orders. It is this granular visibility around value and risk that is required.

Our experience is that investment, third party funding and bank funding is available for good firms, and there is appetite to lend. The devil is in the detail and this means case level data is critical.

Zoe Holland, Managing Director, ZebraLC.

Janet Tilley, Director of Volume Services, Simpson Millar LLP.

MC // November 2015

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The Opinions

Funding: a solid track record Business funding: if you have plans for growth in the claims sector, are these being enabled by external investors or banks – is there appetite for lending?

A

ll businesses are, or should be, bursting with ideas for new ways of working. That is especially so in the insurance claims sector, where there is a strong imperative to improve processes and make claims handling faster and cheaper. That comes with the added corollary that what insurers really require of a claims handling operation is access to data – the ability to retrieve and package Management Information (or MI) is the watchword for so many presentations at the moment.

However, devising the software to capture that data and then creating the systems to store it and make it accessible to the ultimate client/user is an expensive proposition.

It helps if (as with my business), there is a longstanding system (Claimsview), in place which has been subject to constant upgrades over the years, but even with that there is a significant element of investment and for SMEs, getting investment presents a conundrum: does the business seek to fund its developments via the traditional route of bank debt or does it seek out assistance from the plethora of other sources of funding – challenger banks or venture capitalists or one of the new sources: a crowd funding scheme?

The argument in favour of bank financing is a short one: basically, it is cheaper! The downside is that the appetite of clearing banks for business lending, while it is still there, has shrunk under the influence of Solvency II. Banks also now want to have a much shorter timescale for the repayment of any loan. There is also an argument for saying that it is advisable to keep project lending separate from the general banking arrangements, but that will, of course, vary from business to business.

I therefore believe that there is a lot to be said for seeking to get project-specific funding for a new IT project of this sort. There are a number of such crowd-funders offering their assistance at the moment, and this takes many forms, with both debt funding and equity funding on offer. Each has to be viewed on its credentials, because an SME in the insurance field needs assistance from a body with a track record as a “patient investor” – by contrast to the horror stories doing the rounds about the effect of private equity on such businesses.

David Simon, Chairman, Triton Global.

33

Levelling the playing field

T

he Government review of the regulation of CMCs has been brought about because of concerns from the general public and businesses that are affected by the involvement of CMCs, particularly in the financial sector. It is believed that CMCs encourage compensation claims, that their marketing is misleading, charges to their customers are too high and they cause a great nuisance to the general public with cold calls and texts; such as the ones informing you that you could be entitled to ‘up to £5,000.00 in compensation’ for your accident.

The changes that could be recommended are to be focused around protecting the general public and reducing the impact of bad conduct and service by CMCs on businesses that have claims pursued against them. They are also looking to put a cap on the charges that CMCs can apply to their own customers who use them as their source of work.

As with any industry change, there are always winners and losers. If changes are brought in place which result in a reduction in the numbers of cold calls CMCs are allowed to make, this will lead to less work for CMCs to sell to their customers and therefore less claims being pursued where the claimant would not otherwise have pursued their claim. This benefits insurance companies.

Many Solicitors and CHOs use CMCs to get work. Because there are large numbers of CMCs, including big players, as well as the fact that insurers and brokers still expect ‘marketing fees’ from CMCs, the acquisition costs for the CMC’s customers are extremely high. This is despite the reduction in the fees Solicitors can claim from insurers.

On many claims Solicitors, for example are paying CMCs more per claim than they receive in costs from insurers.

This means they are reliant on what they can charge their clients which on low value personal injury claims is minimal. To be able to continue, some solicitors are reducing the quality of service provided to claimants by turning personalised, professional service into a minimal contact, ‘sausage factory’ process to be carried out by low paid administrators. A reduction in acquisition costs should lead to increased profitability for CMC customers which in turn should lead to a better service for claimants.

Capped charges for CMCs should lead to reduced marketing fees payable to brokers and insurers bringing the market back to a more realistic level.

Emma Holcroft, Director, 2020 Investigations.

MC // November 2015

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The Opinions

35

Get it right and replicate

A golden opportunity

How can legal partners ensure that the expectations of their B2B customers are met in a joint venture or partnership, while delivering services in the best interest of the consumer?

With fraudulent insurance claims continuing to have a significant negative impact on an insurer’s profitability, what can be done to tackle the issue and can we learn anything from the successes of insurers from across the globe?

W

hen I speak to my contacts in other chambers, I find the conversation about ‘service delivery’ often veers towards what they think their chambers expertise USPs are, rather than identifying their ability to meet client’s business needs (part of which is working in the ‘best interest of the consumer’). I know I’m not alone in being able to identify the following but I still think too much lip service is paid to identification rather than the capacity to align and deliver.

For our partnered legal service providers, which includes the BGL Group (Minster Law), their expectations and how to deliver often come down to the following: 1. Timelines: Being able to provide a consistent service at all times, to the expected service quality level (the latter is a given by the way, not a ‘USP’).

2. Pricing: Committing to fees that ensure profitability for the client and, ultimately, a more cost effective outcome for the consumer.

3. Accessibility: Being there when/ where the partner needs you and, if necessary, with the ability to utilise their technology (still a huge barrier for many chambers) and customise reporting to meet customer and client MI requirements.

4. Efficiency: Do you work smart? How are decisions made? Do your processes make working relationships between you and the client work more effective or do they really, simply, benefit chambers? Is your service designed around the client?

5. Honesty: Not only do you need to know what the client wants, you need to ensure any barristers signed up to a service agreement or JV are going to put the partnership before ego. Situations where lawyers come out of court frustrated as they explicitly asked a barrister not to take a case off into their own hands can destroy a partnership overnight. It’s time to have some honest conversations back at the ranch about customer service. Going behind a practitioner’s back isn’t my idea of teamwork.

Ultimately, when I go in and pitch to the likes of the BGL Group, I consider what partnership offering would work best for them based on the information I carefully craft first. We work in tandem with Parklane Plowden Chambers to deliver something truly effective, accessible, honest and with real added value for BGL Group – the traits our procurers are looking for. Not once did I have to mention our ‘expertise’ and ability to help advocate in the clients’ best interests. That got us in the door.

Do your homework, listen, put the client first, get it right and replicate good practice.

Stephen Ward, Managing Director, Clerksroom Chambers.

A

ccording to ABI figures, in the last year alone, fraudulent claims were worth £1.32 billion across all business lines, with motor insurance attracting the most fraud.

So significant is the problem that insurers currently invest £200 million annually in an attempt to tackle the issue. The consequence of this is that an extra £90 is added to the annual insurance bill for every UK policyholder. If these facts aren’t worrying enough, experts believe they could be just the tip of the iceberg. Clearly the industry needs to raise its game but how, given the investment already undertaken?

In Australia and South Africa, the top insurers are enhancing fraud detection and risk scoring by harnessing the latest technology that removes the manual process of investigation, and benefits from one central bank of data, removing the need to rely on multiple sources. As a result of this technology’s success, it is being delivered to the UK market, offering insurers an exciting new opportunity to tackle fraud head on.

We know that it’s important to spot fraud as early as possible in the claims process, enabling insurers to make fast, accurate decisions that don’t impact on honest customers. Insurers spend substantial amounts of time and money investigating claims, with many paying out, simply because they are relying on multiple sources of data and manual processes, which aren’t up to the job.

Modern solutions allow assessors to quickly decide whether a claim needs to be investigated further or if the risk is low enough for a pay-out. Advances in technology mean insurance claims can be profiled to determine the level of risk at the start of a claim.

In the global insurance markets already using this technology, fraud detection is higher, resulting in fewer fraudulent claims being paid, having a positive effect on efficiencies across the board.

The benefits don’t stop there. Insurers need to be able to tailor any solution to fit their business and that’s what makes the new approach to risk scoring such a leap forward for the industry. Crucially, insurers can combine elements, such as business rules, customer profiling, predictive models and claim values, to create a risk scoring process that works for their business. With little or no integration needed, the latest web-based solution is fast and easy to set up, providing insurers with instant access to accurate scoring and advanced analytics they can act on immediately.

Technology is finally starting to catch up with the fraudsters. Data collection and analysis is better than ever before. Surely, if there’s a solution available that takes advantage of this data whilst removing manual processes – the combination of which has been proven to significantly cut the cost of fraud and improve investigation capabilities - insurers should be grabbing it with both hands?

Stas Mintowt, Sales & Marketing Director, Audatex.

MC // November 2015

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The Opinions

Fixed Fees are coming whether we like it or not

O

n the government’s balance sheet, clinical negligence provisions are the second highest behind the cost of nuclear decommissioning. Almost half of these costs arise from brain injury at birth claims. Apparently, rather than reducing the number of brain-damaged babies - saving the NHS billions and stopping the misery resulting from these events - the DoH’s response is to target claimant solicitors’ costs by proposing to introduce fixed costs and cap fees to expert witnesses. Fixed costs in clinical negligence will have a devastating impact on access to justice or at least be damaging to the quality of service law firms are able to provide. The vulnerable, whose cases can be the most complex and challenging, will be the most affected.

The premise that low value cases are less complex and therefore less expensive to run is also false; capping legal fees would leave families dealing with fatal cases unable to gain legal representation as this highly specialised work would become unviable for solicitors to undertake, and the “victims” of negligence will be at risk of not receiving the specialist advice they should have, and hence proper redress for their often life-changing injuries.

Fixed fees could be introduced in October 2016, subject to the outcome of a consultation later this year. The current proposal is for a scheme based on the value of damages awarded, rather than taking into account other factors that can increase the cost of any claim such as the complexity of the case. The proposal is that fixed fees should be applied on claims up to the value of £250,000, which would include claims for people who have been very seriously injured.

Fixed Fees are coming whether we like it or not. Firms will have to adapt and change the way they work: look at alternative ways of providing the same quality service. At Medical Records UK, we try to understand these and the other challenges being faced by the industry. The bottom line is, people injured through no fault of their own deserve fair compensation for any loss. We want to ensure that law firms can continue to provide the same quality service and so the idea has been put forward of offering our staff to your firm on an ad hoc basis to sort and paginate medical records bundles and prepare the timeline/ chronology.

Under this scheme, our costs could be reclaimed as “agency staff costs” decreasing the level of disbursements on a case.

To find out more call 01242 603088.

37

Can access to justice be helped by eBay?

I

t has recently been suggested in Northern Ireland (NI) at the highest political level that the time is right for a radical new system of Justice that would see many court cases settled online on ‘eBay’. This is unfortunately not as outlandish as we (lawyers that is) might think.

The present government and especially with Minister Gove, could easily have their ‘heads’ turned. Indeed, the local proposal in NI is coming from the DUP, one of the two big parties in Stormont who hold much-valued seats in the House of Commons.

It is thought appropriate, that in our austere times, DIY divorces, child maintenance disputes and (even) compensation claims are just some of the cases that could be dealt with at the click of a button by online judges and internet hearings. What with the dramatic increase in the numbers of personal litigants for the reasons we are all too familiar with, the proposal is aimed at assisting those very same people who are been forced to represent themselves in the civil courts due to the reductions in legal aid expenditure.

Currently in NI, legal aid is still widely available for pursuing and defending civil claims, compared with the changes that in England & Wales that have long since bedded in. Many will see the proposal as a way of trying to subtly navigate a way round the existing stand-off between the legal profession and other stakeholders of similar views such as trade unions and Justice Minister David Ford who is demanding huge cuts to the legal aid budget. The so called cyber justice system has been proposed by chairman of Stormont’s Justice Committee, Alastair Ross who said that the squeeze on justice budgets means that “innovative solutions are not just desirable, but are essential if we are to produce a more cost-effective and efficient justice system”.

One thing that is fast becoming the new norm especially with the younger generation, is the everyday usage of online interaction, particularly the various agencies of government now preferring that mode of communication and engagement. Mr Ross believes that NI is small and flexible enough to try new pilots and lead the way. Let’s hope he’s wrong. One only has to look at the hard data of DIY wills to see the additional work created for lawyers when things are not done properly in the first place.

Gerry Lee, Senior Partner, P R Hanna Solicitors.

Adèle Coates-Lyon, Managing Director, Medical Records UK.

MC // November 2015

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The Opinions

A collaborative approach How can legal partners ensure the expectations of their JV partners are met, while delivering services in the best interest of the customer?

T

o answer this, we have to ask why would anyone want a joint venture rather than keeping the project within the company. What is the benefit of a JV?

The aim is to create a new project that is better than could be created by either party acting individually.

The project must benefit from the expertise from both sides, who in turn spread the investment of time, effort and finance. ‘Better’ could refer to the return on investment and thus profits. It could refer to the time scales, a superior product or service. More often than not, it refers to most of these advantages. Ultimately, a new product or service should benefit the customer.

Like most partnerships, clear and honest communication is key, and never more so than at the start of the relationship. It is therefore imperative to establish a clear objective that everyone can work towards; this needs to be communicated throughout both companies. The structure should be established early on so that a clear and measurable plan can be implemented. This way each side understands what is expected and when it should be delivered. The investment in time is paid back exponentially over the course of the project.

That is not to say that consistent communication throughout the project is not imperative, in particular the earlier creation phases. Regular monitoring and assessment of the project keeps it on track and allows for tweaks and sometimes an evolution into an even better project. If a bit of competition to over-deliver is thrown into the mix, then all the better.

As an example, we have collaborated with software developers and solicitors to build software designed to be a mutually accessible interface between our companies.

Rather than the ‘us and them’ attitude, we both benefit from the transparency of understanding where each other is up to, together with being able to interact seamlessly. Our partners can then know as much as we do and vice versa.

The pay-off is that our mutual clients benefit from both companies increased and clearer communications, with the added advantage of a swift and accurate service.

So clearly established objectives from the start and consistent measuring will make it good; add in transparent and honest communication and the joint venture will be great.

Nik Ellis, Managing Director, Laird Assessors.

39

In focus: costs management Are we seeing an increase in litigation funding in the UK legal services marketplace?

I

n a word, yes! Recent research identified the financial services sector and risk management as the key drivers of growth in litigation funding in the UK.

Therium (a leading UK based litigation funder), and Just Costs Solicitors surveyed 101 commercial litigation partners at the UK’s top 200 law firms on the adoption of litigation funding in the UK. The findings showed that the vast majority of litigation partners (79%) have seen new funded litigation cases in the last 12 months. Funding was most prominent in cases involving the Financial Services sector (26% of total ranked responses), followed by the Industrials (16%) and Energy and Natural Resources (14%) sectors.

The ability to meet costs (23% of total ranked responses), risk management (21%) and cash flow (18%) were highlighted as the most important benefits of third party funding for clients.

Nearly 70% of litigation partners are having more discussions with clients about alternative fee arrangements than in the previous 12 months, and three quarters (76%) are discussing funding as an option in all cases, following the Jackson reforms of 2013 and reflecting client demand to reduce cash investment in dispute resolution.

However, solicitors prefer being paid on a restricted basis, entering into a fixed (30% of total responses ranked by preference), or capped fee arrangement (23%), over risk sharing with clients through a Conditional Fee Arrangement (20%) or Damages Based Agreement (12%).

The lack of interest in DBAs is largely due to how they are regulated and uncertainty regarding their enforceability.

It is interesting to see that the ability to meet costs, risk management and accounting benefits are closely ranked as benefits. From the perspective of big corporates, while they are able to meet the costs of disputes in many cases, the key reasons they turn to third party funding is the risk sharing with the funder and accounting benefits, such as not having to lock working capital into a lengthy litigation.

It is clear that cost management of disputes following Jackson’s reforms has become an increasing focus for parties in arbitration and litigation situations, both funded and unfunded. At Just Costs, we are continuing to see a growing demand for our cost analysis and budgeting services, in complex global situations, through to small local matters.

Mark Hartigan, Client Services Director, Just Costs Solicitors.

MC // November 2015

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The Opinions

Gaining ground?

A credit union has been launched to support Armed Forces personnel access safe and affordable finance. Do Armed Forces service personnel receive enough financial advice particularly when they receive compensation payments?

O

n the face of it, this appears a very good initiative and I welcome it. However, what is also needed, and which is something that we have been tirelessly campaigning Parliament on, is the need for wounded troops to be referred to specialist legal and financial advisors before they receive awards through the Armed Forces Compensation Scheme (AFCS).

There is serious cause for concern in that large sums of money are paid to sometimes very young (18 year olds) in to the bank account where their salary is paid without any checks being implemented to: 1. Consider if the bank account is a joint account, or if anyone can access the account and withdraw a soldier’s financial lump sum payment. There is evidence of this happening.

2. Consider whether the recipient has the mental capacity to receive and manage large sums of money. There is evidence that even when the claim is for a brain injury no assessment of mental capacity is taking place. These recipients are vulnerable adults where the Court of Protection should be involved to give good receipt and control finances so they are wisely invested and not dissipated on buying inappropriate vehicles or spending frivolously.

Many recipients are in receipt of state, means tested, benefits.

The lump sum award can be ring fenced in to a special needs trust to protect current and future state benefits. But: is this being done? Factors to consider here include: • Assessing family dynamics – can the family be trusted or is there a relative in the background ready to relieve vulnerable injured soldiers of their awards? Court of Protection intervention could prevent this.

• Even if there is mental capacity, no offer is made of financial advice or planning, even if it is refused.

• Who should assess mental capacity? The Ministry of Defence has duel capacity as Employer/Health care provider and paymaster. Does this create a conflict of interest for the MoD? Should there be an independent assessment made as in the NHS Trusts?

These problems are only just becoming a serious reality.

Time is passing and the money is running out. Without checks in place, the situation will worsen. As a solicitor instructed on such cases, I would be professionally negligent and open to reprimand and disciplinary procedures from the Solicitors Regulation Authority and legal claims if I allowed this situation to happen in my care. I have met with the MoD and MP’s but the situation remains unchanged.

Hilary Meredith, CEO, Hilary Meredith Solicitors.

41

Telematics: from niche to necessity

I

n recent years, we have witnessed the remarkable marriage of informatics and telecommunications to create telematics. A technology that has already accomplished many remarkable things, from improving health care quality, through to reducing environmental impacts and re-shaping everyday

human behaviour.

Stripped back, telematics is simply the transmission and collection of data, which is then aggregated to create actionable, situational knowledge to inform decisionmaking. As a result, risk professionals can move beyond traditional profiling based on demographics, pre-event simulations and post-event abstraction, to streams of near real-time data, direct from the end-user, to enable accurate and personalised profiling and pricing.

A brief history The origins of telematics can be traced back to a 1984 European Parliamentary resolution to promote road safety. Through these studies a program known as DRIVE commenced, which directly lead to the development of a European treaty to support the commercial competiveness of telematics on a global scale.

Nevertheless, it took another decade for all the pieces of the telematics puzzle to coalesce around the key technologies of GPS, GSM and the Internet. By far the most important ingredient in this mix was GPS and it is safe to say that without it there would not be the telematics we know today.

As with many key technologies, GPS was developed by the military, which knew of the importance of exact data positioning of its assets. When the US government provided free basic signals to anyone, GPS transformed from a niche military application to a civilian one, and with that, telematics moved from conceptual feasibility to commercial reality.

Back to the future “Great Scott, the future has arrived,” exclaimed Doc Brown, as he and Marty McFly blasted their DeLorean in to the future October 21st 2015. Regrettably, flying cars and hover-boards are not as widespread as anticipated but we do find ourselves in the midst of an ambient intelligence (AmI) revolution that was envisioned back in the 1980’s.

Transcending telematics, the demand for wearable technology is flourishing, with market growth estimated to hit $100 billion in the next decade. At it’s core, AmI brings intelligence into our everyday environments via computers and interfaces embedded in all kinds of objects; making people’s surroundings flexible and adaptive. From fitness to wellness, the capacities for tracking personal metrics and translating them into goal-oriented wearable technology is practically infinite.

“The most profound technologies are those that disappear. They weave themselves into the fabric of everyday life until they are indistinguishable from it.” Mark Weiser Phil Swinburn, Head of User Experience, slicedbread.

MC // November 2015

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The Opinions

As the first begin to fail Unique selling points: is there value and room for niche legal/insurance services, over two years on from the Jackson Reforms?

E

ntrepreneurs place much weight on the importance of innovation and the creation of new markets. The pressure cooker that is LASPO and the Legal Services Act has introduced many innovators to the sector looking to revolutionise, providing first-tomarket niche legal and insurance services with “first” USP’s.

However, history demonstrates that being first-to-market does not guarantee success and market domination usually comes by products and companies that came later. In many cases, those with first-to-market advantage weren’t literally the first to do something but rather the first to “put it out there.”

Failure is beckoning and whether it’s the “firsts” with new products or services, the “first” licensed ABS, the “first” private equity investment in something or other, what history also tells us that somewhere between 70-90% of acquisitions fail to deliver the value expected.

Not keeping a constant eye on the detail will leave many “firsts” exposed to significant risk of underperforming.

There are gaps in the market waiting to be exploited by those looking to succeed where first-to-market movers are likely to fail.

Let’s also remember that niche does not mean small – a business can be huge and niche and whatever your size, ensuring you can scale your particular expertise, process, ensure governance and be transparent with the financials involved, means that opportunity is within your grasp.

There are major niche providers developing in the fields of PII, Insurance, Claims, Commercial due diligence and ATE who are targeting their aim under the radar at specialist business sectors, offering something different from their competitors that has value built to last.

Ultimately there is no quick route to success and protestations of quick success and fabulous financials are usually underpinned by shortcuts. Let’s be frank, this often works extremely well for a time and fills media columns but is not sustainable long term.

Once the flaws of the “firsts” are exposed, financial stability rocked and the game over, those looking to take advantage and swallow up the products and service offerings to clients wanting a new home can swoop in.

43

Meeting the needs of the modern customer

A

s telematics hovers on the brink of mass market penetration, it’s not a question of whether this will happen or not, but when. People’s knowledge of telematics will continue to grow.

Five years ago the general public knew nothing about a black box, but these days’ young driver’s insurance policies are often financially prohibitive if they chose not to have one, and young people are aware of that. So too of course are the main shareholders at the ‘Bank of Mum and Dad’.

However, the mass market adoption of telematics will be in a different guise. Telematics as a product will simply become an enabler of customer value propositions.

Hardware will come in different shapes and sizes including the car itself, and different demographics of the population will adopt different form factors.

The “What’s in it for me?” question is one that needs to be addressed by all of those involved in bringing telemetry enabled products to the mass market, what seems obvious is that a telematics proposition that simply offers the customer the opportunity to save money on his motor insurance premium will struggle to gain the traction and volume required.

As technology develops, customer needs and demands move and often increase: faster, cheaper and better quality are the desires of the 21st century consumer.

Successful technology solutions are those that wash over the customer and deliver value with little or no input on their part and those that can be controlled by Mans new best friend, the smart phone.

Motor telematics starts with scoring your driving and develops into everyday life where you are rewarded for driving to work, where you buy your petrol and your insurer helps you save money on everyday vehicle costs.

Relationships between insurer and customer will reach new heights increasing retention and reducing acquisition costs. A telematics based customer (note the lack of the word insured or policyholder) may, just may, not consider his insurance policy a simple commodity purchase.

When that’s done (and it will be far more than a niche in the next 5 years), it will be time to tackle the connected home and human telematics.

Miles Keeble, Non Executive Director, Veracity Claims Ltd.

Playing the long game post LASPO means that there is value and room for niche legal/insurance services, it is an open market waiting for the second wave of activity as the “firsts” begin to fail. The unique selling point is “the client” – first, last and every time – not how great the financial return and being “first” is.

Lesley Graves is Solicitor and Managing Director of personal injury consulting law firm Citadel Law. MC // November 2015

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The Opinions

45

Not all CMCs are the same The perfect partners

R

egulation of claims management companies has continued to evolve since the introduction of the Compensation Act 2006. Now the Legal Ombudsman’s remit enables it to consider complaints from customers about the services provided by regulated CMCs, leaving the Claims Management Regulation Unit (CMRU) at the MoJ to deal with regulation of the industry.

This increased level of regulation has very recently shown its teeth with the first penalty issued under new powers allowing regulators to fine a CMC specialising in finding NIHL cases £220,000 after hundreds of complaints were made about speculative calling. Just last week we learnt that the Regulator had fined a CMC almost £570,000 for high-pressure tactics to get customers to make PPI claims.

But, since when have “nuisance calls” been worth more than taking someone’s life? Compare the fines above with some reported fines in October 2015 for breaches of Health & Safety rules, which resulted in loss of life.

• Rettenmaier UK Manufacturing Limited fined £200,000 with costs after admitting breaches of Health & Safety Regulations following an employee’s death.

• Two global companies fined £275,000 and £375,000 respectively with costs in addition, after a worker was killed and another seriously injured.

There is a real drive from some to stamp out CMCs altogether. Many smaller firms rely upon them for work.

They do not have the large budgets of the bigger firms, who saturate daytime TV with adverts, does this not also add to the perceived compensation culture? Insurance companies complained bitterly about referral fees at the same time as being the biggest recipients of them.

Law firms will continue to pay for marketing services. Many of them are simply not geared up to do this for themselves and certainly since the introduction of CMCs. But what choice do they have? If fees are capped, will this limit the amount some law firms can spend on marketing? Will more CMCs then be brought “in-house” and operate directly under a law firm, as many do now in any event?

There are huge blurred lines between what are nuisance or cold calls and Non Opt-in/TPS data calls. As per usual, the few ruin it for the many. Not all CMCs are the same. The reality is that law firms and CMCs will adapt, as they did following the ban on referral fees. Some will thrive whilst others will fall by the way side. But will anything actually change for Claimants?

How can legal partners ensure the expectations of their JV partners are met, while delivering services in the best interest of the customer?

A

joint venture (JV) is a formal arrangement between two or more firms, to create a new business for the purpose of carrying out a mutually beneficial activity.

Businesses of any size and shape can decide to join forces and use a JV to strengthen relationships.

Usually, JV’s are set up for specific projects, which can range from a one off project to a long-term business relationship.

Entering into a JV is of course not without risks, as the business will be getting into bed with another business and should enter such an arrangement with its eyes wide open. Due diligence is therefore critical and cannot be underestimated.

On the positive side, a successful JV will offer a number of benefits such as technical expertise, increased capacity, regulation, technology/intellectual property, access into new markets and distribution networks, and the ability to share costs. Depending on your strategy for growth, it can also be used as a vehicle to raise cash from outside investors without the need to increase debt by borrowing money from the bank.

On the negative side, there are risks when you partner with a business, such as failing to meet agreed objectives and milestones, divergent styles in management, culture clashes and risks associated with a failure in systems of governance and control.

The JV should be offering the customer a better experience with increased benefits and higher quality products, therefore if the above potential risks are not mitigated, they must eventually impact on the viability of the JV itself and the experience of the end customer.

All parties will need to work hard to get the JV back on track, to achieve those agreed goals and objectives, which are embedded at the heart of the JV. Being flexible, adopting an open approach and communicating regularly with the partners is essential to making the JV work. If you cannot resolve these issues, this JV could turn into your worst nightmare and could end up costing you your business.

Nicola Klimkowski, Head of Business Control and Development, LAMP Services Limited.

Robin Selley, In-house lawyer, Box Legal Limited.

MC // November 2015

46

The Opinions

Technology, Disruption and Risk

W

hen well received books on the legal profession are entitled, “The End of Lawyers?” and “Avoiding Extinction”, something is happening to the environment. Digitisation, Big Data and the Internet of Things will drive substantial changes in business models and practices, indeed knowledge workers are thought to be particularly vulnerable where artificial intelligence can be applied.

The insurance industry will see significant changes as more accurate predictive modelling allows better underwriting decisions, faster claim payments and improved fraud protection, to name but three benefits. These trends are discussed in a recent CII research report, Big Data and Insurance.

Therefore, where insurance and the law intersect, change is inevitable.

Clients are seizing the opportunity of digital and looking to save costs but opportunities for growth and cost efficiencies do not come without risk. Increased technological and data dependency creates business continuity issues and liability exposures. Importantly, there are concerns about privacy, the accuracy and use and abuse of data.

Law firms have been identified as targets for attacks by the ICO and others because they hold sensitive data and potentially have relatively weak security. Hacktavists have targeted law firms. The threat of adverse publicity poses a reputation risk that is potentially enterprise threatening.

In addition to the liability and reputation costs, physical loss of equipment and loss of revenue from system downtime are sources of potential loss. The threat is increasing for law firms in the UK and globally.

Organisations are often surprised to learn that attackers could be in their systems without the business knowing.

Spear phishing attacks are statistically very successful.

Are you a potential target? Do you have proportionately strong security?

Fortunately the uncertainty can be managed. Identifying the most important data held and taking sensible steps can eliminate the majority of the risk, especially since many incidents result from poor behaviour or human error.

Since security budgets may be constrained, advice and expertise can be accessed through insurers and cyber insurance. This protection can reduce unpredictability if a breach occurs, by having the right expertise available swiftly to holistically and professionally manage a situation.

Incident response is the key to loss limitation, damage confinement and recovery.

Keith Tracey, Managing Director, Aon Risk Solutions.

MC // November 2015

Diversify and innovate, together Unique selling points: is there value and room for niche legal/insurance services, over two years on from the Jackson Reforms?

A

t an industry level, I have observed mixed reaction to the Jackson Reforms. These recommendations brought about extremely difficult times for personal injury practitioners, who already felt the 25-50% income decrease. And I do not think this period is over by any means.

I have seen practices move into illness and clinical negligence claims in an attempt to mitigate any business risk brought about by the changes in PI work. This was a necessity when understanding that the only alternative was to cease practising or lose employment completely. I recently read a direct quote that simply said ‘Get big, get niche or get out’.

We have a duty to make room for innovation in order to revolutionise our services. Change is often resisted, but if the thinking is still to continue business as usual, then a severe reduction in volume and income for any firm will be a quick and painful reality check.

Having a unique selling point is a factor that differentiates a product from its competitors. There are ways to provide the lowest cost, the highest quality and the first-ever product of its kind. So ask yourself, ‘what do I or can I have that my competitors don’t?’

As a specialist providing products and services, I understand how difficult it can be to go to market with something exceptional that no one else offers. As a result of the reforms, I-COG responded swiftly and immediately put out to market sustainable solutions.

In response, we still delivered high ROI during adverse times and significantly reduced the total cost of claims whilst never compromising first class customer service.

We all need to ask ourselves what the needs are of the end consumers and then work backwards to the front end to understand what solutions and measures can be applied. That ever important profit margin has to be in the mind of any business owner, but we cannot compromise ethics, quality and delivery. So we have to make room for change, and this is the industry value.

Change does not happen overnight and no one person knows all the answers. But industry requires the collaboration of minds that identifies a niche approach, with empirical evidence to show for it. Two years on, we still have much more to do. But sticking heads in the sand is not an option. Diversification and innovation is the only way to continue to trade and to prevent the UK market ending up like the US market, and we need to diversify and innovate together.

Tara Shelton, Founder & CEO, I-COG Claims Management.

The Opinions

47

Rough ride or silver lining? Standing out in the maze With fixed fees in several legal sectors and strong indications that clinical negligence and commercial will follow, what are the challenges of maintaining a profitable business without compromising on client service?

B

efore the widespread onset of fixed fees, maintaining a high level of client service was relatively straightforward. All that was needed was effective management, good training and good staff. However despite all the protests from the profession as fixed fees entered the marketplace, maintaining profit and a high level of service is a serious task.

I speak in relation to my own legal practice which specialises in personal injury. Our priority is to ensure the highest level of client service. I accept that this is a common goal for practices but the laser focus I put on client service forces me to adapt the business around client service as we grow.

With the support of key personnel, we bring in innovative ideas to enhance the client experience and rewards for employees who demonstrate a WOW experience. We have a Client Service Ambassador within the firm who runs an informal team. Their sole purpose is to continue to ask how we can improve our service.

With ever tightening fixed fees, the cost of implementing all the fantastic ideas is almost impossible. With lower fixed fees due to LASPO, we have had to focus on maintaining the profit levels against rising overheads and high marketing costs.

As a firm we have looked to tighten our management information not just at the top but at the bottom too. Fee earners have several KPIs that they manage and report on every month. It ensures that they lift their head up from behind their computer and see the big picture. This has been invaluable to ensure that they are focussing on the right areas to maximise their profit. Employees handling our new enquiries have their own KPIs to monitor their performance and conversions.

New non-fee earning roles have been created to enhance efficiency and of course, a significant investment in technology, case management and operating systems.

The investment in technology has been instrumental in ensuring that we not only maintain our client service but enhance it while at the same time lowering our operating costs and maintaining profits.

Those sectors that are yet to face fixed fees would be well advised to begin preparing for a rough ride. However the silver lining is that those who meet this head on with a well-structured plan and investment in the right areas could well find themselves not only maintaining their profit levels but increasing them in the long term.

T

he claims industry presents one of the most interesting and challenging areas for digital marketing out of any industry.

The curious (potential) claimant unwittingly ventures into a maze when opening up a web-browser searching for the right person to deal with their claim. To name but a few, they face:

• Insurance companies telling them on one hand that they offer a ‘One Stop Shop’ and can help (although on the other hand telling them that they are also a potential fraudster); • Claims Management Companies with large budgets and celebrity voiced adverts assuring them that they present the true path to justice; • Law firms of various shapes and sizes either offering them an iPad or telling them that they have been doing this since 1873; • Which? and other such sites giving them the consumer protection “How To” guide.

From a claimant lawyer’s perspective, things are just as tricky. Even those at the high end of the food chain with the largest budgets cannot guarantee success or domination in the market. Without the right direction, digital marketing budgets can be consumed at a speed similar to a hungry Labrador who hasn’t seen food for two hours.

Every firm’s budget is finite regardless of their size.

Additionally, there are no barriers to entering the market and competing for the advertising space or the position in rankings. If you have a balance on your card, Google will certainly help you spend it.

Insurers want to drown out claimant lawyers in any way they can (be it writing to clients who are already represented, third party capture or digital marketing) and as much as they bleat on about not making any money because of the big bad claimant lawyers, the fact is that their pockets tend to be considerably deeper than most law firms when it comes to marketing budgets.

The real test therefore on a digital marketing spend (or any marketing spend for that matter), is whether it delivers the right level of return. The great benefit of well-managed digital marketing is the ability to track every pound you spend, ensuring you get value from it. Another big factor in achieving value is considering what claimants experience when they do click through to your site. It is no use spending the money to attract a potential lead only to offer a website that does nothing to capture them.

Scott Whyte, Managing Director, Watermans.

Sucheet Amin, Managing Partner of Aequitas Legal & Founder of inCase™ mobile app.

MC // November 2015

48

The Opinions

Unique selling points...

Is there value and room for niche legal/insurance services, over two years on from the Jackson Reforms?

C

harles Darwin once said, “It’s not the strongest of the species that survive, nor the most intelligent, but the most responsive to change”. In the same way that evolution in the natural world undergoes major transformative events, all of our businesses will have had to have evolved in some way in order to adapt and deal with cases in the Post-Jackson “era”.

The purpose of the Reforms was to promote access to justice and control costs in civil litigation, with the overriding objective of ensuring that any costs incurred are proportionate. Whether or not those aims have been realised is a discussion for another time, but the biggest impact has been felt by those of us dealing with cases valued at below £10,000. I remember reading somewhere that in order to survive, you should either “get big, get niche or get out” and that much has since proven true. In the wake of the reforms according to APIL, many claimant law firms either shut down or ceased working on cases valued at under £10,000, since dealing with these cases was no longer financially viable. This incidentally captures approximately

85% of the PI market and the vast majority of credit hire and repair only cases and has created a “niche” in which Accredita UK has been able to thrive ever since.

Many firms have also gotten bigger, with a host of mergers and acquisitions happening between law firms, insurance companies and CMC’s. Typically, focus has been on employing less qualified staff whilst utilising more IT in order to retain a workable margin and this dilution of expertise has created an opportunity for the niche or “boutique” legal/insurance service sector to flourish.

As humans, we inherently love specific solutions and a niche specialist will generally possess an expert knowledge on a particular area of law, lower overheads and greater flexibility on fees and working arrangements, be better able to recruit and retain the best people and provide clients with a more specialist, refined service.

There will always be instances where you need a full service firm but if your demands are limited to one area of law such as credit hire, why wouldn’t you speak to an expert?

Matt Hogg, Managing Director, Accredita (UK) Ltd.

49-58

The Features

My flight was delayed. Why haven’t I been paid yet?

With aviation claims increasing, David Bott explains the difficulty that comes with each new judgment, when more and more clients assume that they are automatically entitled to compensation.

A

fter the significant judgments in flight delay compensation claims over the last 18 months, one would be forgiven for thinking that any flight delay over three hours attracts compensation and that claims of this nature are a straightforward process. The recent suspension of flights to and from Egypt by the Foreign Office is a handy reminder that this is not the case.

EC Regulation 261/2004 provides for compensation in the event of: denied boarding, cancelled flights, delays of more than three hours, or missed connections. The airlines have one defense to this – extraordinary circumstances – and that has been the subject of much litigation this last decade.

Significant strides The Regulation gives us examples of things which may constitute an extraordinary circumstance – industrial action, hidden manufacturing defects, meteorological conditions or political instability. The events in Egypt fall under that last example, so in this instance even though millions of passengers are inconvenienced, they are not entitled to statutory compensation. They are however still entitled to care and assistance - refreshments, telephone calls and overnight accommodation where appropriate - but these are rights which the airline must provide at the scene, and there is no basis for a claim there.

The year 2014 saw Bott & Co make significant strides in passenger rights with the Huzar v Jet2.com Supreme Court judgment that clarified the law around extraordinary circumstances, and gave us a binding judgment. This case was about technical defects and whether they were an extraordinary circumstance, with the courts resolutely confirming that they were something inherent in the normal activity of an air carrier, and compensation should be paid.

Bott & Co also had the Dawson v Thomson Supreme Court judgment that confirmed passengers had six years to issue court proceedings in England and Wales.

An unbiased observer may have believed that with two Supreme Court judgments all the arguing around the Regulation was at an end. That has not been the case.

In 2015, there was the case of Allen v Jet2.com judgment at Liverpool County Court – where various airlines asked for cases to be stayed pending clarification from Europe. Whilst the Allen case was a first instance decision, Bott & Co received a detailed judgment on the issue and had the airlines been successful, the majority of claims would have been stayed for

2015 - much as they were for the majority of 2014.

Not content with these arguments failing, the airlines ran two more landmark cases at the end of summer 2015 and in both instances, the courts again found in favour of passengers. In August 2015, Bott & Co acted in Goel and Trivedi v Ryanair appeal case at Manchester. I am glad to report that the court rejected Ryanair’s argument that passengers waived their rights to claim after two years as part of their conditions of carriage, and in the van der Lans v KLM European Court of Justice case the highest court in Europe rejected another challenge on technical defects, giving us more clarification on hidden manufacturing defects.

These cases give us significant clues as to what is and isn’t claimable, but also perfectly evidence the airline industry’s appetite for fighting these cases. Both the Goel and Trivedi and van der Lans cases were merely extensions of previous judgments but a decade of this Regulation has shown us that the airline industry does not like this law, is committed to fighting it, has very deep pockets, and a willingness to run small claims through to the highest courts possible.

‘The difficulty is that with each judgment, the clients assume that they are automatically entitled to compensation all the time, and there is a real skill to keeping the client happy and informed’ Keeping clients happy So whilst we are in a much better place than we were 18 months ago, the fight goes on. The argument on technical defects has now been switched to an argument about what is a hidden manufacturing defect and a quick scan of our client roster shows arguments around weather, crew sickness, connections outside of Europe, bird strikes, ground handling damage and lightning strikes all being fought tooth and nail by the airlines.

Each of these has the capacity to go to the Supreme Court and different airlines are fighting different points. So the law firms representing clients must accept extensive delays, highly technical arguments, high investment in IT, have equally deep pockets, and all this against a backdrop of payment under the Small Claims Track regime.

The difficulty is that with each judgment, the clients assume that they are automatically entitled to compensation all the time, and there is a real skill to keeping the client happy and informed as they ask the reasonable question: “Why haven’t I been paid yet?”

David Bott is Senior Partner at Bott & Co.

MC // November 2015

50

Legal Opinion

Legal Opinion The latest news and views from Modern Claims’ resident legal experts.

Still searching for a solution

T

he governments review into the regulation of CMCs is welcome as the practices that are still operating in some sectors of the CMC market continues to reflect negatively on consumers, the legal profession, and on those in the personal injury market. Whilst the possible reform of fees charged appears to be limited to claims such as PPI (falling under the remit of FOS), I do feel that it should be extended further to cover all CMC activity. To do so may assist with a reduction in “cold or nuisance calls”, offering assistance for negligible injuries or hitherto unknown PPI claims.

It can be argued that some of these calls do elicit genuine claims, however CMCs who use these calls as the main form of leads for claims often encourage potential claimants to exaggerate or concoct injuries, or with PPI just to “give it a go”. Reputable CMCs and Claimant solicitors have worked with the insurance industry to help combat fraud, but it’s debatable whether the less reputable CMCs will be deterred by a cap in charges. In fact, I’d be concerned that to earn the same income they will have to generate more potential leads. However, the recent heavy fines issued for cold calling may also be a further deterrent.

For genuine Claimants being charged less by a CMC for managing their claim is certainly a benefit, so long as CMCs are strictly regulated and infringements enforced.

It’s ironic however that in the same Budget, the Chancellor announced an increase in IPT, so anyone claiming PI following an RTA are unlikely to see a real benefit.

It will be interesting to see how the cap will work in practice, and how it could be regulated. Cynically I do feel that the rogue CMCs will find some way around any reform, and that negative press will continue to impact of genuine CMCs, and so reflect on the legal profession. I am however trying to be open-minded and I am pleased to see the review taking place.

Donna Scully, Partner, Carpenters.

MC // November 2015

The real issue Unique selling points: is there value and room for niche legal services, over two years on from the Jackson Reforms?

A

s long as the Government doesn’t keep making changes and multitrack work remains exactly that (and not part of the Fixed recoverable costs), then in general, niche legal services will have a place in the market.

In some respects, the lowering of costs in the Portal and the introduction of fixed recoverable costs in the fast track has meant that many large departments have entirely focused on the process element of their workflows. This means that when cases go outside of that process the number of fee-earners left with the skill set to deal with the cases has significantly reduced.

This is where niche legal services come into play and can very successfully mop up and deal with these elements or types of claim that require a specialist skill set. There are a number of very successful businesses out there. Some deal with those areas of law that others do not wish to play at, others are specialists in areas that other firms deal with but only as a small department. Each of these business models have merit and the fact that the law firms dealing with those specialist subjects make the shortlist and win the awards in most of the main legal awards ceremonies speaks volumes.

Nevertheless, the attacks from the Defendant lobby keep on coming and with the latest hot topics of fixed costs in Clinical Negligence and Industrial Disease (Noise Induced Hearing Loss Claims) this could make it much more difficult to remain niche. Although the likelihood is that only a niche practice could obtain enough work and make the process slick enough to survive. The reason why firms have a niche area is because although more risky and requiring higher overheads for specialist staff, the returns are worthwhile. If fixed costs become too entrenched then there will be no specialists and no-one prepared to take the risk, meaning that there is no choice for those people requiring such representation, they simply have to forego their claims.

This is of course a Human Rights issue and that is a whole different question…

Alan Nesbit, Managing Partner, Nesbit Law Group LLP.

Legal Opinion

51

Vnuk: an involuntary transfer of risk – are you prepared?

T

he ECJ decision in Damijan Vnuk v Zararovalnica Triglav has potentially significant ramifications for the scope of compulsory motor insurance and other liability insurances in the UK. The ECJ concluded that the legal obligation to insure motor vehicles, set out in the EU Motor Insurance Directives (MID), should be interpreted to extend to ‘any use of a vehicle consistent with the normal function of that vehicle’. The use of a vehicle is a wide concept and includes ‘any use’, and is no longer restricted in geographic scope such as by reference to ‘road‘, ‘other public place’, or ‘private land’.

The judgment is directly applicable in all EU member states. Consequently, the restrictions in the UK’s Road Traffic Act 1988 (RTA) of the definition of a motor vehicle to ‘a mechanically propelled vehicle intended or adapted for use on roads’ are now seemingly contrary to EU law as understood after Vnuk.

Nothing changes in terms of UK law until the RTA has been amended. However, pending any change, the Government is potentially at risk of Francovich claims – damages paid by an EU member state to one of its citizens – for failing to implement the Directive properly.

A complete compliance regime would mean that every vehicle, where use was ‘consistent with its normal function’ would be subject to compulsory motor insurance. There is illogicality in lumping together vehicles built for use in a public environment and designed to comply with the long established rules and regulations associated with road use with those not designed for the highway, esoteric vehicles (such as the Segway that knocked over Usain Bolt) and specialist trade vehicles, such as forklift trucks.

A lesser compliance regime allowing an opt out or ‘derogation’ of certain types or classes of vehicle would solve the commercial problem but shifts the risk and costs to the Motor Insurers’ Bureau (MIB) in the case of the UK or to the relevant compensatory guarantee scheme of other EU countries.

A third alternative would necessitate lobbying for change at a European level. Inevitably, this will take a considerable period of time when the UK Government and therefore the taxpayer would be left open to meeting the cost of Vnuk claims pending a resolution.

Vnuk will have far reaching effects on the insurance industry and businesses in the UK. The future is currently uncertain but a Government consultation is anticipated to follow towards the latter part of this year/early 2016.

Mike Dobson, Partner, BLM.

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52

The Features

How Artificial Intelligence can transform Insurance Jonathan Crane explains how early adopters of artificial intelligence (AI) technologies could reap the benefits in a competitive industry.

A

s with most industries within the financial services sector, insurance is facing the dual pressures of needing to keep costs down in a competitive environment while maintaining satisfaction levels – and this can be seen very vividly in the area of customer service.

The call centre is typically the front line of customer support, and is often characterised by long waits and cumbersome menus. This leads to unsatisfactory experiences, and ultimately lost business. In addition, interactions with customer service staff can sometimes prove frustrating – and it only takes one bad call for a customer to leave, or even worse, voice their grievances on online forums or social media.

One of the most common complaints is the length of time taken to speak to a customer service representative.

However, there are often additional problems once the customer has got through. According to the National Research Centre, the top customer service irritants amongst consumers include:

• 75% of consumers surveyed found customer service rude or condescending • When making a telephone call, 74% of consumers surveyed were disconnected and unable to reach a representative again • When speaking on the telephone to a customer service representative, 64% of consumers surveyed felt they were being ignored.

On top of this, customers are getting more resourceful when it comes to proactively seeking information about their insurance policies and research shows their experience when doing so largely hinges on the interactions they have with customer service representatives. As a result, it is clear providers must innovate in order to make the customer experience faster, simpler, and more enjoyable.

The Cost vs Satisfaction Challenge The core question for insurance providers is how they can simultaneously raise customer satisfaction levels, lower costs and enhance productivity. This is a significant dilemma as improving satisfaction and productivity can be achieved by hiring more and better trained customer support staff, but at a considerable cost. Historically many organisations in a variety of industries have offshored their call centres, but this has caused issues with comprehension, and especially among higher age groups. In fact, many companies have started to ‘reshore’ their customer support centres. BT, for example, pledged this year that it would raise the proportion of calls answered by UK contact centres from 50% to 80% in response to customer complaints. In order to do this, they would have to fund hundreds of new positions in the UK.1 MC // November 2015

‘Virtual agents can also take the place of lengthy online forms for frontline sales, helping select exactly the right insurance package for a new customer or prospect’ One regularly deployed solution is ‘live chat’ or ‘click to chat’, whereby customers can message customer service representatives online. However, while this works for some queries and tasks, it is unsuitable for many others, and especially any requests that involve complexity. What is required is increased conversational ability.

Another option has been Intelligent (or Interactive) Voice Response Systems (IVRs). These are pre-recorded menus, equipped with speech recognition software that takes customers through a range of options until their query is resolved. However, the menus tend to be limited and only able to respond to yes/no or a very small range of answers. IVRs can sometimes help solve very simple queries without the need for a conversation with a customer service representative, but they often become a source of frustration for customers who frantically mash buttons to get through to a person as soon as possible.

A New Solution: Artificial Intelligence Artificial Intelligence provides an opportunity to solve these problems at a reduced cost, especially in the long term.

Virtual agents, like IPsoft’s Amelia, mean that interactions with customers can be reciprocal, conversational and pleasant.

Amelia intelligently combines a ‘process ontology’ with a ‘neural ontology.’ The two work hand-in-hand to allow her to interact as fluidly as a person. Her neural ontology is essentially a knowledge repository, and the approach used here allows her to understand the meaning of what she is being asked and retrieve the relevant information.

The Features

This differs from other, far more basic, forms of information retrieval like keyword pattern matching. She can understand the concepts conveyed in conversation and the relationship between those concepts. This means she can communicate with people naturally, rather than the frustrating ‘yes/ no’ experience of walking through an IVR decision tree. Similarly, her process ontology allows her to be taught the processes and procedures she should be following using natural language (rather than programming language) in much the same way an organisation would train a new hire.

Just like any new employee, however, not all permutations in customer service interactions have to be documented in detail. Amelia can work out through dialogue what kind of support the customer really needs and what steps in the process will need to be invoked. This is a breakthrough compared to virtual or human agents who follow a set script. Of course, new queries and issues will arise over time that Amelia has not yet learned how to deal with, and when this happens, she will immediately call upon a more experienced human agent to help resolve the issue. Straight away this increases satisfaction – the customer gets to speak to a representative rather than circling around a fixed menu of options that doesn’t meet their needs, or worse still being forced to call another number to start the entire process again.

More significantly, Amelia will listen in to this human-tohuman interaction and dynamically create new steps in her process ontology, effectively learning so she can address that type of issue with subsequent callers. All this happens independently; she learns by herself rather than having to be taught again. This means that human intervention will no longer be required the next time a question is asked.

Incrementally Amelia’s knowledge of the process is improved so that she can continue to increase impact on productivity.

Rogue learning is less of an issue with AI than it is with humans. All the new processes Amelia observes pass through an approval process that is checked by another manager. This ensures that new steps can be appropriately refined to work smoothly and meet all compliance needs.

Unlike human agents, however, virtual agents can be relied upon to follow approved processes every day so that customers will receive a consistently high quality service no matter when they get in contact. Additionally an AI agent only needs to be ‘trained’ once, so the learning process continues to provide returns as it will scale to whatever business volumes are required. Knowledge does need to be rebuilt from scratch as it does with every new human ‘hire’.

‘The biggest obstacle to AI implementation in insurance is fear’ Other Applications AI agents have a huge amount of flexibility. For example, human agents can also collaborate with their virtual counterparts in a different way. An insurance provider may want to keep people as the front line of their customer support or sales staff. If this is the case, a virtual agent can be deployed to act as an interactive assistant for the employees. The virtual agent will be able to quickly look up information while the employee is on the phone interacting with customers. This is similar in process to a human agent searching for information – but it can be done far quicker and hence acted on almost immediately. This speeds up call resolution, avoids confusion and means that employees can

53

‘With AI systems taking over this kind of repetitive work, employees are challenged and encouraged to take on more creative and revenue-generating roles’ more easily follow guidelines.

Virtual agents can also take the place of lengthy online forms for frontline sales, helping select exactly the right insurance package for a new customer or prospect. For example, a virtual agent can:

• Proactively ask what type of insurance a customer is looking for • Look up a product’s book value • Inquire and incorporate extras, such as ski or diving cover for travel insurance • Look up and help select variables and appropriate excess • Finally make recommendations, select the package and take the payment.

This is all done in the context of a personalised interaction, rather than through a faceless form. The agent can respond to queries and even provide financial advice, all at a cost far less than employing teams of sales support staff.

Enabling the Transition Put simply, the biggest obstacle to AI implementation in insurance is fear. This is nothing new - throughout history, the greatest inventions have often been the most intimidating and most challenged. No one thought that the personal computer would catch on, and now most of us keep one within arm’s reach at all times. New technologies, while sometimes scary, have proven to create more jobs, push people to work harder and smarter, and improve quality of life. Artificial Intelligence (AI) is this decade’s transformative technology.

The practical obstacles to implementation are far smaller.

The flexibility and continuous improvements inherent in AI systems mean that they can be deployed very quickly. The first step is identifying the parts of the business that would benefit from AI support. Some insurance companies have over 300 individual processes. While not all of them are suitable, many of the clunky operational procedures that take up a great deal of employee time are perfect candidates. To ease the transition, virtual agents can be deployed incrementally – starting with one or two processes within an operational part of the business, such as customer support, and then expanded to any other area where there are benefits.

Fears of mass redundancies are also misplaced. AI can mean workers within the business are freed from the most mundane tasks. With AI systems taking over this kind of repetitive work, employees are challenged and encouraged to take on more creative and revenue-generating roles.

This should improve quality of life and enjoyment of work, therefore decreasing staff turnover.

With this in mind, early adopters and fast followers will see the greatest benefits from AI technologies. By the time their competitors catch up, they will have been long enjoying cost saving, greater efficiencies and customer satisfaction.

Jonathan Crane is Chief Commercial Officer at IPsoft.

1. BT promises to bring call centres back to the UK, The Guardian 18th September 2015

MC // November 2015

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The Features

55

MedCo: where next?

The annual Motor Accident Solicitors Society (MASS) Conference took place on 8th October at the Hilton Hotel, Deansgate, Manchester. Charlotte Parkinson, Modern Claims takes an in-depth look at the MedCo panel session.

S

ince the launch of MedCo in April this year, the portal – which provides a panel of medical experts to handle whiplash cases - has received widespread criticism from across the claims industry, regarding its implementation, structure and whether it was ready to launch when it did. This was evidenced most clearly when the Ministry of Justice (MoJ) announced an immediate review once the portal went live.

The debates around the implementation and structure of the portal had made the MedCo panel session the most hotly anticipated in the run up to the MASS conference.

Delegates had the chance to hear from Craig Budsworth, Immediate Past Chair, MASS; Dr Simon Margolis, Group Chairman, Premex Group; Lorraine Rogerson, Independent Chair, MedCo, and Nigel Teasdale, MedCo Director on behalf of FOIL. Rogerson kicked off the discussion, explaining, “I am not a lawyer, I am not a doctor and I don’t drive a car – I fully meet the brief of being the Independent Chair of MedCo.” She went on, “MedCo is an interesting beast...and we have been given the job of implementing it, although our job is operations, not policy.” Some of the most important jobs that MedCo is there to do, are “still in the process” of being done, said Rogerson, against “very tight” deadlines.

‘The idea of randomisation has created a lot of the angst around MedCo’ Dr Simon Margolis MedCo: a missed opportunity Margolis elaborated, explaining that so far the “challenges have outweighed the benefits.” He went on to argue that “the idea of randomisation has created a lot of the angst around MedCo” and “undermines the opportunity” MedCo has as an organisation to “achieve something meaningful.” Margolis argued that the implementation of the portal had resulted in “a number of consequences” which were “never original policy objectives.” He explained that these consequences included reducing the volumes of work for a number of Medical Reporting Organisations (MRO’s), which had “built up over 20 years,” by “80 to 85 per cent.” The introduction of randomisation, continued Margolis, had created “a windfall opportunity” for companies who had “never previously shown a desire” to operate in the sector and allowed them

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to “self-certify” their ability to provide work, forcing claimant solicitors to “use MRO’s they have never heard of.”

The challenge today, explained Margolis, is addressing the perception by many that MedCo has been an “unmitigated disaster,” however he defended the work of those involved, agreeing with Rogerson that the problems were down to “the speed with which it was implemented.” He said MedCo now needs to focus on delivering its “original policy objective,” put a stop to “bad behaviour” in the industry and make experts “more accountable.” Teasdale added to the debate by highlighting the original objectives of MedCo, which was to “improve the quality of medical reporting,” and explained that there were “high expectations” from the Ministry of Justice (MoJ), “from the outset.” This, argued Teasdale, coupled with the fact that there “wasn’t the infrastructure” available at the start had added to the problem, but he was quick to stress that “progress was being made.” Other challenges, he argued, include the “shadow of the Judicial Review,” which argued Teasdale, is “hanging over” the sector.

How to move forward Moving forward, Teasdale expressed the importance of “reinstating confidence” in the new system in terms of the “quality” of Medical Reports and the experts conducting them. Focussing on the perspective of the claimant lawyer, Budsworth added to the discussion explaining that the biggest change from his perspective since the implementation of MedCo, has been the “amount of work we have to do to look after our clients.” The frustration, argued Budsworth, is “not directly” the fault of MedCo, who he said were “doing a good job,” but (agreeing with the other panellists), the frustration has come out of the “poor implementation.” Looking forwards, Budsworth argued that the only solution is to “hand back some control” to the claimant solicitor, as they “understand what the client wants,” and accident victims spending “5 minutes with a doctor,” is not good enough.

The role MedCo will continue to play within the sector is still somewhat of an unknown, but what is abundantly clear is that it is currently not fit for purpose – regardless of the efforts being made by stakeholders and the MedCo board itself. The outcome of the governments review is hotly anticipated and I’m sure I’m not the only one thinking that this time next year, MedCo could be an entirely different beast.

Charlotte Parkinson is Group Editor at Modern Claims Magazine.

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The Features

57

Falling on deaf ears Kate Sweeney explains why, for many personal injury practitioners, branching out into noise induced hearing loss work will be risky, expensive and far from the “cash cow” the ABI suggests.

I

t’s an expression I’ve heard and used over the years, but after reading the Association of British Insurers (ABI’s) report, “Noise Induced Hearing Loss Claims. Improving the Claims System for everyone”, published in the summer, it seems more apt than ever when attempting to rationalise its approach to all claims, not just those detailed in the report.

We also saw in the report, the highly pejorative term “compensation culture” creeping back in to the rhetoric, having been, we had hoped, put to bed following the raft of changes to the personal injury claims process over the last five years.

Such changes included the extension of the RTA portal, the introduction of the EL and PL Portals, coupled with the work in progress that is MedCo, and of course the introduction of fixed fees, across the entire sector. All of which were being driven by an extremely powerful ABI, relying on their own statistical data, which as we have subsequently come to learn, is less than accurate. So forgive me if I read the ABI’s most recent report, the first instalment of two, somewhat cynically.

Reacting to change Despite all the changes, and the

cooperative and dignified way in which personal injury practitioners have presented themselves in recent years, we find ourselves once again being quoted at by the ABI, with more headline grabbing data, massive percentage figures and media hyperbole. But unlike the ABI, personal injury practitioners are unable as a collective to confirm or deny if the numbers of industrial deafness claims are on the increase, and it is interesting to note how much emphasis in the report is put on the “hike” from 2010 to 2013, but yet little attention paid to the significant drop in claims in 2014, compared to 2013.

But why is the ABI in such a tizz about this alleged increase? And what if the numbers are up? Is the ABI once again suggesting that both personal injury practitioners and their injured clients are the drivers behind this alleged rise? It appears to me that they are simply unwilling or unable to accept that personal injury practitioners are reacting to changes in their market, and diversifying into different areas of work.

Not to improve profits, but as a means to survive. Personal injury practitioners have looked carefully at their management information, crunched the numbers and gone back to the drawing board to re-write their business plans pre and indeed post Jackson.

Careful consideration Instead it would appear that the ABI wants to label this as a “compensation culture” which needs tackling, and suggests it’s the personal injury practitioners’ way of replacing whiplash type claims. For some practitioners, it is possibly an area of work that they have never previously undertaken and as a result, there may be a small number of claims brought, which probably should

‘It is interesting to note how much emphasis in the [ABI’s] report is put on the “hike” from 2010 to 2013, but yet little attention paid to the significant drop in claims in 2014, compared to 2013’

not. But simply because a claim fails doesn’t mean it should never have been brought. Injured people have a right to seek legal advice and redress, but they don’t always obtain compensation. That is part and parcel of our justice system.

If a personal injury practitioner is unable to “win” the noise induced hearing cases they vet, filter and take on, it will be they who pay in the long run. Many of the hearing loss cases are processed through the EL portal, but a large number exit due to insurer behaviour. So there is the ability to apply a fixed fee in many noise cases, the fact that claims exit is out of the claimant practitioners’ control. Any extension of the fixed fee regime to these claims has to be considered carefully, a task currently being undertaken by a very select working group. We await their report, due this month, with interest.

Co-operation and collaboration Only by working with the ABI and insurers, will we improve the way in which these claims are brought and processed, not by positioning ourselves on the opposing sides. Co-operation from the defendants in such cases, represented by insurers, would ensure a quicker and more efficient process, both in terms of claims brought, but also the time taken to conclude such claims, which ultimately impacts on the cost. To suggest that undertaking such work is a form of “exploitation” will serve no positive or useful purpose.

For many personal injury practitioners, branching out into hearing loss work will be risky, expensive and certainly not the “cash cow” the ABI suggests. Such claims are highly complex, lengthy and to think otherwise is naïve. And there is no guarantee that every personal injury practitioner who undertakes noise induced hearing loss claims will be able to do the work “profitably”. The cost will be for those personal injury practitioners to bear, and may ultimately be their undoing.

Kate Sweeney is Partner & Head of Injury Department at Stephensons Solicitors LLP.

MC // November 2015

58

5 minutes with...

5 minutes with...

Professor Dominic Regan.

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

A: The legal profession has changed beyond recognition and next year it will suffer even more upheaval due to proposals coming on 28th January 2016. I loathe political interference with a Judicial system that was the best in the world. Admittedly, some changes are welcome. Judges are I think more worldly and human than when I began my career.

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

A: After a decade in practice I was invited to give a talk to solicitors and I haven’t shut up since. I adore speaking about the law and I have the most loyal

following, something I never take for granted. Whilst I present audio and webinar sessions, I must say that talking to a large, live audience is without comparison. The Modern Claims Conference, where I was encouraged to give an unscripted blast was one of my most memorable days, truly. Some have suggested that the abolition of the 16 hour requirement will have an adverse impact. I disagree. Practitioners rightly want to know exactly what is happening and what is in the pipeline.

Q: Who inspires you and why?

A: Sean Jones QC for his fabulous combination of brain, humour and humility. He is, with wife Penny, a doting parent to two lovely sisters.

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

A: As a trainee I was taught by Phil King (Thompsons), who was a colossus

of litigation. Get the letter of claim right and remember that your client is depending upon you. Never fail them.

Now, Jef Zindani is the person whom I look to. He has been so kind to me and we now work and write together.

He is a genius at the business of law whilst I stick to the black letter stuff. My children, baby grandson Cassius and Clare all thrill me.

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

A: In my dreams, I would be in the Court of Appeal as I really love law and legal argument. Wine is my other passion and working in that sphere would keep me happy. I have recently done some TV work for Channel 4 Despatches and I adore that too.

Professor Dominic Regan is a Legal speaker, broadcaster, columnist and author.

Centenary Solicitors chooses Proclaim Practice Management Solution Hosted Proclaim system implemented by leading law firm

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management data, Centenary Solicitors is also utilising the Proclaim Practice Management solution with integrated productivity reporting toolsets.

Matthew Waterfield, Senior Partner at Centenary Solicitors operates from Centenary Solicitors, comments: 3 offices in Greater London, Surrey “We chose Proclaim for two core and Kent. The firm provides a full reasons; it’s the only solution to be range of legal services to both private (L) Darren Gower & (R) Matthew Waterfield endorsed by the Law Society and the and commercial clients, with a major system’s inherent flexibility was so impressive. Proclaim strength in winning compensation for victims of Personal will allow us to tailor our clients’ journey perfectly, Injury – Centenary Solicitors handles matters of the highest enabling us to achieve our goal of building successful complexity, including Brain Damage and Paraplegia. long lasting client relationships. Proclaim’s range of inbuilt process streamlining tools will save us significant time The firm has rolled out the Proclaim Case Management on each case, freeing up resources to further strengthen Software solution throughout the Personal Injury team, our core ethos of providing an open, friendly and ensuring a consistent approach to each case. As part of understanding service.” the implementation Centenary Solicitors has also adopted Proclaim’s A2A (Application-to-Application) functionality For further information, please contact Darren Gower, to process low-value RTA (Road Traffic Accident) claims Marketing Director at Eclipse Legal Systems, part of Capita through the Government’s Portal system. plc, via darren.gower@eclipselegal.co.uk or call 01274 704100. Alternatively, visit www.eclipselegal.co.uk To provide instant desktop access to key financial

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