Issue 18 March 2016 ISSN 2051-6495
Linking the industry together
STEVE WHITE
“We don’t believe regulation of the insurance market is proportionate and we have been lobbying for more proportionate, appropriate and cost effective regulation for some years”
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MODERN CLAIMS
Editorial BOARD Aaron Pearson Director and Solicitor Three Graces Legal
Lisa Beale Head Checkaprofessional.com
Adèle Coates-Lyon Medical Records UK
Matt Hogg Managing Director Accredita UK (Ltd)
Alan Nesbit Managing Partner, Nesbit Law Group LLP Chairman, ARC Darren Gower Marketing Director Eclipse Legal Systems, part of Capita plc David Hertzell Consultant, BLM Chair, Insurance Fraud Taskforce David Simon Chairman Triton Global Limited David J Williams Managing Director, Underwriting AXA Donna Scully Partner Carpenters Dr Hugh Koch Clinical Psychological and Director Hugh Koch Associates Duncan Rutter President Forum of Insurance Lawyers (FOIL) Hilary Meredith CEO Hilary Meredith Solicitors Janet Tilley Director of Volume Services Simpson Millar LLP Jeff Charlton, Technical Director Building Forensics Ltd.
Miles Keeble Non-executive Director Veracity Claims Ltd Nicola Klimkowski Head of Business Control and Development LAMP Services Limited Nik Ellis Managing Director Laird Assessors Oliver Smith Marketing Manager slicedbread Rob Smale Claims Director Ageas Ron Atkinson Head of Insurer Relations SSP Worldwide Scott Whyte Managing Director Watermans Stephen Ward Managing Director Clerksroom & Clerksroom Direct Susan Brown Chair, Motor Accident Solicitors Society (MASS) Director, Prolegal Tara Shelton Founder & CEO I-COG Claims Management Tim Wallis Mediator, Solicitor, Director Expedite Resolution & Trust Mediation
Lesley Graves Managing Director Citadel Law
Victoria Rawlings Media and Marketing Manager TRS Claims
Linsey Carroll In-House Solicitor Box Legal Limited
Issue 18 March 2016 ISSN 2051-6495 Group Editor Charlotte Parkinson
Production/Editorial Assistant Ebony Lawson
Project Manager Rachael Pearson
Events Sales Martin Smith
WELCOME W
elcome to the new look Modern Claims Magazine! We have been busy here at Modern Claims Towers and I hope you agree that the magazine now looks much cleaner, fresher and is easier to navigate.
In this issue, I speak to our cover star, Steve White, the Chief Executive of the British Insurance Brokers Association (BIBA), as the organisation reveals its 2016 Manifesto. Steve also told me about the Code of Good Practice, which BIBA have launched in conjunction with the Association of British Insurers (ABI), and what this means for its members in practice. Read the full interview from page 12. I also spoke to Stuart Wright, Claims Manager at Ascot, about trends in relation to property claims, and the challenges associated with handling large losses from both a UK and international perspective. The interview can be found on page 17-19. I’m delighted to announce that the shortlist has now been released for the Doctors Chambers Modern Claims Awards, and would like to extend my congratulations to all those who have made the list this year and thank all those who took the time to submit a nomination. The awards ceremony takes place on 28th April at New Dock Hall, Leeds and further details can be found at www. modernclaimsawards.co.uk If you haven’t already booked your tickets for the Doctors Chambers Modern Claims Conference, I urge you to do so now. The conference takes place on 15th June at Old Trafford, Manchester United and is jointly chaired this year by Andrew Twambley, InjuryLawyers4U and David Williams, AXA. This year’s event is one not to miss and further details can be found at www. modernclaimsevents.co.uk I hope you enjoy the new look magazine. I would welcome your feedback and any suggestions you might have for a future issue. Please do feel free to get in touch with me via the details below. Happy reading!
Charlotte Parkinson, Group Editor, Modern Claims Magazine. @modernchar charlotte.parkinson@charltongrant.co.uk 01765 600909
Modern Claims Magazine is published by Charlton Grant Ltd ©2016.
All material is copyrighted both written and illustrated. Reproduction in part or whole is strictly forbidden without the written permission of the publisher. All images and information is collated from extensive research and along with advertisements is published in good faith. Although the author and publisher have made every effort to ensure that the information in this publication was correct at press time, the author and publisher do not assume and hereby disclaim any liability to any party for any loss, damage, or disruption caused by errors or omissions, whether such errors or omissions result from negligence, accident, or any other cause.
March 2016
Modern Claims 03
MODERN CLAIMS
CONTENTS NEWS
INTERVIEWS
07
EdiTorial Board
12
07 James Roberts talks news
The Business Development Director, Insurance at Europcar UK Group explains how the motor claims experience can be revolutionised by offering choice, not just replacement vehicles.
12 Steve White
As the British Insurance Brokers Association (BIBA) publishes its 2016 Manifesto, Charlotte Parkinson, Modern Claims spoke to the Chief Executive of the association to find out what is on the agenda for 2016, and his views on the proposals to stamp out fraudulent claims.
17 Stuart Wright
Charlotte Parkinson, Modern Claims spoke to the Property and Casualty Claims Manager at Ascot Underwriting, about how recent catastrophic events have impacted property claims, and how telematics – which has primarily been used by motor insurers - could impact both household and commercial property insurance in the future.
27
22 Getting ready for Flood Re David Williams, AXA Insurance
22 Focussing resources where they are needed most Rob Smale, Ageas
23 Adapt and diversify
Matt Hogg, Accredita (UK) Ltd
23 Digesting the Civil Courts
Mark Hewitt, piCalculator (part of the Rebmark Group) & Adèle Coates-Lyon, Medical Records UK
25 Worried about being the Jennifer Lawrence of the claims profession? Oliver Smith, slicedbread
25 The next level
Nik Ellis, Laird Assessors
contributors
27 Up-skill now to survive
Lesley Graves, Citadel Law
27 The latest learning curve Scott Whyte, Watermans
29 Don’t forget what’s right in front of you
[veracity] claims solutions consultancy
Victoria Rawlings, TRS Claims
29 Making the claims process work for less Stephen Ward, Clerksroom & Clerksroom Direct
31 A cloud vacuum
Aaron Pearson, Three Graces Legal
31 Tough talk from “Fraud taskforce”
04 Modern Claims
Linsey Carroll, Box Legal Limited
March 2016
MODERN CLAIMS Issue 18 March 2016 ISSN 2051-6495
EdiTorial Board
FEATURES
35
33 Partners or delegates? How should law firms treat their service providers?
51
44 The Doctors Chambers Modern Claims Awards 2016
Hugh Koch, Hugh Koch Associates LLP
The shortlist for the third annual Doctors Chambers Modern Claims Awards has now been announced. Charlotte Parkinson, Modern Claims, takes a look at who has made the shortlist this year.
35 Speed of reporting: The Holy Grail?
49 Focus Feature: Noise Induced Hearing Loss Claims
David Simon, Triton Global
33 Bridging the gap between lawyers as experts
Miles Keeble, Veracity Claims Ltd
35 What works for your business Nicola Klimkowski, LAMP Services Limited
37 On the agenda in 2016
Tim Wallis, Expedite Resolution & Trust Mediation
37 Adding fuel to the fire
The inaugural Noise Induced Hearing Loss (NIHL) Symposium, organised by Pure Legal Limited and Fusion Law, took place on 4th and 5th February 2016. Ebony Lawson, Modern Claims, reports on the panel debate from day one.
39 A question of balance
39 Facilitating an informed choice
Lisa Beale, Checkaprofessional.com
41 A crystal ball for fraud
Ron Atkinson, SSP Worldwide
41 Rejecting junk science reduces claim costs, liability and time lines
Jeff Charlton, Building Forensics Ltd
42 The New LCB Guidelines – a summary of the new NIHL paper
Mark Hewitt, piCalculator
March 2016
56
56 What happened to Human Rights protection for our Armed Forces?
David Cameron has ordered a “major crackdown on abuse by lawyers pursuing soldiers through the courts for simply serving their country and doing their jobs on operations”. Is this the right course of action and how will it work in practice? Hilary Meredith explains.
58 Sector Soapbox
51 Legal Opinion
Alan Nesbit, Nesbit Law Group LLP
Tara Shelton, I-COG Claims Management
FEATURES
Modern Claims’ resident legal experts Donna Scully and David Hertzell, address the impending increase to the small claims limit and review the findings of the recent report by the Insurance Fraud Taskforce.
61 Case Study
53 Stepping into the unknown?
Martin Doyle considers why solicitors should be risk assessing their firms with the potential increase in the small claims limit on the horizon.
55 Make adjustments and reap the rewards
The third anniversary of the Jackson Reforms falls in April this year. Janet Tilley asks whether now is the time to begin assessing the ramifications of the reforms as practitioners have worked their way through ‘pre Jackson’ caseloads.
Modern Claims’ panel of industry associations, including the Association of Regulated Claims Management Companies (ARC), the Motor Accident Solicitors Society (MASS) and the Forum of Insurance Lawyers (FOIL), discuss issues effecting the claims sector at the moment.
piCalculator within Proclaim - Eclipse’s latest integration simplifies damages calculation. Eclipse Legal Systems, the Law Society Endorsed legal software provider, has announced the integration of Proclaim Case Management with the award-winning piCalculator from Rebmark Legal Solutions.
61 Case Study
Just Costs Solicitors is the UK’s leading Solicitors’ Practice specialising in Costs.
10 MINUTES WITH 62 Sian Fisher
Chief Executive, The Chartered Insurance Institute (CII)
Modern Claims 05
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NEWS
JAMES ROBERTS TALKS NEWS The Business Development Director, Insurance at Europcar UK Group explains how the motor claims experience can be revolutionised by offering choice, not just replacement vehicles. In the perpetually competitive world of personal lines motor insurance, the nirvana is the loyal customer. And undoubtedly the claims experience is fundamental to achieving customer retention. It is at the point of claim when an insurer’s service is truly tested and, in many cases, the point at which a renewal is lost or won.
I
The policyholder rightly expects the claims journey to be seamless, from dealing with the first notification of loss to arranging vehicle repair and any legal services. And, at the heart of the process is keeping the policyholder mobile. But what does that actually mean? The conventional approach has been to provide a replacement vehicle regardless of the policyholder’s circumstances. But does that necessarily fit with what the customer needs and wants? For those living in rural and remote locations, a personal vehicle is essential. It has been well reported that public transport connectivity outside of major urban centres struggles to serve demand. And continued local authority budget cuts are likely to put even greater pressure on public transport services in the future. The provision of a replacement vehicle for a policyholder living outside of a major city or town is, therefore, crucial to delivering a positive claims experience.
The changing face of urban motoring
But car ownership in towns and cities is starting to become a different challenge. And the insurers that recognise this in how they deal with urban claimants could be the real winners in the customer retention battle. The UK is still a nation of car owners and that is unlikely to change significantly in the near future. Latest Department of Transport1 figures show there were 25.8 million licensed cars in the third quarter of 2015 compared with 25.2 million in the same period of 2014. And since 2011, the number has increased by about 1.6 million in England, 142,000 in Scotland and 69,000 in Wales, with the largest rise in the South-East with 373,200 more cars over five years. It’s not surprising, therefore, that congestion, parking and pollution are all issues that today’s urban car owners juggle on a daily basis. As a consequence, there is a growing groundswell of support for mobility innovation that delivers the convenience and independence of car ownership in towns and cities – but without necessarily the associated costs. Recent research2 by Ubeeqo, a mobility start-up in which Europcar took a majority share last year, revealed that Londoners are wasting thousands of pounds each year on buying, taxing, maintaining, insuring and parking cars they hardly use, as they do not want to solely rely on public transport. Over half of London drivers surveyed (59%) said they only use their car for between 1 and 7 hours a week – less than 1 hour a day and 1 in 5 only drive between 25 and 50 miles a week – that’s 7 miles a day. On average, Londoners’ cars are used for just 4% of the time, the
March 2016
There’s no question that a new wave of mobility solutions are already being developed by those in the automotive and transport sectors, that are being embraced by a growing proportion of the UK population remainder being parked outside their homes, or even worse, in a paid for bay or garage. Indeed, 1 in 10 London drivers surveyed said they have to pay to park their car when they’re at home. And these parked, unused cars are also clogging up the already congested London road network. The picture is likely to be similar in other major cities around the UK. With the AA reporting that in 20143 it costs on average £1,913 to tax and insure a car that costs up to £13,000 when new, (also taking into account the capital cost, depreciation and breakdown cover), it’s clear that urban car ownership is undergoing a rethink.
Tapping into the shareconomy
Driverless cars may sound like something from a sci-fi movie – and there are certainly numerous issues to address before autonomous
Modern Claims 07
NEWS
Whilst it is likely to be quite some time before the new era of mobility solutions truly has an impact on UK car ownership, they can be used very effectively by insurers to address the short-term vehicle replacement needs of policyholders vehicles can truly become part of the transport options accessible by all - but there’s no question that a new wave of mobility solutions are already being developed by those in the automotive and transport sectors that are being embraced by a growing proportion of the UK population. Alongside the traditional players in the automotive sector – car manufacturers and rental companies – a new breed of mobility innovators is emerging, tapping into the technologies that are empowering many forms of social engagement. From the now defunct Friends Reunited to Airbnb, the shareconomy is revolutionising the way people live their lives. And mobility is no exception. Car sharing, which first hit UK streets in the early Noughties, is at last starting to be accepted as a genuine alternative to car ownership, especially for those living in big towns and cities. And everyone is getting on board with this concept, from the big manufacturers to the emerging disruptors. For example, just last month Ford unveiled a new car-sharing brand just weeks after investing $500m in ride-hailing service Lyft, sign-posting how the big carmakers are preparing for a future in which drivers no longer own vehicles. General Motors is also trialling what it calls peer-to-peer car-sharing schemes in Frankfurt and Berlin and BMW is testing out the market for its DriveNow sharing scheme, with Minis, 1-Series cars and electric i3s in nine cities. And, of course, Uber has been taking the world by storm with its disruptive approach to urban taxi services. A different perspective on replacement vehicles At the heart of all of these initiatives is the use of technology to make the connections between people and vehicles. And whilst it is likely to be quite some time before the new era of mobility solutions truly has an impact on UK car ownership, they can be used very effectively by insurers to address the short-term vehicle replacement needs of policyholders. With new technologies giving users access to vehicles via smartphone and membership cards, combined with a more receptive consumer attitude to the shareconomy, smart thinking insurers could be introducing a whole new dimension to the claims process. The need to stay mobile has become even more important in an ever-more globalised world, but the customer is becoming more comfortable with having access to a variety of means to do so. Insurers could, therefore, be giving their customers that flexibility, as part and parcel of the claims process. And it doesn’t have to be a car – it could simply be the technology
to access the various forms of public transport available in cities and towns. The new generation of mobility businesses – like Ubeeqo – generally tie into platforms that allow users to manage their mobility spend and select the method of transportation most suitable for them. Many businesses have already adopted this approach for employee travel – moving away from company cars to car sharing. There’s no reason, therefore, why the same principle couldn’t be applied to the insurer claims process. The raft of intelligence already held about a customer could be used by claims handlers to identify the urban policyholders who might prefer to simply have access to a vehicle when they need it – rather than have the challenge of parking from day to day. And it could all be managed via their smartphone or by using a membership card or voucher to pick up and drop off the car whenever they need it. A multi-modal platform, like Ubeeqo, means the insurer could provide access to a range of mobility solutions, including public transport, taxis and even motorbikes, rather than the all-or-nothing of car hire. The policyholder is then in control of the transport solution that works for them – with the insurer managing the cost. The same approach could also be taken where insurers aim to assist the ‘not at fault’ driver. As well as creating strong brand equity, insurers could achieve significant cost savings by offering the ‘not at fault’ driver an alternative to conventional car hire. A mobility voucher – where the insurer sets a limit on the mobility spend, with the remainder being paid to the ‘not at fault’ driver, perhaps as a gift voucher, loyalty points or cash – could cut out the risk of high costs, particularly where there is a threat of losing the claim to credit hire. If the ‘not at fault’ driver decides to go into credit hire, any chance of controlling the claims cost may be lost. Insurers are constantly looking for ways to pare back costs, whilst enhancing the customer experience. The next generation of mobility solutions – which are already being adopted by motorists across the UK – could tackle both of those challenges in one fell swoop. 1. http://www.bbc.co.uk/news/uk-england-35312562 2. YouGov research conducted, December 2015 – 1006 car drivers living in London. The survey was carried out online. 3. AA Motoring Costs 2014 - http://www.theaa.com/resources/Documents/pdf/motoringadvice/running-costs/petrol2014.pdf
The new generation of mobility businesses...generally tie into platforms that allow users to manage their mobility spend and select the method of transportation most suitable for them 08 Modern Claims
James Roberts is Business Development Director, Insurance at Europcar UK Group.
March 2016
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INTERVIEW
Steve White As the British Insurance Brokers Association (BIBA) publishes its 2016 Manifesto, Charlotte Parkinson, Modern Claims spoke to the Chief Executive of the association to find out what is on the agenda for 2016, and his views on the proposals to stamp out fraudulent claims.
Q
What are the core purposes of the Code of Good Practice, which BIBA has recently published in association with the ABI?
A
The Code provides a basis for Brokers and Insures to deal flexibly and appropriately with vulnerable customers when it comes to their renewal. The Code is voluntary but we will be making sure our members are aware of it and why it is out there and we have a number of mediums where the purposes of the Code will be discussed. We run Compliance Forums around the country for our members and the Code of Practice will be high on the agenda at these events. We also have an in-house magazine called The Broker, and run the largest Insurance Broking Conference in the European calendar – which this year takes place on 11th and 12th May, and it will no doubt be a topic for discussion there too.
Q A
Do you think FCA regulation of the insurance market is proportionate?
No, we don’t believe regulation of the insurance market is proportionate and we have been lobbying for more proportionate, appropriate and cost effective regulation for some years. The 2015 BIBA Manifesto set out our 10 Point Plan for more proportionate regulation and we have been engaging with the Regulator with regards to this, and we will carry that work through during 2016.
Q A
Is BIBA trying to actively encourage young people to enter insurance broking as a profession?
We are not focussing on anything specifically, although we do fully support the Chartered Insurance Institute, who are currently driving forward their Discover Risk Campaign. This Campaign is their hook to attract bright young people into the insurance business. We have been working with the Department for Business, Innovation and Skills on an Apprenticeship Standard, which would help young Apprentices start their careers in the insurance industry, and also get them on the road to obtaining their qualifications. We are very much focussing on indirect rather than direct encouragement.
Q A
How does BIBA view the proposed measures to reduce fraudulent claims, as announced in the Autumn Statement?
We don’t believe regulation of the insurance market is proportionate and we have been lobbying for more proportionate, appropriate and cost effective regulation for some years
We support the measures to reduce fraudulent claims, as the cost of fraud is adding significant sums of money to insurance premiums. Last week, the government announced the findings of the Insurance Fraud Taskforce, which we fully support.
Q A
How has BIBA evolved as an organisation since you became Chief Executive in 2013? When I took up the post of Chief Executive, I set a number of core objectives. The first of these was to be better at listening
12 Modern Claims
March 2016
INTERVIEW
We have been working with the Department for Business, Innovation and Skills on an Apprenticeship Standard, which would help young Apprentices start their careers in the insurance industry to the needs of our members and speaking up on the issues that matter. Secondly, to up our game on lobbying and we now lobby smarter than we did before. Thirdly, to increase our visibility as an organisation. We are now more visible than we used to be and are much sharper at our communications. Our communications are now based on the understanding that a communication is what is received, not what is sent.
Q A
What impact do you anticipate the Insurance Act 2015 will have on the market and brokers more specifically?
The Insurance Act 2015 comes into effect in August this year. Last year we produced an introductory guide to the Insurance Act, with the Law Commissioner, David Hertzell, which we launched at our conference. During last Autumn we held our usual roadshows with members and they told us the Act was right at the top of their list of priorities for 2016. There is a real craving for knowledge on the subject. So much so, that we are producing an Implementation Guide to the Act, where we will be addressing questions such as ‘What is a fair presentation of the risk?’, and ‘What is a reasonable search?’. The Act does not mention insurance brokers - it mentions insurers and it mentions customers - but more often than not, brokers will act as the agent of the customer. Much of the terminology used is not defined in the new legislation and ultimately, will be defined in Court. The guidance we put out to our members could be used to shape the thinking of the Courts further down the line. The Implementation Guide will be released at our conference in May.
Q A
How will the recent flooding affect insurers and brokers – how does BIBA plan to address issues around surge events?
The BIBA Manifesto – Campaigning 2016 1. Accessing Insurance 1.1 The Advice Gap It is important that advice to insurance customers is available as widely as possible, helping the public to understand the risks they face and how to mitigate and transfer that risk. That can be challenging when people simply click and buy online without any suitable support, possibly resulting in an advice-gap. BIBA was pleased when, in August 2015, the Government announced the ‘Financial Advice Market Review’, a key part of which is making sure that people can access high quality, affordable, tailored advice and guidance to help them make informed financial decisions. This is fundamentally what BIBA members already do. 1.2 Under-insurance The 2015 FCA thematic review ‘Handling of insurance claims for SMEs’ noted a significant number of instances where the sums insured were inadequate to cover the loss incurred. BIBA is concerned that many SMEs purchase insufficient levels of business interruption (BI) insurance and is urging them to take advice from their broker when arranging their insurance and to purchase at least a 24 months BI indemnity period if appropriate to avoid underinsurance. 1.3 Signposting/Find-A-Broker service Every year the Find-A-Broker service helps more than a quarter of a million customers, ranging from members of the armed forces to large businesses, seek the insurance protection they need. More specifically, during the last three years over 200,000 older motorists and holidaymakers who have struggled to find insurance were signposted to the Find-A-Broker service thanks to the voluntary agreement on age and insurance BIBA has with the ABI and the Government Equalities Office and we are delighted that this agreement has been extended for another three years.
We are a big supporter of Flood Re - the government and insurers’ solution to facilitate affordable flood insurance for householders. However, there is an issue around access to insurance for those who sit outside the scope of Flood Re, so we have been working on a commercial solution to create a Commercial Property scheme for those risks that don’t fit Flood Re. There is an awful lot of interest in that from politicians, insurers and regulators, and we have been working with a couple of providers – Capita and Landmark, to put a scheme together that will help small businesses access cover. We are confident that we will get a scheme in place in the first half of this year.
We support the measures to reduce fraudulent claims, as the cost of fraud is adding significant sums of money to insurance premiums
March 2016
1.4 Vulnerable customers A potentially vulnerable customer is an individual who may be particularly at risk in their interaction with financial services providers, due to a certain set of circumstances, characteristics or processes that may affect their ability to make an informed choice. BIBA is delighted to be launching a joint, industry-wide voluntary code of good practice with the ABI to support vulnerable customers in the insurance renewal process. The aim of the code is to provide a basis for insurers and brokers to deal appropriately and flexibly with vulnerability at renewal and to ensure that those customers who may be significantly less able than a typical consumer to protect their interests and understand their options, get fair consideration.
1.5 Sharing economy The phenomenal rise of the sharing economy brings with it new insurance exposures as people move from insuring their own car, house or pet, to sharing someone else’s. This requires a different insurance solution from the traditional model.
1.6 Switching Part of the role of an insurance broker is to search markets and recommend a suitable insurance product to a consumer. This will often involve the broker recommending
Modern Claims 13
INTERVIEW
The BIBA Manifesto – Campaigning 2016 a switch to a different product. A high proportion of personal lines consumers already switch their policies each year and although BIBA is broadly supportive of many of the principles in the BIS9 ‘switching suppliers’ proposals, we believe there are significant concerns regarding data protection, particularly if third parties were able to access the customer’s data. The proposals would also require a complete redesign of the insurance industry’s IT systems, placing a significant cost on the sector. This is fundamentally out of line with the Competition and Markets Authority’s market study and associated remedies in seeking to reduce the cost of insurance to consumers. BIBA supports the switching of insurance products but only where it is in the best interests of the consumer. Unlike the utility industries, ‘suppliers’ in the insurance industry do not provide exactly the same product and so switching solely for a cheaper premium may not deliver suitable insurance
2. Cyber Risks
BIBA is an active member of the Cabinet Office’s Cyber Insurance Industry Forum. More businesses than ever before are being attacked, hacked or having sensitive data lost or stolen. Businesses are under a constant threat of cyber-attack which, if successful, can have catastrophic consequences for the firm involved and their customers. The insurance industry does not hold the same amount of data on cyber as on other risks. Actuarial pricing information can be difficult to obtain because of a reluctance to publicise attacks or losses. More information sharing would result in greater product development.
3. Claims
3.1 Claims working group The BIBA-led claims working group involves co-operation across the whole industry from the ABI, CILA, AIRMIC, brokers, insurers, loss adjusters, assessors, expert witnesses and other stakeholders including the FCA, Flood Re and the Law Commission. The group made progress with damages for late payment of claims which will reinforce confidence that the UK is the best market to place insurance risks.
3.2 Fraud BIBA is involved in a number of important anti-fraud initiatives. We work with the Insurance Fraud Bureau and the ABI and have recently reissued the Application Fraud guide. We have also worked with AXA on the guide to ‘making fraud prevention clear’. BIBA has also participated in the Insurance Fraud Taskforce to investigate the causes of fraudulent behaviour and recommend solutions to reduce the level of insurance fraud in order to lower costs and protect the interests of honest consumers. 3.3 Claims Management Companies ‘You are entitled to £3,500 for your claim.’ Are you really? There are so many spurious messages hassling customers and possibly generating fraudulent claims that the ABI estimates innocent customers are paying 20% of their motor premium towards whiplash claims. BIBA welcomed the announcement by the Chancellor on 25th November that there will be new restrictions on compensation for minor whiplash injuries making it harder to make exaggerated or fraudulent whiplash claims.
14 Modern Claims
4. Motor
4.1 Vnuk The interpretation by the Court of Justice of the European Union Vnuk case could result in major changes in the UK motor insurance market. Its decision that motor vehicle ‘use’ should mean ‘any use of a vehicle that is consistent with the normal function of that vehicle’ means the Court believes vehicles such as, sit-on mowers, fork-lift trucks and golf buggies cannot simply be covered, as they are now, under a public liability policy, but will require full Road Traffic Act cover. Similarly, motor racing events will require competitor-to-competitor liability insurance – an area of cover that does not exist for this type of event. 4.2 Uninsured driving Each year, thousands of people are injured or killed by uninsured and untraced drivers. It is estimated that around 7% of all road deaths are caused by uninsured drivers. The compensation for the damage and injury caused by uninsured drivers comes from the Motor Insurers’ Bureau (MIB). This £250 million bill is paid for from the insurance premiums of all law-abiding motorists. 4.3 Autonomous vehicles Driverless vehicle technology has the potential to be a game changer on the UK’s roads and similarly will require new insurance solutions to be created.
5. Flood insurance for UK properties
5.1 Flood Re Flood Re is a joint industry and Government sponsored scheme that is planned to launch in April 2016, to help support households that have a significant risk of flooding and which are experiencing some degree of difficulty finding affordable flood cover. Flood Re is intended to improve the availability and affordability of flood insurance. It is expected that approximately 500,000 homes may benefit over time. 5.2 Helping SMEs access flood insurance BIBA is committed to finding a commercial insurance solution for UK SMEs, let and leasehold properties which are at risk of flood but are outside the scope of Flood Re.
6. Europe
6.1 Implementation of the Insurance Distribution Directive (IDD) The IDD is a significant step change for our sector that, once transposed into UK law, will create fairer outcomes for customers regarding insurance distribution. Customers will benefit from the same level of protections and disclosure of information despite differences in distribution channels. We value the close working relationship we have had with HM Treasury during the development of the IDD and welcome the progress towards a more level playing field between distributors and their customers. 6.2 Product Information Document (PID) EIOPA18 is tasked with producing the new product information document which will contain the key information about a particular product on offer.
March 2016
INTERVIEW
6.3 European Referendum While BIBA is apolitical and therefore not mandated to discuss all of the implications of Britain potentially leaving European Union (EU) membership, our advisory boards and technical committees believe that a British exit from the EU would be disadvantageous overall to the insurance broker sector for the following reasons: 1. It would lead to uncertainty for businesses which would have an adverse impact on the insurance market, investment and customer groups whose fortunes are closely linked with our members. 2. The existing system of insurance companies ‘passporting’ into the UK could cease, potentially leading to a reduction in choice for UK consumers. 3. We believe that an exit would seriously damage our members’ ability to act and place business on behalf of clients domiciled within the EU. 4. Brokers need to be able to write suitable policies and have available the freedom of services provisions. 5. Europe provides access to a far larger labour pool of skills and knowledge which UK brokers believe is highly beneficial to retain.
6.4 European Commission Green Paper The European Commission has launched a new Green Paper: Retail Financial Services; better products, more choice and greater opportunity for consumers and businesses, which is consulting on the obstacles providers and customer face when offering or purchasing insurance across the EU.
7. Trading and Operational Issues
costs of regulation which is completely disproportionate to the low risk they represent. We were delighted that the Enterprise Bill, Part 2 – Regulations, included a regulators performance report and a duty to report on the effect on economic growth of regulation ‘red tape’. We are pleased that the Government has provisionally listed the FCA as a regulator included in its deregulation target.
8.2 Being smart on communications BIBA, working closely with LIIBA, is updating the Industry Guidance on Transparency, Disclosure and Conflicts of Interest in the Commercial Insurance Market, previously confirmed by the FSA. This will take into account changes in the legal, regulatory and supervisory environment, including the greater emphasis on behavioural economics at the FCA.
8.3 Conflicts of interest in the commercial insurance market BIBA, working closely with LIIBA, is updating the Industry Guidance on Transparency, Disclosure and Conflicts of Interest in the Commercial Insurance Market, previously confirmed by the FSA. This will take into account changes in the legal, regulatory and supervisory environment, including the greater emphasis on behavioural economics at the FCA.
8.4 Timely processing of applications BIBA members have expressed concern about the impact on their businesses from delays in the processing of Variations in Permission applications by the FCA, which can cause delays in innovation and new product development.
8.5 FSCS BIBA is encouraged that the FCA has stated it will review the FSCS in 2016. Of the £308 million charged to the FSCS general insurance intermediary subclass between 2010 and 2014, insurance brokers paid approximately 71% (more than £219 million), yet they have been responsible for fewer than 1% of the claims. At the Treasury Select Committee in October 2015, acting FCA Chief Executive, Tracey McDermott said that the regulator is concerned about the ‘lumpy and unpredictable’ nature of FSCS levies and pledged a fundamental
7.1 Terms of business agreements TOBAs between insurers and brokers are very important in laying out the terms of the commercial arrangement, but can be extremely onerous and legalistic. Without a single industry template, brokers can end up with dozens of differing and complex agreements. 7.2 Wordings It is the broker’s responsibility to bring to the client’s attention key points of a policy including significant conditions and warranties to allow the client to make an informed decision. However, on commercial policy renewals this can be challenging where there is no ‘important notice’ or advice from the insurer regarding any changes. 7.3 Implementation of the Insurance Act The Insurance Act is the biggest change to insurance law in over 100 years and it includes many positive developments that BIBA called for such as outlawing the ‘basis of the contract’ and ‘terms not relevant to the actual loss’. Implementation of the Act will bring new considerations for brokers on ‘fair presentation’ and ‘reasonable search’.
8. Fair Regulation
8.1 Cost of regulation The insurance conduct regulator – the FCA, increased its fees for insurance brokers by 8.4% for 2015-16. This was despite the UK already having the most expensive regulatory system in the world as per research conducted by London Economics. BIBA members pay £28 million into their FCA feeblock and in addition, face significant indirect
March 2016
9. Careers and Apprenticeships
9.1 General Insurance Apprentice Standard BIBA wants to promote insurance broking as a career of choice. A key part in delivering this vision is developing world-class apprenticeships to equip those starting in the industry with the skills to succeed in their careers. BIBA, along with Aon, the Chartered Insurance Institute and the ABI has developed Level 3 and Level 4 apprenticeship standards, with those completing them achieving the Cert CII and DIP CII22 qualifications respectively.
9.2 Apprenticeship levy The implementation of an apprenticeship levy of 0.5% of payroll for firms with revenues of greater than £3 million will have a negative effect on some BIBA members, increasing the cost firms pay as well as disrupting the skills balance of new entrants to the industry. 9.3 DWP/Careers In 2013, BIBA signed an agreement with the Department for Work and Pensions which aims to promote broking as a career of choice.
Modern Claims 15
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INTERVIEW
Stuart Wright Charlotte Parkinson, Modern Claims spoke to the Property and Casualty Claims Manager at Ascot Underwriting, about how recent catastrophic events have impacted property claims, and how telematics could impact both household and commercial property insurance in the future.
Q A
Have you noticed any specific trends in relation to property claims in the last year?
In terms of trends in property claims in the last year, actually the last few years, what really stands out is the lack of insured losses resulting from natural catastrophes. Whilst there have been small hurricane or earthquake events such as Hurricane Odile or the Napa Earthquake, there have been no genuine major catastrophic events which have resulted in a large volume of claims and as such there are growing numbers of claims adjusters within the property market who have never actually dealt with a full blown catastrophe, such as Hurricane Katrina. The market has Catastrophe Coordination plans in place, but these have not been tested recently by real time losses. A concerted and proactive approach to claims management is required to ensure that the necessary professional action is taken quickly in the event of a major catastrophe. Business Interruption appears to be increasing the cost of large commercial property claims, with ever higher BI values and risks that are more and more interconnected. BI losses are not something that is new, but they are without doubt becoming a larger element of property losses. The impact of an event like a fire or a flood can be much wider and more costly. An incident at one company in one part of the world can have a knock-on effect and generate BI and CBI (contingent BI) claims for many other companies in other countries. As the property and business interruption values of individual properties have increased, industry claims in excess of $1bn have also become more frequent, in some cases coming from sources not traditionally anticipated by insurers.
Q A
What are the most common types of property claim?
The most common types of property claim really depends upon the time of year. Quite clearly over the past few months flood losses have been the focus of media attention, along with winter storm losses from the severe storms affecting the United States. There have also been a large number of fire losses emanating from the wildfires that occurred in both Australia and the US. Losses really fall into two main categories, being the losses from natural catastrophe events such as earthquakes, hurricanes and the like together with the higher volume lower value attritional losses. The most common cause of property losses in terms of the number of losses is Fire at around 25%, followed by Machinery Breakdown. Fire is also the largest driver of losses in terms of value.
Q A
Which type of claims tend to represent the highest value and why?
A concerted and proactive approach to claims management is required to ensure that the necessary professional action is taken quickly in the event of a major catastrophe
Purely by their nature, catastrophe losses represent the highest value on a gross basis. That said, dependent upon the reinsurance programs that insurers may have in place, attritional losses that fall below the reinsurance attachment
March 2016
Modern Claims 17
INTERVIEW
As the property and business interruption values of individual properties have increased, industry claims in excess of $1bn have also become more frequent, in some cases coming from sources not traditionally anticipated by insurers point can be more harmful to the overall bottom line. We are currently seeing losses coming out of the US from the winter storms as well as a number of heavy industry related losses. For the insurance industry, natural catastrophes mean mass claims and claims involving large sums insured. Dependent upon where in the world the losses occur, you may find you are dealing with sophisticated corporate insureds with Risk Management teams in place or conversely individual homeowners. Irrespective of the size or standing of the insured, all policyholders have the right to properly processed claims, even in exceptional circumstances. The key to professional settlement lies in proactive and optimal claims management.
Q A
What are the core challenges of operating in the property claims marketplace and why?
The nature of the placement of large property risks, with the involvement of US domestic insurers, Managing Agents from Lloyd’s of London and UK/European insurance companies, can potentially lead to a divergence of opinions and a differing approach to claims handling. I recently spoke on a panel discussion in the US on exactly that subject and the potential conflicts and controversies of major market losses. Matters become further complicated when the risks are placed on different terms for differing markets. Ultimately we are all striving for the same end goal, to pay valid claims in a timely manner and put the insured, our client, back whole as quickly as possible. It is vital that the property claims market continues to attract and recruit young talent, the next generation of claims adjusters, be that by way of individual company graduate schemes, apprenticeships or wider market-based initiatives. Once the talent has been found, the market needs to nurture it and help the next generation grow so that we have a valid succession plan in place for the property claims market as a whole and do not lose talent to the perceived greater riches of underwriting.
Irrespective of the size or standing of the insured, all policyholders have the right to properly processed claims, even in exceptional circumstances
18 Modern Claims
Q
How have potentially fraudulent claims affected property claims - are underwriters/insurers more conscious of the validity of potential claims?
A
The reality is there will always be the potential for fraudulent claims to be made. Cheating or exaggerating on an insurance claim is not necessarily perceived by the general public as being wrong or unethical. We have all experienced the perception that the policyholder will exaggerate his claim to give themselves negotiating room with the insurer based on the perception that the insurer will adjust the claim downwards. Insurers need adequate checks and balances in place to ensure any potential fraudulent claim is spotted and dealt with appropriately. Fraudulent claim presentations are not the only issue. If you add into the equation the Claim Preparation firms, the cost of which most commercial property policies will cover up to a certain limit, then you have the possibility of a loss being increased beyond what is reasonable, a policyholder with unreal expectations based on the representations of the firm preparing their claim, and a difficult and potentially lengthier adjustment process to get the claim settled at a fair value according to the terms of the policy. Given the fact that commercial property policies in most cases allow the cost of such claim preparation firms to be recovered, it could be said that the insurers are creating their own problems but in reality there is a need - in the case of large losses - for the insureds to utilise the services of an external company to prepare their claim and that involvement should simplify the whole loss adjustment, if managed properly.
Q A
What are the main risks associated with property claims and why (for both insurers and their clients)?
It is quite difficult to set out what risks there are to both insurers and their insureds within the realm of property claims. From the insurers’ perspective, the cost of natural catastrophe claims seems likely to continue to rise as economic activity and the value of property in hazard zones increases. Furthermore as wealth creation and economic activity in emerging markets accelerates as it has done in recent decades, so the potential for large natural catastrophe property claims has also increased. Handling those sorts of claims in emerging markets can also be more expensive because the associated costs can rack up. As an example, if you built a manufacturing facility in a remote location in Africa, repair and transport costs will be much higher and experts will not be available locally, which all helps lead to an increased cost of the loss. From the insureds’ perspective, they expect an ever increasing level of service. They cannot wait a long time for any claim they may have to be adjusted. They rightly want to know that their loss is covered and to be able to replace or repair what has been damaged. The challenge for the property claims handlers is to respond in a timely manner, and start communication immediately. The timely settlement of valid claims is very much dependant on good communication and relationshipbuilding. Once a good relationship has been established, the flow of information between the parties far improves to allow matters to be resolved.
March 2016
INTERVIEW
Natural catastrophes can result in large volumes and large claims – meaning claims management can quickly turn into crisis management
Q A
What are the specific challenges associated with handling large losses from a UK and international perspective?
Large property losses, whether they are UK or international, are by definition complex. It is vital to have the right team of experts assigned to the loss, in some cases assigned pre-loss such that in the event of a loss the team is ready to respond immediately. Coordinating both the adjustment team and the panel of insurers (to whatever degree possible) is of paramount importance as is understanding any local customs and practices. It comes down to having the right people on the ground, representing the insurers. Natural catastrophes can result in large volumes and large claims – meaning claims management can quickly turn into crisis management. Together with having to handle thousands of claims efficiently and accurately, insurers have to cope directly with the effects of a catastrophe that make claims handling more difficult, such as ruined infrastructure and inoperative communication networks. Even what could be called ‘normal’ natural catastrophes are having an ever-increasing impact due to increased density of population and the accumulation of high-value assets in, for example, industrialised areas in more and more hazardous regions.
Q
Are there any potential changes on the horizon in the property claims marketplace which insurers and their clients should be watching for?
A
Technological advancements will change the way that property losses are assessed and adjusted. Drones are already being utilised to access and photograph damage in areas that would otherwise be inaccessible after a loss, satellite imagery can be used to ascertain the extent of flood damage, 3D scanning can be used to recreate entire loss scenes, and loss adjusters have the ability to show real time damage to claims handlers via video links. Claims adjusters will effectively have the ability to sit at their desks and view damage on a real time basis. Satellite imagery immediately post a catastrophic event would allow the areas affected to be properly ascertained and therefore the correct resources to be deployed in a timely manner. All of this can only assist in the handling and settling of valid claims. Telematics, utilised primarily by motor insurers, is something that can and will impact both household and commercial property insurance. “Smart” homes will allow policyholders to monitor for electrical issues, be alerted remotely of a fire, or a change in weather conditions that may put the insured property at risk. There is a wealth of data that could and should be utilised, but for that to happen the right systems need to be in place to share, validate and capitalise on that data. It is absolutely vital that the property insurance market grasps the technology available and realises its benefits both to the client and to the companies themselves.
March 2016
Stuart Wright Stuart Wright is the Property & Casualty Claims Manager for Lloyd’s Syndicate 1414, Ascot Underwriting Ltd. He has responsibility for all complex Property, Casualty, Natural Resources and Renewable Energy losses emanating from Ascot’s global book of business.Ascot Underwriting has the largest North American open market Property underwriting book in Lloyd’s of London. Stuart has over 19 years’ experience within the insurance industry, of which the last 14 years have been spent working for various syndicates at Lloyd’s of London. Having joined Ascot Underwriting in 2011, Stuart now chairs the LMA Property Insurance Claims Group (PICG), and sits on the LMA Worldwide Property Business Panel. The LMA PICG is a Lloyd’s Market Association sector panel providing a representative forum which allows, where appropriate, discussion of common issues and concerns within the property market. The role of the group is to take the lead to identify and investigate property related issues with an objective of producing solutions for the benefit of the Lloyd’s market and the market in general, to initiate projects or sub-groups, where appropriate, to address specific issues and to advise and provide feedback to the Lloyd’s Market Association Claims Committee where property issues have a wider impact on the market.
Modern Claims 19
Wednesday 15th June 2016 Manchester United Football Club, Old Trafford “2016 will shape the future of the personal injury market place like never before. The immense pressure upon law firms, both claimant and defendant, to re-evaluate their entire practices is going to cause mayhem. Rather than trade insults over a ravine it is time for the industry to come together to argue their points and create a united voice! Tickets are entirely free to solicitors, insurers, brokers and barristers so that we can get all the major stakeholders in one room.” Joint Conference Chairman, Andrew Twambley, Director, InjuryLawyers4U “Following the Autumn statement 2016 has already produced some excitement, accusations of secret meeting and FOIL breaking ranks with Insurers on the small claims track. This will be an incredibly important year for all involved in the claims process. Nothing is yet decided, it is still possible to influence the final outcome and I would recommend all interested parties to attend the Modern Claims conference where you will hear from all sides of the debate and can contribute yourself to what could be the biggest change in almost 20 years.” Joint Conference Chairman, David Williams, Managing Director, Underwriting, AXA Insurance - Commercial Lines and Personal Intermediary
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EDITORIAL BOARD
Getting ready for Flood Re How will the market respond to Flood Re, which launches in April this year? he first question to ask is which companies will actually be ready for the April launch? With so much riding on this scheme, the insurance industry needs to be ready, and yet the noises are suggesting not everyone will.
T
Software Houses particularly are rumoured to be struggling, and with most business placed these days via cost comparison sites, the chances of some not being able to offer their customers the Flood Re benefits from Day One is worryingly real.
Focussing resources where they are needed most Will surge events such as the recent flooding across the UK become more frequent and how can those involved in the claims process ensure they are protected? he frequency and magnitude of severe flooding across the UK looks set to increase. By the 2050s nearly half a million more homes will be at a significant risk of flooding, assuming current flood risk management approaches continue1. While Flood Re is due to launch in April this year, the Government is under pressure to invest in strong flood risk management policies and plans.
T
Once that issue is out of the way, what will insurers attitudes be to customers who renewed in the last 6 months, but now recognise better terms from an excess perspective are now available, along with truly affordable premiums, something that for the higher risk properties had all but disappeared despite the statement of principles.
Right now, however, the insurance industry remains a first line of defence for homeowners and businesses and the ABI’s statistics underline the high level of response to this winter’s storms and floods. Because severe events such as this are becoming more frequent, the industry is evolving and innovating in the way these claims are handled, both to enhance the experience for the distressed customer and streamline processes.
My hope is that there will be good communication from our industry, something that could tremendously help our sometimes battered reputation, along with appropriate customer focussed behaviour. By this I mean no ‘surprise’ charges if a customer needs to move elsewhere midterm to get advantage of the new arrangements, and making sure customers are aware of the changes.
After listening to customer feedback following the floods back in 2013, we saw an opportunity to reimagine our supply chain (The Ageas Solution Network) to align the process to individual claims circumstances. We wanted to create greater coordination and communication between suppliers and the customer, while improving efficiencies across the board.
Away from the mechanics of making Flood Re terms available, there is a huge amount of work that insurers need to do in terms of potential changes in risk appetite, and ‘Tactics’ need to be considered going forward. By this, I mean if you previously avoided any higher risk business, do you now open up your book, maybe feeling that the new ‘reduced’ terms mean that there is more fat elsewhere in pricing, and therefore this business suddenly becomes more attractive. Alternatively, will the fact that insurers will still have to deal with these claims in the first instance, with all the potential hassle and PR risks that could be involved, mean that Flood prone business will still be the province of a few specialists?
In all complex claims, a lead supplier is appointed to be the key decision-maker when dealing with the customer, with the authority to progress the claim with support from the wider panel, without need for referral. As a consequence customers are satisfied, communication is better, there is greater ownership of the case and claims are progressed more speedily.
My view is there will be a bit of both, certainly we should see it much easier for customers to get the cover they need, and as long as that is true then individual companies being a little slow or remaining negative won’t have too much of an impact. Now we just need to sort out small businesses and resilience! David Williams, Managing Director Underwriting, AXA Insurance.
The storms and floods in the past few months have really put our new approach to the test and it’s gratifying to find how well our suppliers have worked together, sharing resources and information – even if they would normally be in competition. For example, our supply chain has created a ‘Quality Call Document’, to capture key customer information and created its own surge team and cross supplier support. For suppliers, there is greater confidence in the longevity of the partnership, enabling them to feel able to invest time, effort and money in partnering with Ageas. When you treat the supply chain as an extension of the claims team, you create a better understanding of the skills, capabilities and logistical issues involved in managing claims. All this serves to streamline the claim, thus reducing ‘failure demand’ so that resource is focused where it is needed most and customers get the right outcome. 1. https://www.theccc.org.uk/publication/sayers-for-the-asc-projections-of-future-floodrisk-in-the-uk/
Rob Smale, Claims Director, Ageas.
22 Modern Claims
March 2016
EDITORIAL BOARD
Adapt and diversify
Digitising the Civil Courts
The government are due to consult on the small claims limit this year. What are the potential ramifications for your section of the market if the increase is made?
ord Justice Briggs pulled no punches on his plans to digitalise the legal system in his interim report (December 2015) on the Civil Courts Structure Review: “The ambition of HMCTS is to digitise the whole processes of the court…to make use of IT for new or different processes and procedures.”
n 25th November, Chancellor George Osborne announced during the government’s spending review that the small claims limit for personal injury cases should be increased from £1,000 to £5,000. By transferring these cases to the small claims court, Claimant’s injured through negligence will be unable to claim the cost of legal representation, in pursuing a claim against the negligent party. With around 95% of personal injury claims falling below the newly proposed £5,000 threshold, PI lawyers would be practically eliminated from the process altogether.
O
In the immediate term the majority of the PI market will be required to adapt, diversify or simply be driven out of business. This may mean moving in the same direction as is currently prevalent in the US where contingency fees are the norm, monetizing activities that may not be currently generating revenue, outsourcing non-profitable, resource-sapping activities or specialising in other areas that may be more lucrative. But what would a world without PI lawyers look like, will this affect the credit hire marketplace and what will this mean for the stakeholders in a claim who were previously reliant upon PI lawyers to liaise with and recover damages from the at-fault insurer? Credit hire has always been a demanding and technically complex area of law and many firms may opt to specialise in this area. To date though, firms would have offered this service to CHO’s for a fee dependent upon the number of PI referrals received, together with the ratio of Fast Track or Multi Track work. Without the PI revenue though, case management fees will have to increase but it could be made to work for the CHO if the process were simple. Given the current climate post-Stevens and outside of the ABI GTA, these cases are few in number and I am concerned for those CHO’s whose business model of cash recovery is currently reliant upon this facility. Ultimately, if the relationship between Claimant, CHO and Solicitor is not financially sustainable, Claimants and those other stakeholders will be at the mercy of the insurance industry whose aim it is to keep outgoing payments to a minimum, therefore increasing profits for the benefit of shareholders. If the insurer’s “play ball” and the amounts offered for damages are always fair and equitable, there should be no detriment to the innocent claimant. However in the absence of adequate technical knowledge this may not be the case and we could therefore see a huge increase in issued road traffic claims, imposing a monumental burden on an already creaking court system.
L
So things are set to change. Again. And if there is anything that successful law firms have shown in recent years it’s their ability to adapt to the pressures of a changing legal landscape. Their survival techniques have inevitably focused on streamlining processes by harnessing technologies that assist fee earners in performing their roles more efficiently. Exactly what the HMCTS is looking to do in fact - utilise technology to streamline the legal system. The only difference is that successful firms have chosen to harness technology, rather than having it forced upon them. Knowing that IT is central to the fundamental reform of the administration of justice in England & Wales, what can we expect to see? Aside from an increased acceptance and use of existing technology-based solutions, the following is on the horizon: • Court Documents: including electronic bundles. • Public access to court files. • Paperless trials: Believe it or not, there are software systems now available for paperless trials which are (from time to time) used in the Rolls Buildings by litigants. There is no technical reason why civil trials cannot be conducted on a paperless basis once the IT infrastructure is in place. • ADR: Online Dispute Resolution platforms that aid settlement are an obvious technological development. We are currently developing ‘Consensus’ which will be launched later in the year. • On-line Courts: They will become a reality for the resolution of straightforward debt and damages claims up to the value of £25k in the relatively near future. Online Courts are already in use for family and consumer disputes in the Netherlands. The government is putting its money where its mouth is, all £700 million of it. By becoming early embracers of the technologies available, law firms can become fully competent at using digital technology, making the full transition to a digitised civil court system much less daunting. Mark Hewitt, MD, piCalculator (part of the Rebmark Group) and Adèle Coates-Lyon, Medical Records UK.
Matt Hogg, Managing Director, Accredita (UK) Ltd.
March 2016
Modern Claims 23
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EDITORIAL BOARD
WORRIED ABOUT BEING THE JENNIFER LAWRENCE OF THE CLAIMS PROFESSION? How can cloud based software support claims professionals? Do security and data breach risks mean practitioners need to reconsider how they adopt systems such as these? he theory of cloud computing has been around since the 1950’s, but really started to take off in the 90’s and has continued to be the driving force for the delivery of business and consumer applications and software. Cloud computing is essentially the delivery of services through the Internet. Examples of cloud software and applications include CRM, storage and media streaming where an individual or business can access these through the Internet via their computer or mobile device. Cloud based software, also known as Software as a Service (SaaS), is of great use to claims professionals and firms. From a firm’s point of view, the benefits are extraordinary and include: • Ease of roll out - most cloud software is accessed through a standard Internet browser; this equates to huge cost savings on software and IT resource • Scalability – firms only need to pay for what they use and can also easily scale software to meet their business needs • Staying up-to-date – SaaS vendors are normally responsible for upgrades and maintenance • Client communications – provide clients with portals featuring data relevant to them, better communication leads to increased satisfaction.
T
Professionals can work from anywhere and any device connected to the Internet. Working from home is easy, as is demonstrating reports to clients at their premises. Cloud services are also designed to work on mobiles, tablets and other devices meaning access to critical business information is nearly always available. Security is imperative and must be considered when investing in business critical software, especially sensitive data held by legal firms. However, there are no significant data security differences when comparing cloud software to on-premises installations. Any reputable software vendor will ensure that security is a major component within their software to ensure data integrity. Let’s assume that a legal firm has appointed a SaaS vendor with excellent security measures; the security and data breach risk responsibility belongs with the individual claims professional. Many high profile breaches, such as Jennifer Lawrence’s leaked iCloud photographs, could have easily been prevented by following these simple rules:
The next level What can we expect in 2016 in terms of technological advances, and what impact will these have on claims? 015 saw a huge rise in automated processes which bypass the more menial tasks performed on a daily basis. Repeated administration tasks which took humans minutes or hours are now carried out nearly instantaneously and with the added advantage of increased accuracy and accountability. Technology will only amplify and speed up a system designed by humans. It is therefore imperative that clear objectives are set for the system and defined safety nets are in place to catch anything that falls outside the system, as well as an ensured route to move things back on track. We have seen this technology start to be taken to the next level with the introduction of artificial intelligence; a couple of law firms implementing not just set routes but the ability to make decisions and to learn selections. It is not just to process claims quicker, but to also establish fraud indicators, provide more effective management information and to allow trends, peaks and troughs to be identified. The fees for running claims are considerably lower than three years ago, so law firms have recognised the importance of these advances to ensure that claims or any similar processes are expedited with the minimum of fuss and the highest level of quality. We have also seen a few apps appearing; some are in-house apps designed to link the mobile worker with the office in a more seamless way. Rather than arrive at an office stacked with paperwork, why not use an app to work on the train on the way in, for a more relaxed approach? We have also seen apps dedicated to client care. These have a double-edged sword; firstly, the clients have access to updates about their case, can retrieve copies of paperwork and a whole raft of other features and information. Secondly, the solicitor is not disturbed by as many update calls allowing them to concentrate on what they do best. There is also an additional benefit for the law firm’s owner; every client polices the staff having transparent access to what’s going on with their case. The impact this will have on claims is to reduce fraud, increase efficiency, reduce staff costs and thus maximise profits.
2
Nik Ellis, Managing Director, Laird Assessors.
• Create a strong password and keep it safe • Never access your cloud software via a shared or public computer • Beware of phishing emails trying to extract your passwords. The benefits of cloud software are obvious, but educating claims professionals to ensure they avoid common security pitfalls is a must. By stopping individual mistakes; legal firms should be on solid ground to securely reap the rewards and freedom that the right cloud software can provide. Oliver Smith, Marketing Manager, slicedbread.
March 2016
Modern Claims 25
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EDITORIAL BOARD
Up-skill now to survive
The latest learning curve
The third anniversary of the Jackson Reforms falls in April this year. Is now the time to begin fully assessing the ramifications of the reforms, as practitioners have worked through their preJackson caseloads?
What impact has The All Scotland Personal Injury Court had so far?
pril 2016 sees the third anniversary since the Jackson Reforms hit the personal injury (PI) sector. Further unknown challenges lie ahead - including the proposed increase in the small claims limit, the “ban” on whiplash and the introduction of fixed fees in claims worth up to £250,000 meaning that PI lawyers must continue to adapt to survive.
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I predict the very best firms adapting by driving specialism and lean management throughout their businesses. Surely cutting out waste, poor practices and bringing certainty to cash flow with fixed fees is a good thing for both injured people and law firm profitability? With the initial reforms 3 years ago came predictions that the sky was going to fall in, suggestions that hoards of law firms would exit the sector or fail. The opposite has in fact proved to be true. Specialist PI law firms are growing and high street multi-service law firms attract local clients through reputation. We’ve seen remote outsiders join the PI race, ABS formation, private equity investment and losers from these outsiders already hitting the headlines. There remains profit in PI and these latest proposals will not change and the sector will continue to attract investment. However, these proposals will hit the inefficient hard and the formation of a super class of PI firms will begin, demarcating themselves through healthy cash flow and low debt from the inefficient also-rans. Firms carrying too much debt, lacking in expertise and process will find their cash flow dry up. There will be no “quick fix” save to under settle costs from dwindling legacy WIP – with the insurance sector taking full advantage of struggling firms. The hourly rate will be redefined and WIP alone will no longer be a marker of value and future profits. Those willing to embrace change with expertise, governance and oversight will thrive. Cash flow will improve with lean management and the certainty of fixed fees. My advice for law firms is to take control and assess your processes, use barristers and costs lawyers and redefine your business model.
he All Scotland Personal Injury Court opened its doors on the 22nd September 2015. It has long been in the pipeline since the (now retired) Lord Gill undertook a review of civil litigation in Scotland in 2009. The Court is the first of its kind in Britain and was designed to make all Personal Injury cases more streamlined and for clients to receive their compensation in a timely manner. Six specialist Sheriffs have been assigned to this court in order for “consistency” to prevail.
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Whilst we are very much in the early stages of this new regime, we have to ask the question is it really that different from the current Sheriff Court system or that of the Court of Session? Whilst Court of Session procedural practice appears to have been mirrored, Proof dates are being set 10 months in advance and timescales for processes do appear to have been lengthened rather than shortened. We can already see that one of the main aims appear to have failed. Given the variety of personal injury actions with varying complexity it could be fair to say that the introduction of this specialist court with specialist sheriffs may bring consistency to awards. However, does the Court have capacity to deal with the volume of work which is flooding through the door? Up until September, around 7,000 actions were raised in the Court of Session and dealt with by circa 20 judges. Now we have just 6 people to decide these cases. To add to that, the automatic sanction for Counsel has been removed meaning that a considerable inequality of arms has been created between Pursuer and Defenders, with the latter still able to tap into their deep pockets to instruct Counsel at their pleasing. It is still early days and all parties involved are undertaking a learning curve at the moment. Only time will tell if efficiencies and scale of consistency will prevail or whether it will simply make practitioners and, most importantly, accident victims’, lives more difficult. Scott Whyte, Managing Director, Watermans.
Your PI clients are yours. If you up-skill as technical experts with slick processes, you can reduce external costs that currently chip into profit margins. The real issue here is the survival of the PI bar and costs lawyers. Now they really do have a challenge ahead… Lesley Graves, Managing Director, Citadel Law.
March 2016
Modern Claims 27
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EDITORIAL BOARD
Don’t forget what’s right in front of you
Making the claims process work, for less
Should companies operating in the claims market be looking at alternative ways of marketing themselves and attracting new business in 2016, and if so, what are the most effective channels?
What can we expect in 2016 in terms of technological advances and what impact will these have on claims?
he key words that stand out in this question are ‘new business’. Is there not a concern for looking after current business and customers as well as looking at new business? From research conducted at TRS, we found that only 1 in 25 people will make a claim during their policy. The 1 person that does make the claim is the only one that truly understands the quality of service that they have been paying for. As for the other 24 when the time for renewal comes, there is a distinct lack of loyalty and trust in the market and the option to shop around becomes attractive. I can only judge based upon price comparison sites having a bigger share of search traffic than the actual providers. Instead of solely putting efforts into attracting new business, wouldn’t it be prudent to maintain and reward those 24, should they ever make a claim? Claims Companies should have a better understanding of these individuals rather than finding channels to attract new individuals.
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Looking at this and the claims management process, TRS took the initiative to consolidate buildings and contents claims, in many case exclusively partnering with the best of breed local yet national companies to create a complete “hub solution” for our existing customers, and it’s attracting new business. Each creditable company offers its own USP’s and follow the same brand values as TRS; these include the likes of Euronics, Sig Plc, All-Trades Network and Timpson. In adopting this hub, TRS could offer customers very welcomed options of outcome. Each scenario suits different individual’s requirements and the service is tailored to their needs. If we combine traditional methods and balance this with technology, we are able to reach customers rapidly and have far more impactful communications and response. Marketers and customer service should not substitute the human touch for technology and other emerging channels. As Steve Jobs once said: “Get closer than ever to your customers. So close that you can tell them what they need well before they realise it themselves”. At TRS, we combine our claims validation database ‘ClaimBrain’ for desktop, out in the field and customer portal use, with traditional technical and claims call centre support. Options for phone calls or post are still available for those who prefer it. Victoria Rawlings, Marketing Manager, TRS Claims.
he need for automation and efficiency in the PI sector is now more pressing than ever; in the complex claims sector as well as the traditionally IT-heavy volume claims industry. Thanks to Lord Justice Jackson’s recent proposals for fixed fees, profitable practices, chambers and expert witnesses will comprise of those who put technology at the heart of everything they do with clients and the claims process.
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For us, driving efficiencies into client interactions with chambers is key and we know technology will be central to our success – both in terms of our ability to be a progressive national chambers with the ability to service clients on a contract basis, and to meet the pressures of fixed fees now and in the future. There are calls for barristers to ensure their fees are in line with new pressures on legal practices in PI. This demands capacity, expertise, an understanding of what clients want (key to this is data, which implicitly demands technology) and geographical reach. This simply can’t be managed without sophisticated technology. There are no two ways about it – to make the claims process work for less demands investment into the right technology now. However, you also have to understand what type of system you want, ensure it works for clients and practitioners and can integrate marketing, CRM, management and process. This type of investment takes courage but I’m convinced it’s easier than having to make redundancies to counter inefficiencies. Some solicitors are a long way ahead and have already maneuvered their technology to integrate potential risks from fixed fees. Those who remain with their head in the sand are falling further and further behind – and we haven’t yet seen the start of reform. If some solicitors shy away from technological investment, what hope is there for chambers? We have been quietly (and now not so quietly) using technology to develop our practice efficiencies and client interactions – both for Clerksroom and also Clerksroom Direct. With the largest selection of barristers across the UK, IT has proved to be the backbone of our success but we don’t ever stop developing. We are finalising our client preferences system for counsel services, which means that our systems can help sift through barrister data (work preferences, expertise, travel scope and fees) to enable efficiencies and a greater service from our clerking team as well as offering the most cost-effective professional service to clients. IT won’t win the war, your business plan and leadership will, but the right technology will put you and your clients in the best possible position, now and in the future. www.clerksroom.com Stephen Ward, Managing Director, Clerksroom & Clerksroom Direct.
March 2016
Modern Claims 29
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EDITORIAL BOARD
A cloud vacuum hen I was a kid, I used to wonder whether a device could ever be invented which could suck up clouds – a cloud vacuum if you will - so we would be able to have continuous sunshine. Clouds always got in the way of a sunny day. The difficulty of this invention was of course the storage of the rainwater from the clouds: where would it all go? We then get into the realms of moisture evaporation and particle reversal theories, or even matter transformation...I digress.
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The point is, it became very confusing. We now live in an age of not only the cloud, but also the hybrid cloud, which mixes public with private, and suggests the IT world is now willing to allow elements of their infrastructure as a service (IaaS) and data to go out of their control. It appears that the risk-averse attitude of the past has now been replaced by a desire to find a software as a service (SaaS), platform or infrastructure solution much quicker than before. This clearly helps cash-flow for businesses and should improve functionality for claims professionals. But what of preparation, costs and risk? Well, avoiding cloud adoption all together is no longer desirable. It is ineffective to try to avoid SaaS and, in an age where fixed-fees reign supreme, it is necessary to reduce time and costs for the business to move forward. But is there a risk that data and security be placed at the behest of the least expensive provider? We saw throughout last year, first with Ashley Madison, then with Talk Talk, that security breaches will arise at any level. Data security breaches are not only expensive to resolve, but damaging to reputation. Care must be taken. Cost should never trump safety or security. Clearly, hybrid cloud offers IT a streamlined way to do business, but undoubtedly, this could end up disrupting existing IT. A firm’s IT department can reduce disruption by thinking-through its processes, researching the public cloud in advance of adoption, and preparing for a rapid increase in demand as the floodgates start to open in 2016. We are suddenly entering the realms of a different type of cloud vacuum. Aaron Pearson, Director and Solicitor, Three Graces Legal.
Tough Talk from “Fraud taskforce” he Insurance Fraud Taskforce was set up in January 2015, and within that, it established a Personal Injury Working Group to look at issues relating specifically to personal injury claims. The interim report was produced in March 2015, with the final report made available in January 2016.
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The Taskforce makes a number of recommendations, 26 to be precise, which they believe should be implemented by insurers, solicitors and regulators, intended to reduce overall levels of insurance fraud, and in particular address ‘concern about the preponderance and costs of fraud in low value personal injury claims’. A great deal has been done to improve the claims process already including reforms to ‘no win, no fee’ agreements but, the report goes further calling for more data sharing, a clampdown on nuisance calls, improvements to the medical process, tougher action on dishonest claims and a more aggressive response to suspect claims. One of the recommendations is that there is more data sharing between the parties at an early stage. However, it has long been the case that Defendant’s will withhold certain information, only to reveal it when it suits. This can feel like an attempt to ‘trap’ a Claimant, rather than adopt a ‘cards on the table’ approach that has been encouraged. It can feel like the Defendants ‘hedge their bets’ when acting in this way. They want to make allegations that a claim is fraudulent, but they will not necessarily want such a finding to be made, given that most ATE insurers will withdraw indemnity if there is sufficient evidence to show that the claim is fraudulent or fundamentally dishonest. The report also discourages the making of ‘pre-med’ offers, a practice all too common in low value personal injury claims. We know that pre-med offers do not help this system and yet insurers continue to make them even when they may have concerns about a claim. Whilst it seems most solicitors agree that more can be done to curb the number of fraudulent claims, some may argue that it’s an onerous task, unfairly incumbent on the Claimant and their solicitor, and risking access to justice in some cases. Insures have as much responsibility, if not more, to clamp down of fraudulent claims and all parties must ensure that the honest majority are not tainted by the dishonest few. Linsey Carroll, In-house Solicitor, Box Legal Limited.
March 2016
Modern Claims 31
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EDITORIAL BOARD
Partners or delegates? How should insurers treat their service providers? fter all the initial excitement over new forms of structure for legal service providers – with all sorts of different ABSs, flotations, virtual law firms and any number of variants, things have gone a bit quiet and downbeat over the last 6 months. A number of the new “experiments” have run into difficulties: each new bad news story appearing in the media to loud cries of “I told you so” and “bring back the legal profession” from serried ranks of lawyers of a more conservative bent.
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As a fairly neutral observer, however, it has seemed to me that one of the areas where these sorts of difficulties are bound to have had a direct impact on the insurance community is in relation to the various JV vehicles that have been put together by insurance companies to manage volume claims. A JV is by its very nature a partnership and so insurers who elect to create a claims handling and litigating business in cahoots with an existing law firm are inevitably committing themselves to a partnering arrangement. It is convenient to structure this SPV as an ABS with some branding linking it to the insurer partner. If, however, the partner law firm gets into financial difficulties, then some of the adverse consequences are severe: a replacement partner has to be wheeled in (with very complicated financial adjustments over cases which are in full flow) and new branding has to be deployed rapidly. I have no experience myself of any such partner arrangements in the guise of ABSs but seeing headlines advising insurers to “take care when choosing partners for single purpose ABSs” brought to my mind the question: why would an insurer want to create a solus arrangement with a service provider, rather than manage its claims portfolio by utilising well tried and tested panel arrangements? At least with a panel, if one service provider drops out for whatever reason, there are always others to take its place and there is less danger of brand contamination. I suppose that where I am coming from is that over the years, insurers have evolved some pretty effective methods of managing their claims resolution activities on a panel or outsourced basis and with a few exceptions this has stood them in good stead. But then was the rush to ABSs just about referral fees, I wonder?
Bridging the gap between lawyers as experts How can the medico-legal relationship between lawyers and experts develop? awyer engagement with claimants has been shown to be one predictor of claimant recovery (Elbers et al (2012)), explained by lawyers’ attitude and communications. Learning the lessons from this innovative study from the Amsterdam Centre for Comprehensive Law, I wanted to develop a model for understanding lawyers’ interactions with experts, which can be later developed by empirical research. In a previous editorial, I argued that ‘internal’ customer relationships between lawyers and experts are crucial. The lawyer needs to be accessible, efficient and an effective communicator with his ‘P2P’ (professional to professional) colleagues. This is an integral part of a judicial system based on Total Quality Management and Continuous Quality Improvement. In my 25 year career in medico-legal work, I have met a considerable number of lawyers who exceed normal expectations for this type of effective win-win relationship style. If one investigates the lawyer-expert interaction, what might one find, either positive or negative? Applying the five desirable lawyer characteristics from the Elbers Study (communication, empathy, discussion, independence and expertise) to lawyer– expert interaction, my hypothesis is that the following example outcomes could be found:
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Lawyer Characteristics
Positive Outcomes
Negative Outcomes (if characteristic is missing)
Effective Communication
Clarity of what the lawyer requires (type of evidence, adequacy of opinion, timescales)
Wasted time revisiting mismatch between lawyer and expert expectations
Appropriate mix of types of communication
Letter only with inherent delay and poor dialogue
Empathy
Both professions feeling respected and treated appropriately
One (or both) professionals feeling lack of respect or disinterest
Empathy Decisiveness
Appropriate mix of empathy and business-like discussion/debate
Mismatch of expectation
Each professional having a ‘bias for action’ and getting things done
Delays and inactivity
Appropriate equilibrium between debate, information dissemination and discussion
Passivity or overassertiveness without appropriate debate
Both parties being impartial and logical, staying within their own areas of competence
Giving opinion outside their competence
Having good organisational and communication skills both with each other but also with other professionals and the claimant
Inefficiency and chaotic organisation resulting in time delays and ineffective litigation process.
Decisiveness Independence
David Simon, Chairman, Triton Global.
Expertise
This ‘broad brush’ brainstorm about lawyer-expert interaction is an excellent basis for a research study along the lines of the Elbers study and would enhance not only lawyer-expert satisfaction but, more importantly, have a knock-on effect on lawyer-client satisfaction, improving the wellbeing of all parties involved in the litigation process. Dr Hugh Koch, Chartered Clinical Psychologist and Director, Hugh Koch Associates LLP.
March 2016
Modern Claims 33
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EDITORIAL BOARD
Speed of reporting: The Holy Grail?
What works for your business
Will self service in motor claims lead to an improved customer journey?
How can cloud based software support claims professionals? Do security and data breach risks mean practitioners need to reconsider how they adopt systems such as these?
e often associate claims with a distress purchase. For most people the journey to work each day is expected to be a smooth one, albeit, in most parts of the UK, a slow and frustrating one. No one expects to have an accident, no one wants to have an accident. So, with this in mind, is there a place for self service in motor claims or is the desire to speak to the claims department too overwhelming for this to ever work?
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There are areas outside of the motor space where self service could significantly improve customer service, household and travel being the obvious ones, but there are claims within these genres that are far less stressful than being hit at 40 mph when you are taking your children to school. There is another important consideration, Fraud. Technology and the ability to self serve in terms of the quote process has made it easier to falsify details to reduce premiums. The concern for claims directors will be whether any improvement in the customer journey is offset by an increase in fraudulent claims. As more technology is adopted by the market to move away from rating risk using pooled statistical data, much smaller segments of customers are formed improving risk selection, its true that the claims process should follow the same trend. Not all customers will want to ring the insurer for a multitude of reasons and for these customers a slick, transparent, self serve claims service should be available, encouraging speed of notification. Where possible the notification process should be pre-populated with existing policy details and supported with an automated fraud process that enhances the experience for genuine claimants. For those customers stressed by the 8.50am accident making the children late for school, help should always be on hand. Speed of reporting is seen by insurers as the Holy Grail when it comes to controlling costs, but are several phone calls from numerous areas of the supply chain really what the customer wants? For some it definitely will be, for others, a streamlined self service process, that links in all the elements of the supply chain provides a much better customer experience and will enable the insurer to control or reduce costs just as efficiently. Miles Keeble, Non-executive Director, Veracity Claims Ltd.
am sure we have all heard of the term the “cloud” and I suspect quite a few of us are using this platform to store data. Very simply “cloud computing” means that you can store and access data using the internet, instead of your computer’s good old hard drive. Over the last few years the pace of technological advancement has been unprecedented and almost a challenge in itself to keep up and understand new innovative ways that will enhance and support your business.
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Cloud based services can offer claims professionals several advantages, such as the ability to access these services anytime and anywhere. All you need is an internet connection to access the data. Also from a cost and maintenance perspective, hardware, software and IT resource costs should reduce, because you will only be paying for the capacity the business needs - which brings me on to scalability. This offers flexibility to the business and the ability to accommodate administrative and claims processing changes in accordance with the business needs. Another advantage is that this platform can implement these changes quickly and efficiently, because after all, we all want things yesterday! At the forefront of everybody’s mind should be data security (a huge topic in itself), when considering moving to cloud based systems to run your business operations. The business will have both a regulatory and legal obligation to keep data secure and it is your responsibility to comply with the Data Protection Act (DPA), assuming you are storing data as defined by the DPA. It is therefore critical for you to assess the risks to the business before moving to the cloud. You can assess the security of a cloud provider by visiting their premises (which is actually unlikely with a public cloud provider and more likely with a private cloud provider), or arrange for a third party to conduct a security audit. Before selecting a cloud provider your assessment will need to cover all bases of technical and physical, and a detailed understanding of the security measures in place. The use of cloud based services is increasing, which means that legal and regulatory compliance is more challenging and complex. With all the advantages of cloud based services we just need to be on the ball and invest time in researching a cloud service that works for your business. Nicola Klimkowski, Head of Business Control and Development, LAMP Services Limited.
March 2016
Modern Claims 35
EDITORIAL BOARD
On the agenda in 2016
Adding fuel to the fire
What can we expect in 2016 in terms of technological advances, and what impact will these have on claims?
The government are due to consult on the proposal to raise the small claims limit this year. What are the potential ramifications for your section of the market if the increase is made?
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his question reminds me of the Opinion on Liability and Quantum which was one line long and which read: “The Claimant will win and damages will be enormous.”
So, to answer this question, I might say that the technological advances will be enormous and the impact on claims will be massive. That might be over-hyping things a little, but I only saw this question a few days ago and since then: • On Friday I was at an insurance conference where I learned that immediately after the recent floods insurers and adjusters deployed drones to assess property damage. • On Monday I read that the Dutch government were using trained eagles to give them the capability of taking drones out of the sky if they were suspected of interfering with air traffic, or being used for crime or terrorist purposes. • During the weekend in between I read articles about the deployment of technological advances, and artificial intelligence in the health and finance sectors. At the conference it was asserted that “mobile is massive”. That hyperbole has some foundation, according to Ofcom who say: • “Smartphones overtake laptops as UK internet users’ number one device. • “We’re spending two hours online on our smartphones every day; twice as long as laptops and PCs. • “Smartphones have overtaken laptops as the most popular device for getting online, …with record ownership and use transforming the way we communicate. • “Two thirds of people now own a smartphone, using it for nearly two hours every day to browse the Internet, access social media, bank and shop online.” (http://media.ofcom.org.uk/news/2015/ cmr-uk-2015/)
s a personal injury solicitor whose firm specialises in Road Traffic Accident cases, where the Defendant Solicitors have alleged fraud, this could have very serious consequences to the business. It is clear to most that cases where fraud is alleged should be multi-track, however there has been a worrying trend of Judges prepared to state that this now fairly commonplace and should therefore be Fast Track.
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If the Claims limit is raised to £5,000, then there is a real danger that those judges may either accept this work to be in the small claims track, or be even more tempted to bring it into the Fast Track. There is no place for allegation of fraud cases in either Small or Fast Track. Furthermore in the joined cases of Qader & Khan that started in the portal, but are taken out and put into the multi-track (due to complexity as a result of an allegation of fraud) are being restricted to fixed fast track costs (Qader) or, allowed to take exceptional circumstances (Khan) and therefore standard costs. Both of these are being appealed and should be heard this year by the Court of Appeal. The insurers already tell us that it is too expensive to fight fraud cases (although they seem more than willing to do so in our experience). It is of course of concern that if the tandem plan to go ahead with their “no cash for whiplash” proposal, will it not be even more tempting for insurers to pay out on cases that are potentially fraudulent rather than fight them? Thus scuppering one of the aims of this government in dealing with the so called epidemic of fraudulent cases, which even the ABI say makes up less than 7% of claims. Alan Nesbit, Managing Partner, Nesbit Law Group LLP.
It seems obvious that consumers, including lawyer’s clients, will be become less tolerant of slow paper-based systems. 2016 is not likely to see the widespread deployment of artificial intelligence in the legal sector, new claims arising from driverless cars or digitisation of the entire court system, but these subjects will remain on the agenda and during this year we are likely to experience a greater use of portals, of client Apps such as inCase and of online dispute resolution. Some of our current kit will go the way of the quills and the telex machines! Tim Wallis, Mediator and Solicitor with Expedite Resolution, Trust Mediation and others.
March 2016
Modern Claims 37
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EDITORIAL BOARD
A question of balance What can we expect in 2016 in terms of technological advances, and what impact will these have on claims? n the modern business world, we all have a duty to explore the concept of technology and understand how such platforms can improve contribution to the insurance claims industry. However, technology in isolation will never be ‘the silver bullet’ but it most definitely delivers a substantial contribution.
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The argument of human vs machine will no doubt always continue. But to me the key word is ‘balance’ with technology enhancing the function of the employee and the effectiveness of the organisation. I am aware of many examples where large budgets have been secured, and ultimately wasted in the quest of technological advancements. After all, technology replaces human thinking and errors, automates claim functions and relieves claim pressure, doesn’t it? Sadly, in my experience you can’t have one without the other. I am often called in to help re-establish lost customer trust, business performance and productivity when technology purchased at an Executive level fails to deliver. In the majority it’s not the technology itself that fails, it’s the lack of understanding in deployment, knowing where business leakage exists and creating a solution that supports an organisations claims philosophy. To assist insurers during 2016 and beyond, I-COG will be launching three cutting-edge technology solutions that are perfectly balanced with human application. i-Social® will allow the industry to systematically investigate over 100 social media websites in a cost effective way. Interestingly, beyond claim departments HR departments are also appreciating the benefit of this intelligence prior to offering positions to new starters. I-COG has also agreed terms with the worlds largest supplier of classified adverts (some 1.7 billion) to enable us to utilise industry leading technology to combat fraud and create recoveries in a way the industry has never seen before. Whilst technology is important, do not underestimate the value of continuous education in our industry. To this end we have already launched our proprietary online learning management system to enable us to assist our customers and their quest to further educate their supply chain. i-Learn® is a fully digitised and provides 24/7 access in 86 countries and in multiple languages.
Facilitating an informed choice Should companies operating in the claims market be looking at alternative ways of marketing themselves and attracting new business in 2016, and if so, what are the most effective channels? uilding trust and valuing clients should be top of the agenda. Some key findings outlined by the CAB reported 72% of British adults had received some form of unsolicited communication in a twelve month period. Other reports such as Subject Access requests under the Data Protection Act, are being used by some CMC’s to just search for customer data. These are just some examples of practices that are making consumers concerned, unhappy and putting them off making an enquiry to a claims management company, for fear of being hounded.
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A concerning figure reported was, that of 22% of people who said they had previously bought PPI said they were likely to claim compensation in future, only 16% of these people said they would most likely use a CMC, suggesting that the proportion willing to use CMC’s is dropping. It is evident that previous tactics for gaining business has to change, in order to attract business. Pro-active, forward thinking CMC’s are aware that business can still be done and will look at what prospective clients now know and address the way they do business. Cost is obviously an issue, but if a client needs advice and has no money, they may still contact a CMC, providing they can access information about the company they are speaking with and that business is transparent about the service on offer. Over the coming years, it will become common practice for prospective clients to be looking for third party independent reviews. It is so easy for anyone to build a website and place on the site anything they wish and this will not be enough to reassure a prospective client. Forward thinking companies, who provide their prospective clients with the tools they need to make a choice, provide transparency and are open for their previous clients to share their customer service experience, will benefit hugely from placing their heads above the parapet. Find out more, contact us on 0800 093 8414. www.Checkaprofessional.com Lisa Beale, Head of Checkaprofessional.com
The key of course is to always provide balance between emerging technologies and the needs of the people who work in the industry. Technology that compliments your corporate strategy, your people, claims philosophy and customer focus is the key to positive impact. My clear corporate message is to create seamless harmony between human intervention and automation within the context of what you are aiming to achieve. Tara Shelton, Founder & Chief Executive Officer, I-COG Claims Management.
March 2016
Modern Claims 39
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A crystal ball for fraud raud has been a persistent and growing issue for the insurance industry since 2008. Although ghost brokers and organised fraud rings make the headlines and cost the industry millions, Experian analysis showed the majority of insurance fraud is carried out by non-professional fraudsters, with 90% of fraud in financial services committed by first-party fraudsters.
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As more than a third of converted policies have at least one potential indicator of application fraud, the net result is that, just for motor insurance quotes in the broker channel, the industry looses a potential £1.42 billion in premiums. That’s before you take into account the increased propensity of these customers to make a claim – the costs of which could be as high as £1.36 billion. According to the Insurance Fraud Survey 2015, only 22% of insurers feel they are dealing with application fraud successfully. Consequently, insurers that take action now to protect themselves against such behaviour can focus on their quality clients, leaving the laggards to quote more competitively for, and hence win, the problem customers whose business they really don’t want to write. The key lies in using technology to capture and monitor the behaviour of individual customers in real-time across the whole insurance market to identify when application fraud is occurring. Insurers can then decide whether to push ahead with a quote if the manipulation is not too severe, refer it to a broker to verify details or decline altogether for the 2% or 3% of customers that cause the worst losses. This is exactly the level of insight provided by solutions such as SSP Verify, enabling insurers to identify and respond to the actions of dishonest individuals. Proven ghost brokers, fraud rings and suspect devices can also be added to watch lists to flag up any activity. As consumers respond to a hardening market and the Insurance Premium Tax rise, it is likely they will carry out greater levels of manipulation and become more sophisticated in the way they do this. Our insight into customer behaviour showed the details that are much harder for insurers to verify already coming to the fore –and this trend is only set to intensify. May 2014
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Rejecting junk science reduces claim costs, liability and time lines ne of the most significant costs and potential liability of flood claims is the contamination that develops post water damage. The significance of contamination is relayed in British Standards and enshrined in H&S as a requirement, to verify the remediated property is in a safe condition for occupation and not least the statement that a property has been returned to a pre loss condition.
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The contamination arises from black or clean water, which causes bio amplification of the omnipresent mould spore and bacteria. This amplification occurs as ideal environmental growth conditions occur as the building warms up during the drying process, and contaminated surface dust and biological growth, dry and becomes aerosolised dust. Of course claims managers will expect to see line costs for decontamination, but just how cost effective are the current protocols used and more importantly do they work? Currently, contamination is sprayed or fogged with chemicals in an effort to kill it, however the World Health Organisation (WHO) state that inhalation hazards are the major risks to building occupants and most importantly warn that dead or non-viable mould, bacteria and cell wall components are allergenic and pose a much higher risk than live or viable components. The current use of fogging and disinfectants by the flood restoration industry does nothing to remove the known hazards and few (if any) contractors comply with British Standards and verify sanitation, relying on the unfounded “returned to pre loss condition” as the only guarantee. Manufacturer’s sales talk ignores the point that all sanitising agents require source removal, or cleaning to remove the contamination prior to application and contact dwell times usually means submersion or contact for 20 minutes, something that never ever occurs outside a lab. The HSE have published data that proves conventional air cleaning techniques of HEPA air filtration doesn’t work, so the claim manager should wonder just what they are paying for and what actual results are being achieved for the money spent. A new low cost method of decontamination and cleaning called “Airscrub” cleans the air by causing contamination to drop out of the air in minutes, meaning properties can be decontaminated within a few hours. Jeff Charlton, Technical Director, Building Forensics Ltd. Training and information is available from Building Forensics on 08700 789 999 jeff@buildingforensics.co.uk
Ron Atkinson, Head of Insurer Relations, SSP Worldwide.
March 2016
Modern Claims 41
EDITORIAL BOARD
The New LCB Guidelines – a summary of the new NIHL paper lthough not yet published, the new LCB Guidelines for the Quantification of Noise Induced Hearing Loss have already managed to create quite a stir. Putting to one side the varying opinions on the validity of the new paper, there is no doubt that it is essential for all NIHL practitioners to consider their impact on existing claims and even claims that have previously been closed due to noncompliance with the CLB Guidelines.
an area of contention between claimants and defendants since the first NIHL claims. All approaches have used general population statistics as the starting point to assess the age associated component of a claimants hearing loss with the remaining loss being attributed to noise.
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The LCB Guidelines propose an alternative approach based on the individuals hearing loss with a modified AAHL calculated in the same way as the bulge calculation in the CLB Guidelines. The anchor points at 1kHz and 8kHz are adjusted slightly based on the original bulge calculation and then a further analysis performed based on these new anchor points. This creates a specific AAHL line for the claimant from which the NIHL component can be calculated.
The new paper provides clarifications to the existing CLB Guidelines which, in theory, should be implemented immediately as they are not new, but simply serve to clear up some of the ambiguities in the original paper. Specifically, there is the method of interpolation between the anchor points, which was not explained in the CLB Guidelines (a situation not helped by the fact that the examples were incorrect).
From a purely practical point of view, the LCB Guidelines mean that a bulge analysis has to be performed on every audiogram, including those that have a significant notch so that the adjustment to the anchor points can be assessed and then a further analysis performed to calculate the AAHL/NIHL apportionment.
The LCB Guidelines state that the intended approach was to use logarithmic interpolation between the anchor points rather than the more commonly (and mathematically simpler) linear method. Using noise Calculator, we applied this clarification to a number of separate audiogram datasets and saw improvements in compliance ranging from 4 - 9%. It is therefore clear that the interpolation methodology cannot be ignored.
Depending on your firms’ existing systems, the prospect of reviewing all of the claimant audiometries in light of this paper could well be daunting. But even if this is the case, all NIHL practitioners are urged to carry out the reviews to avoid problems in the future.
The main point of the new paper is to provide an approach to quantifying the NIHL component of the claimants hearing loss. This was not covered at all in the CLB Guidelines and has remained
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FEATURES
The Doctors Chambers Modern Claims Awards 2016 The shortlist for the second annual Doctors Chambers Modern Claims Awards has now been announced. Charlotte Parkinson, Modern Claims, takes a look at who has made the list this year.
The Shortlist Legal Team of the Year Hill Dickinson LLP Transportation Claims Ltd, subsidiary of FirstGroup PLC WNS Assistance
Client Care Award Covéa Insurance Hudgell Solicitors Midway Insurance Services Ltd UnionLine (Trade Union Legal LLP) XL Catlin
Claims Professional of the Year Matt Tuff - Hudgell Solicitors Richard Greer – Simpson Millar LLP Marshal Ahluwalia - Walker Morris LLP
Innovation of the Year BHR Online (a trading style of RTC Investigations Ltd) Imperial Consultants Limited inCase - Lavatech ISO National Windscreens
Law Firm of the Year BLM Hudgell Solicitors Lyons Davidson Limited Simpson Millar LLP Zyda Law
Rising Star Award Kelly Fitzgerald - ANV Syndicates Ltd Hayley Riach - Hill Dickinson LLP Kayleigh Farrell - I-COG Claims Management Donna Jones - Jigsaw Law Rob May - John Lamb Insurance Broking
Insurer of the Year ARAG plc Covéa Insurance Syndicate 1884
Technology Initiative of the Year BHR Online (a trading style of RTC Investigations Ltd) Claims Consortium Group inCase - Lavatech Risk Solved Limited (RSL) sharedo by slicedbread
Good Luck to all those who have been shortlisted!
Broker of the Year Absence Protection Centor Insurance & Risk Management Ltd Clark Thomson Insurance Brokers Ltd Covered Insurance Solutions Ltd Midway Insurance Services Ltd
Counter Fraud Initiative of the Year Asset Protection Unit Ltd (APU) Covéa Insurance I-COG Claims Management LV= Transportation Claims Ltd
Claims Management Company of the Year BDElite Charles Taylor Adjusting MSL Claims Solutions WNS Assistance Winns
The awards ceremony will take place on Thursday 28th April at New Dock Hall, Leeds
Service Provider of the Year Claims Consortium Group iovation S&G Response Silva Legal Services WNS Assistance
Costs Company of the Year Costs ADR Harmans Costs Just Cost Solicitors Kain Knight Ltd MRN Solicitors
To view the shortlist and book tickets visit: www.modernclaimsawards.co.uk
Outstanding Commitment to Training ALPS Legal Practice First4Lawyers Imperial Consultants Limited OPIL LTD The Claims Academy
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March 2016
FEATURES
Judges
Donna Scully CHAIR Partner Carpenters
Rob Cummings Manager, Civil Justice & Data Strategy Association of British Insurers (ABI)
Ben Fletcher Director Insurance Fraud Bureau (IFB)
Susan Brown Director Prolegal Ltd
Hilary Meredith CEO & Founder Hilary Meredith Solicitors
Deborah Evans Chief Executive Association of Personal Injury Lawyers (APIL)
Andrew Gibbons Managing Director Mason Owen Financial Services, (BIBA)
Laurence Besemer CEO FOIL
Francis Kendall Council Member ACL
Steve Chelton Head of Claims & Insurer Fraud Protection Swinton Insurance
Martin Coyne Managing Partner Ralli Ltd
“I am delighted to be Chair of the Judges again this year. These awards were designed to showcase exceptional achievements across our industry, despite the massive changes we have all experienced over recent times and still face now. As always, our industry works hard to adapt to change but also sustain standards of care and the Modern Claims Awards seek to recognise and reward outstanding contribution, innovation and hard work. These awards, which started last year, bring a new benchmark of quality and excellence within the claims industry and we have encouraged and received nominations from organisations across the sector who can demonstrate true strategic vision, a commitment to customer needs and innovative developments. The standard of the entrants and entries this year have surpassed last year and it is great to see that. Well done to everybody who has entered for their effort and hard work and, of course, best of luck to those shortlisted. I look forward to a great event, even better than last year if that’s possible!” Donna Scully, Partner, Carpenters and Chair of the Modern Claims Awards Judging Panel
March 2016
Modern Claims 45
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FEATURES
Focus Feature: Noise Induced Hearing Loss Claims The inaugural Noise Induced Hearing Loss (NIHL) Symposium, organised by Pure Legal Limited and Fusion Law, took place on 4th and 5th February 2016. Ebony Lawson, Modern Claims, reports on the panel debate from day one. he Inaugural NIHL Symposium took place on 4thand 5th February in Manchester. Claims professionals came in their hundreds to hear from pioneering claims professionals on Medico-Legal Advancements in relation to NIHL claims.
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Conference Chairman Theo Huckle QC, Counsel General for Wales, introduced the panel, which included Professor Mark Lutman, AUDIS Partner, Institute of Sound and Vibration Research at the University of Southampton; Doug Cooper, Barrister, Deans Court Chambers; Kaiser Nasir, Barrister, ParklanePlowden Chambers; Chris Fry, Solicitor, Fusion Law, and Neil Bateman, Consultant Ear Nose and Throat (ENT) Surgeon, BMI Thornbury Hospital. The panel had been accumulated to explore de minimis hearing loss, delayed onset hearing loss, and when hearing aids and alternative therapies can be claimed.
The key focus
To begin the discussion, Huckle had devised a series of questions to put the panelists under pressure and to “identify potential issues” with noise induced hearing claims, asking “is NIHL represented by particular symptoms or a particular level of disability?” Lutman responded from a medical standpoint stating that “structural function” may be altered as a result but that the key focus should be the “emotional state” of a person suffering from noise induced hearing loss. Bateman justified Lutmans point highlighting that “disability handicap distinction” is useful “to help recognise the extent of disability.” Huckle next probed the panel around when to compensate a sufferer of noise induced hearing loss, and whether they should be compensated as either “individual patients” or whether it should be based on “population health systems.” Lutman clarified that it is possible for there to be damage “without the person noticing” but added that it would be “strange” to compensate somebody on hearing loss that goes unnoticed. Acknowledging Lutmans point, Bateman explained, “the majority of people fitted with hearing aids don’t use them” and outlined that as a “cynical NHS worker” it is important “not to fund the NHS to supply hearing aids as a surrogate.”
The majority of people fitted with hearing aids don’t use them Neil Bateman, BMI Thornbury Hospital Cooper, outlining that in his opinion, that when a NIHL diagnosis is made that shows “progressively worsening hearing loss” compensation should still be applicable as the hearing loss is still “noticeable clinically”.
What is the legal meaning of disability?
Closing in on compensation, Huckle questioned the panel about “how disabled a person has to be” in order to be granted compensation and also asked whether the “disability has to be permanent,” to which Doug Cooper explained “the client has to be appreciably worse off,” which requires evidence that they have a “diminished perception in the real world.” Fry, in agreement, added, “there has to be some loss of amenity” but that “disability has to be in the context of the social circumstances.” Nasir also added that “disability is about perception” and that, in order for a person to be granted compensation, the disability “does have to be permanent.” There is no doubt that the personal injury disease market has experienced a rise in the number of NIHL claims. Although the market saw a reduction in the quantity of claims in 2014, the number of cases rose by 3 per cent in 2015 alone. This signals that an increased number of firms may move into handling NIHL claims in 2016, to replace lost revenue in light of the Jackson reforms of 2013, and other external pressures on the personal injury market. Ebony Lawson is Editorial Assistant at Modern Claims Magazine.
When to provide compensation
Next to join the debate was Cooper, who focused on when to compensate in regards to “noticeable” and “appreciable” noise induced hearing loss, specifically Tinnitus. Responding to Huckles question around whether NIHL can have an effect after period of time, he stated that hearing would need to be “noticeably lost” as opposed to “measurably lost”. Fry added to Coopers point from a claimant perspective, saying that if “an accurate audiogram of 3dB plus” is presented, then compensation for Tinnitus should be granted. Nasir interjected with a slightly different viewpoint to
March 2016
Modern Claims 49
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Legal Opinion Modern Claims’ resident legal experts Donna Scully and David Hertzell, address the impending increase to the small claims limit and review the findings of the recent report by the Insurance Fraud Taskforce.
The right professional representation The government are due to consult on the proposal to raise the small claims limit this year. What are the potential ramifications for your section of the market if this if the increase is made? think a better starting point for this question is not about our ‘market’ but to consider injured accident victims who are forced to take out compulsory motor insurance. The proposed reforms will deal a devastating blow to them in my opinion. Only ‘after’ they pay their insurance and find themselves needing to make a genuine claim will they find out they have to do it on their own with no expert legal advice and assistance. Their opponent on the other hand will have skilled, expert advice and assistance if the matter goes to court. In the ordinary course of life when you have a problem, such as your boiler breaking down, you are not expected to fix it yourself assisted using a manual, you would automatically call an ‘expert’ to fix it. It is simply not fair or just that when you have a legal problem, the system actively prevents you from seeking expert advice. In my view, the process is too complicated for the small claims track as a litigant in person. I have made the suggestion that a member of the ABI, the government, or a non-RTA lawyer should run a so called ‘straight-forward’ RTA case themselves and see how they fare. I genuinely think that this would be the only way that they would see the complexities that are involved. There can, even in low value cases, be difficult issues relating to liability, causation and medical evidence. A proposed “five-fold’ increase to the small claims limit is enormous and the level of injury you are talking about at £5,000 is deeply concerning. As usual, I fear the reforms will hit the most vulnerable in society, those who may not have the ability or the confidence to seek their redress in court on their own. I suspect, in terms of our industry, victims will continue to desperately seek representation when they need it most and be prepared to pay for it out of their damages - so the market will continue. My genuine fear is whether these people will get the ‘right’ professional representation or whether unscrupulous people will see these reforms as a way to make money. I also have concerns that the number of claims might actually increase - and the levels of fraud too. Now that would be a tragedy for everybody. I sincerely hope that the forthcoming consultation is a genuine one and that real concerns about the unintended consequences the reforms could bring are listened to.
I
Donna Scully, Partner, Carpenters.
Insurance Fraud Taskforce publishes recommendations in highly anticipated report fter a year of consultation including an interim report in March 2015, the Insurance Fraud Taskforce has recently published its final report. The members of the Taskforce balanced the interests of insurers and policyholders and had a broad view of the market beyond any one type of business. It consulted very widely, established an advisory group and set up a personal injury working group. The final report is a synthesis of the views expressed.
A
So what did the Taskforce find? Whilst the precise numbers can be debated, there is no doubt that fraud imposes a considerable cost on the insurance market and that cost is ultimately passed back to policyholders by way of increased premiums. A lot of the debate focussed on personal injury claims but fraud can occur in virtually any class of insurance. Whilst much of the publicity has concentrated on organised criminal activity in fact, a lot of fraud is opportunistic with otherwise honest policyholders trying their luck in a spur of the moment decision. Different deterrents will apply. The causes of fraud are often deep rooted. The Taskforce recommendations were wide ranging. Insurers could do more to clarify policy terms and claims processes to avoid consumer confusion and creating a victim mentality. Board focus is helpful and communication about how insurance works including the costs and consequences of fraud could be improved. Data should be shared more widely and used more effectively. Regulators too should become more involved including those responsible for “professional enablers” such as solicitors and doctors or nuisance calls and data management. Regulators such as the Solicitors Regulation Authority or the Claims Management Regulator might need increased powers in some areas. The Taskforce did not make general recommendations about the legal system – that lay outside its remit. It did recognise some specific issues and had an overall concern as to how legal representation could be arranged at a proportionate and sustainable cost. Finally the Taskforce was aware that such reports do not always lead to practical activity. It suggested a legacy body reporting to the government to police how its recommendations are implemented. David Hertzell, BLM consultant and chair of the Insurance Fraud Taskforce.
March 2016
Modern Claims 51
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FEATURES
Stepping into the unknown? Martin Doyle considers why solicitors should be risk assessing their firms with the potential increase in the small claims limit on the horizon. he idiom “the devils’ in the detail” has never been more true than in relation to the raising of the small claim limit to £5,000 as announced in The Autumn Statement of the House of Commons in November 2015.
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Speculation as to what this will mean in conjunction with the proposal to remove the right to general damages for minor soft tissue injuries is ongoing, however, what is clear is that following a period of stabilisation in the industry further turbulent times are ahead. It is difficult to see how the government will address the right to general damages as the general consensus is that an Act of Parliament will be required to remove the power of the courts to compensate for a tort. The small claims limit increase proposed does not require primary legislation but as yet no date has been set for when this will come in to affect.
Breaking new ground
Since the passing of the Access to Justice Act 1999, the personal injury industry has been through many evolutions leading to the one we work in today. The Legal Aid, Sentencing and Punishment of Offenders (LASPO) Act 2012 is the latest incarnation. Both After the Event (ATE) and Before the Event (BTE) have had significant roles to play in the history and development of the industry, breaking new ground and evolving to ensure the liabilities of claimants are covered allowing solicitors to provide their services on a no win, no fee basis. The ATE market stepped into the breach post-LASPO to provide cover for the liabilities of claimants under the new regime which Lord Justice Jackson had envisaged would be the domain of the BTE market. A subsequent review of BTE (Motor Legal Expenses) stated that its complexity resulted in a lack of understanding by the customer. This has led to a ban on opt-out selling and a requirement to improve information provided to customers buying add-ons, as detailed in the Financial Conduct Authorities, General Insurance Add-Ons Market Study published in September 2015. The BTE market continues to address the issue’s raised to ensure compliance with the changes required by the FCA. The ATE market as a whole has been guilty of under selling an insurance product which ensures a client receives their damages if unsuccessful, and as an added benefit to solicitors, provides that at the very least they can recover their costs to the date of the defendants Part 36 offer. Plus the premium is only payable if they are successful and receive damages. With the increase in the small claims limit on the horizon, however it manifests itself; further reductions in income on a per case basis are inevitable. We are only now seeing the full impact of the LASPO reforms from a financial perspective with the post-LASPO cases running off.
March 2016
Since the announcement of the proposed small claims limit increase all solicitor’s should look at the risk to them of undertaking this practice as well as reviewing their current arrangements to ensure they are fit for purpose Innovate now
Whilst ensuring the claimant is provided with robust protection, it is important that solicitor’s utilise risk transfer mechanism’s to maximise their income. Self-insurance has become more prevalent post-LASPO, but since the announcement of the proposed small claims limit increase all solicitor’s should look at the risk to them of undertaking this practice as well as reviewing their current arrangements to ensure they are fit for purpose. After all, it is the income that is generated in the lead up to the proposed changes that allows the solicitor to assess the market and continue to trade. ATE is an important tool in ensuring that this income is ring fenced and not subject to erosion by attritional payments to customers and third parties. Without knowing “the detail” it is difficult to predict what the future of either ATE or BTE will be and whether one or the other or even both will be necessary. As it stands any claimant will have a personal exposure to costs whether they run the case themselves in the current small claims regime or whether a third party was to run it for them. This means there is a liability to be covered, as well as yet potentially unknown additional exposure. With the increase in the small claims limit, that liability remains and without the current provision of “credit” by solicitors, insurance will be necessary. How and by whom claims are dealt with will dictate route to market for ATE and BTE providers but innovation will be the key for insurers in both fields to maintain market share and look to growing their book. Policy coverage, claims frequencies and per case exposure will be a step into the unknown once again for Insurers. Clarity will be provided as time progresses but the importance of risk assessing your firm in the short term for long term protection is imperative. Martin Doyle is Director of Amberis ATE.
Modern Claims 53
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Make adjustments and reap the rewards The third anniversary of the Jackson Reforms falls in April this year. Janet Tilley asks whether now is the time to begin assessing the ramifications of the reforms as practitioners have worked their way through ‘pre Jackson’ caseloads. ack in April 2013 Claimant PI solicitors and their clients faced revolutionary change. From the way a firm sourced its work, through to average profit costs and recoverability. With a reduced fixed fee for RTA work and the introduction of fixed fees in EL/PL Claims (at a considerably lower average fee then under hourly rates) it should have been glaringly obvious that making a profit needed to be under constant review. Assessing the ramifications now, if for the first time (and it amazes me how many PI Lawyers are) is arguably 3 years too late. Nonetheless, on the premise of better late than never, what are the ramifications of the Jackson Reforms?
Remaining “niche” is a strategy for some. It may well attract a lower cost of acquisition and the odd gem of a multi-track but a lower cost of a small number does not necessarily a profit make
The referral fee ban
money to run a case, but on the contrary, a balance of payment from the negligent party’s Insurer and the clients damages. If Jackson got the fixed fee right to reduce the Insurance burden, then the mere fact of a reduced 25% implies there is insufficient revenue per unit
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I have seen no evidence in practice of the cost of marketing coming down. Lord Justice Jackson suggested if referral fees were banned we could return to organisations directing to quality lawyers. There is no putting the Genie back in the bottle. CMC’s exist, are regulated and have continued to prosper. Whether clients are recommended, sourced through collective marketing or individual marketing there is an online/offline cost. Jackson suggested a compromise of an allowable £200. In my experience, he needed to move northward just to cover the pure cost of individual marketing, and if a profit is to be made by an intermediary doubling the figure might not even get to the lead cost. If anyone thinks £200 covers the cost of a case look at your conversion rate, look at your subsequent fall out rate and finally your per-successful-case cost but make sure you are sitting down!
Pre Jackson work
Many have solved the problem. Mixing the bonanza of pre Jackson run off with the post Jackson lower fixed fee should have shown an initial boost in profitability, but almost 3 years on there is a universal decline in revenue. Supported by a virtually unchanged marketing cost there is an unquestionable reality here.
Survival: Is it possible?
The above makes an assumption that everyone has made the connection between doing work in greater volume to make a profit from a smaller fee. Remaining “niche” is a strategy for some. It may well attract a lower cost of acquisition and the odd gem of a multitrack but a lower cost of a small number does not necessarily a profit make.
Early RTA books are now complete. Those who focused on reducing production cost will no doubt attest to achieving a reasonable profit. For those who have not is it too late? Post Jackson general Personal injury books are still only part complete. Begin now in assessing the impact of reform on these books, make appropriate adjustments and in 12 months time we all hope to see the early shoots of return to profitability. But then again, the Chancellors Autumn Statement...
The 25% success fee
Janet Tilley is Director of Volume Legal Services at Simpson Millar LLP.
Maybe it is just me but if I had suffered an injury at the hand of someone who had been negligent and he or she had already insured themselves against that risk: why am I paying? Right or wrong, the outcome is clients shop around for a reduced or 0% uplift, wiping out the balance Jackson intended. I did not read into the Jackson report that the objective was to leave insufficient
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What happened to Human Rights protection for our Armed Forces? David Cameron has ordered a “major crackdown on abuse by lawyers pursuing soldiers through the courts for simply serving their country and doing their jobs on operations”. Is this the right course of action and how will it work in practice? Hilary Meredith explains. t long last the Government is stepping in, in an attempt to put an end to the witch hunt that has taken place against our service men and women over a number of years. We have most recently represented the interests of three soldiers who became embroiled in the Al-Sweady inquiry, as a result of spurious claims by Iraqis. Having had their lives and careers put on hold for 5 years with marriage breakdowns, these soldiers are in the unusual position whereby there does not appear to be any traditional legal action which can be taken to defend their reputations and hold those responsible accountable.
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It is therefore welcome news that the Prime Minister appears to be taking action to recover as much of the £31m of taxpayers’ money spent on the Al-Sweady as possible - including the millions paid to law firms involved in the inquiry. It is about time that the UK government stands up for our soldiers who spent years complying with the requirements of the unfounded inquiry, whilst facing malicious allegations about their reputation and integrity in a very public arena. Such action is vital so that our troops can feel confident in our justice system. It became apparent in the Judgment given in the Baha Mousa case that the direction given to British military on what to do in capturing the enemy was sadly lacking. Historically, after the events in Northern Ireland, the then Prime Minister Ted Heath in 1972 announced a ban on certain methods of detention, interrogation and treatment of prisoners of war. The MoD immediately updated their 1965 directive to include these five banned activities, which included hooding, sleep deprivation, limited diet and wall standing (stress positions). It is unfortunate that updates over the next 30 years watered down these five banned activities so much so that they didn’t even get a mention in later directives and were written out completely. No wonder then that confusion rained on the ground in combat.
Action needs to be taken by the government to ensure we continue to comply with the Armed Forces Covenant and protect the interests of our servicemen and women 56 Modern Claims
The current situation where lawyers are paid win or lose under the legal aid scheme has to change Time to take action
It became apparent in the early days of Op Telic that hooding had introduced itself - and indeed blindfolding to move prisoners from one place to another was not banned and still isn’t. A verbal command was given to stop the use of hoods on prisoners, but this verbal command did not reach all units and was not communicated down the chain of command causing a total lack of continuity on the treatment of prisoners. In addition, in Gulf 1, most prisoners were military in uniform who in my view commanded some respect as fellow military. The difference in Iraq is the capture of civilian insurgents as opposed to a country’s army. Whilst not making excuses it is easy to see why there was a need for total clarity from above down on these situations. These Iraq Historic Allegations Team (IHAT) claims and other historic claims can be divided into groups: 1. Those arising in a combat situation. 2. Those arising in detention. 3. Those who have been offered compensation by UK lawyers. 4. All others. Through the Armed Forces Covenant, the nation has promised that those who serve are treated fairly. Clearly action needs to be taken by the government to ensure we continue to comply with the Armed Forces Covenant and protect the interests of our servicemen and women. As the first law firm to sign the Covenant, we have campaigned for change to our publicly funded legal aid system for years. At present, such unfounded claims are being pursued at the expense of the British taxpayer and under the Human Rights Act 1998. Although Human Rights Legislation was brought in after WW1, it is difficult to see how it was intended to be used in this way and also difficult to see how we can retreat from it.
Cause for concern
If war crimes have been committed, they should quite rightly be investigated but I cannot believe the extent of the claims made. It
March 2016
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When lawyers receive Legal Aid in the event of losing a claim, there is potentially motivation for them to pursue spurious claims is vital that our Armed Forces’ ability to deal with the enemy is not hindered with thoughts of the enemy’s entitlement to our Human Rights protection. Furthermore, foreign claimants use British legal aid for these claims by satisfying a means and merits test. The government’s proposals to speed up the planned legal aid residence test cannot come soon enough so that only British residents that have contributed taxes to our society are allowed the privilege of publicly funded legal advice. The current situation where lawyers are paid win or lose under the legal aid scheme has to change.
place for those who left the forces years ago. In extreme cases, there are soldiers who left military service many years ago, settled into civilian life and are now being contacted by IHAT and accused of unlawful killing. Having consulted with veterans, I believe they should be guaranteed the following: 1. The right to a framework of help and support for serving and ex-military personnel to include: Chain of Command, welfare and medical support.
One concern however is the potential reforms to the “no win no fee” agreements. Whilst our current system is by no means perfect, such funding agreements do provide access to justice for those who cannot afford to pay legal fees and it forces lawyers to only take on claims where there are sufficient prospects of success. When lawyers receive Legal Aid in the event of losing a claim, there is potentially motivation for them to pursue spurious claims.
2. The right to independent legal advice.
We hope the government follows through with their proposals and will be closely monitoring the next steps that need to be taken. We are also representing a large number of veterans being pursued by IHAT. Worryingly, there is a total lack of support in
6. The rights promised to military personnel under the military covenant to be upheld.
3. The right for funding for such advice. 4. The right to a fair trial. 5. Time limits imposed on the cases.
Hilary Meredith is founder and CEO at Hilary Meredith Solicitors Ltd.
FEATURES
Sector Soapbox
Modern Claims’ panel of industry associations, including the Association of Regulated Claims Management Companies (ARC), the Motor Accident Solicitors Society (MASS) and the Forum of Insurance Lawyers (FOIL), discuss issues effecting the claims sector at the moment.
Driving out bad practice The Fraud Taskforce has released its final report into the review on claims management companies. What could the findings mean for the industry? he final report has of course now been released. The only real issue as far as CMC’s are concerned is to confirm that the current review into CMC’s needs to ensure that the regulatory regime is tightened further, and errant behaviour is properly punished. The wording used is particularly bland and non-committal “strengthening regulation of CMC’s: this should be achieved by the government establishing a stronger regime for CMC regulation and ensuring that the CMR has adequate resources and powers to do its job effectively. To this end the Taskforce endorses and supports the independent review of the regulation of CMC’s led by Carol Brady and will share information relevant to that review.”
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The other issue for CMC’s is the proposals to noise induced hearing loss (NIHL) claims to bring in fixed costs. In the same way that fixed costs in Road Traffic Accident claims decimated CMC’s, the likelihood is that there will be a similar impact on those CMC’s
that provide this type of work to solicitors. Of course the level of those fees will determine how much of an impact this will have. Interestingly, solicitors do not get away with it and the recommendation is to increase the severity of punishments to solicitors who are found to have got involved in fraudulent activities. It has often been the view of those in the CMC sector that all are not treated equally, and for solicitors who are found to have been involved should be given the same kind of treatment as a CMC. Having been part of the stakeholder group that has met with Carol Brady several times, the final recommendations will make very interesting reading. Alan Nesbit, Chairman, The Association of Regulated Claims Management Companies (ARC).
A mixed bag f George Osborne had announced that he intended to ban shopping to prevent shoplifting, or to ban home contents insurance because some people claim to have been burgled when they have not, there would have rightly been a public outcry. Yet this is the equivalent of what has happened to whiplash claims. It is proposed that law-abiding victims should have their rights and freedoms removed because of an unquantified minority who make fraudulent claims. Unfortunately, rather than outrage at such a proposal, it has been widely welcomed, particularly in the mainstream media, where the myth that whiplash is not a genuine injury has taken root.
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The Autumn Statement somewhat took the wind out of the sails of the Insurance Fraud Taskforce. It must have necessitated some last-minute re-writing before its report was published in January. It is a mixed bag of sensible recommendations and misguided and naive ones. Of course pre-medical offers from insurers, which more than anything else, have driven a perception that compensation for whiplash is “easy money”, should be “discouraged”. But the notion that by requiring a dishonest solicitor who has paid an unlawful referral fee to a CMC and may, if insurers are to be believed, have submitted a claim notification form (CNF) without the claimant’s authority, will suddenly be struck by the error of his ways when faced with a field in the CNF requiring him to name his referral source is less sensible.
58 Modern Claims
As for the proposals to introduce special rules for those claimants who do not present claims promptly after an accident, they would (if introduced) achieve nothing other than to complicate the law in an already difficult area. It will certainly disadvantage claimants who have perfectly valid reasons for deferring their claim. The mining of data that leads to claims being generated by cold-calling years after an incident is already unlawful, as is the purchase of those claims by solicitors. At least the Taskforce acknowledged this elsewhere in the report. The scathing criticisms levelled at solicitors, CMCs and other sectors may or may not be justified, but the report cannot be regarded as a balanced document when it merely recommends that insurers improve communication and make greater use of behavioural economics. I represented MASS on the personal injury group that advised the Taskforce. The three insurer/defendant lawyer representatives and the three claimant stakeholder representatives in the group had very constructive discussions, and we put forward some unanimous recommendations that we believed could bring about real improvements. Most of them were adopted by the Taskforce. They certainly did not however include a recommendation that the right to damages for minor whiplash be removed. Susan Brown, Chair of the Motor Accident Solicitors Society (MASS) and Director of Prolegal.
March 2016
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Reports seek radical changes ord Justice Briggs and The Insurance Fraud Taskforce published their reports in January. The Briggs review is an interim report with further consultation to follow but it’s already clear that a radical shake-up of the civil courts is planned. In particular, Briggs backs the introduction of an online court aimed at litigants without lawyers and involving a more investigative approach by judges. It seems likely this will apply in future to many claims up to the fast track limit of £25,000. What is not clear yet is the type of claim which will be included but it looks likely that most money claims will be, with the possible exception of personal injury which Briggs feels cannot be included.
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Briggs does though think that small track personal injury claims could be included in the online court, which may be good news for claimants when the government increases the small track limit for these claims to £5,000 next year. That change will mean thousands of injury victims no longer having access to lawyers to help bring their claims. The problem is likely to be one of timing. Whilst the planned increase in the small claims track limit is expected as early as April 2017, the introduction of an online court, involving a massive IT project, is unlikely to be in place before 2020.
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The Insurance Fraud Task Force report contained a wide range of recommendations aimed at tackling insurance fraud at both the proposal and claims stages. It included a number of radical proposals for dealing with the problem of late whiplash claims, although in the end stopped short of recommending reducing the limitation period to 12 months. The report should be welcomed, particularly insofar as it aims to encourage the public to regard insurance fraud as criminal activity. It is hoped the various initiatives outlined in the report get the backing of organisations supporting claimants. The claimant lobby has been very vocal in objecting to the proposed changes to the small track limit and the proposal to remove the right to general damages for low value soft tissue injuries, largely on the grounds of access to justice. If the public are to get behind these objections, the level of fraud must be reduced, not just in obvious cases where the accident didn’t happen or the injury is fabricated but also the many cases involving gross exaggeration which still blight the market. Duncan Rutter, President, Forum of Insurance Lawyers (FOIL).
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piCalculator within Proclaim – Eclipse’s latest integration simplifies damages calculation Eclipse Legal Systems, the Law Society Endorsed legal software provider, has announced the integration of Proclaim Case Management with the award-winning piCalculator from Rebmark Legal Solutions. iCalculator is a powerful software tool that makes it easy for Personal Injury and Clinical Negligence Lawyers to build a court-ready schedule of loss. Users can enter their client’s past and future losses and piCalculator will work out the interest and multiplier calculations, eliminating the need for reference materials Darren Gower and calculators. All losses can be instantly updated if key information changes ensuring that the schedule is always accurate. piCalculator prepares a complete tailored court-ready schedule, incorporating multiple loss headings and narrative sections. Eclipse’s integration with piCalculator means the schedule can be saved directly into Proclaim, ready for filing with court if required.
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The integration allows users to effortlessly create a schedule from Proclaim at the click of a button, taking them directly to piCalculator’s advanced browser-based schedule builder. On completing their work, users can transfer the schedule back into Proclaim, again with a single click – making the process easier and quicker. Tracy Blencowe, Business Solutions Director at Eclipse Legal Systems, comments:
“The integration with piCalculator is the latest in a series of Eclipse integrations with a number of high-profile software providers, and will simplify the process of calculating damages within Personal Injury and Clinical Negligence. We are constantly looking to strengthen our goal of streamlining administrative tasks and enabling our clients to increase the efficiency of their daily business practices – our integration with piCalculator does exactly that.” Mark Hewitt, winner at the recent Claims Innovation Awards for ‘Outstanding Innovator’, and Managing Director at Rebmark Legal Solutions says: “piCalculator was developed to make preparing a schedule of loss as easy as possible and this integration with Proclaim makes the process even more straightforward. Our powerful schedule building software can be accessed seamlessly through Proclaim and because data is shared it removes the need for duplication of effort. As the only Law Society endorsed Case Management System, Proclaim was the obvious choice for our first integration project.” For further information, please contact Darren Gower, Marketing Director at Eclipse Legal Systems, part of Capita plc, via darren.gower@eclipselegal. co.uk or call 01274 704100. Alternatively, visit www.eclipselegal.co.uk
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Our costs expertise covers: • Personal Injury; • Clinical Negligence; • Industrial Disease; • Court of Protection; • Civil litigation; • Commercial litigation and arbitration costs; • Costs management and budgeting. Since our inception in 2006, we have recovered over £0.5 billion on behalf of our clients. Just Costs also has an in house advocacy team. Due to our reputation, we are regularly instructed by other costs firms as well as firms of Solicitors who have their own inhouse costs departments, specifically for our advocacy services. We have also developed innovative law firm funding schemes, which are helping our clients to hold out for better offers and improve their overall profitability, such as our Costs Advance scheme which allows firms to draw down up to 70% of their likely
March 2016
recoverable costs once their bills have been drawn. To date, over £15million has been advanced to our client base. With the changes that came in effect from 1st April 2013, Costs Management and Budgeting has played a huge part in litigated cases. Solicitors have had to change the way they are working and Just Costs have been on hand every step of the way. We have drafted over 1800 Precedent H for our clients and our excellent in house advocacy team are often being instructed to deal with the Costs & Case Management Conferences on their behalf. With the demand for Costs Budget preparation and Costs Management representation soaring, we have also designed our own budgeting software which is allowing us to draft an accurate Precedent H document in a smaller amount of time. In our opinion, investment in technology is going to “separate the men from the boys” moving forwards and with the Government proposing further changes to the rules, firms are going to have to work smarter and more efficiently. We act for over 350 clients in the UK and are always looking at ways we can assist new clients. It can often be a difficult task to find a Costs Company who you can trust and know care about your case as much as you do – Just Costs Solicitors are that firm and we would love to tell you more about what we have to offer. Please call Mark Hartigan - Client Services Director today on 0161 359 4666.
Modern Claims 61
10 MINUTES WITH
SIAN FISHER Q A
Has the industry changed drastically since you started working in it?
I have been really lucky in the sense that I have essentially had four very distinct careers to date. I started as a graduate trainee at Marsh, in its broking arm, but soon after I was offered the role of trainee underwriter at Hiscox. Then I had what you would call a well managed and well trained technical career, which gave me a good overall grounding in insurance. Given the diversity of my background in the industry, I believe I’ve had a unique view and have seen a number of fundamental areas change and adapt. However, one area that specifically springs to mind when looking at how the sector has changed is when observing how much professionalism has climbed the agenda. Whereas before, unless you worked for a company where the person in charge felt professionalism was an important aspect, it was quite low on the agenda. But in the last five or so years I have witnessed a much stronger focus on upholding ethical behaviour and holding people accountable for their actions in a professional setting. Though it is true that regulation has driven some of that agenda it is remarkable how much the professional landscape has adapted and continues to progress. Though there are still areas that need to be improved, I’m confident that over time there will no longer be a place for people who do not believe in either ethical conduct or professionalism. Another area I have witnessed notable change, particularly in recent years, would have to be the sector’s efforts to attract a steady and diverse stream of talent into the workforce. Insurance has always had a great deal of social diversity and has encouraged individuals from difficult social backgrounds to become very successful. However, making insurance more attractive, particularly with a focus on school leavers, has been a key goal to help tackle the skills shortfall the profession has been presented with.
Q A
What has been the key positive or negative impact of change in your area of the market?
It is immensely encouraging that wherever you go now you are encountering senior women in all positions. However, in many boardrooms you will still encounter a strong gender bias. We haven’t yet cracked the fact women are still dropping out of the workforce to have children. Women do have to have a period of their lives to have children if they wish. As far as I am concerned, that is not a problem. We just have to look squarely at it and ask what needs to be done to ensure a goodly proportion of qualified women feel able and willing to come back to work, otherwise the loss of resource and talent is chronic.
We just have to...ask what needs to be done to ensure a goodly proportion of qualified women feel able and willing to come back to work, otherwise the loss of resource and talent is chronic
Q A
Who inspires you and why?
There is an inspirational lady at the South Bank Centre who is head of their Festivals. Her name is Jude Kelly. She pioneered a Festival called Women of the World six years ago to coincide with International Women’s Day. It has boomed to a multiple day, multi million attracting mega event celebrating, challenging and providing a galvanising forum for women and their lives. She is now franchising it worldwide and it is making a real impact for good.
Q A
Have you had/got a mentor? If so, what was the most valuable piece of advice they gave you?
I have always sought out a network of people in the Market from different backgrounds and sectors and I catch up with them regularly to talk about all sorts. I trust them and I can be open and direct with them. This is the most important aspect for me. Perhaps this is more of a “Buddy” system than true mentoring but it works. We have just applied this concept more widely to set up a pilot Qualification Buddying programme for the Institute of London. This is designed to support people through to ACII or equivalent professional qualifications. Probably Shakespeare and my parents gave me the best piece of advice “to thine own self be true”.
Q A
If you were not in your current position, what would you be doing?
I have had breaks in my full time working several times in my career and I have always promised myself I would read War and Peace. I have several lovely copies of it at home but have so far failed to get beyond admiring them on the book shelves!
Sian Fisher is CEO of the Chartered Insurance Institute (CII).
SAVE THE DATE MODERN CLAIMS AWARDS Thursday 28th April 2016 New Dock Hall, Leeds
MODERN CLAIMS CONFERENCE Wednesday 15th June 2016 Old Trafford, Manchester Utd CONTACT
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62 Modern Claims
March 2016
““ W We e ll ll d do on ne e tt o o e ev ve e rr y yo on ne e s sh ho o rr tt ll ii s s tt e ed d ii n n tt h he e M Mo od de e rr n n C C ll a a ii m ms s A Aw wa a rr d ds s 2 20 01 16 6 .. ””
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