Modern Claims magazine 7 by Charlton Grant

Linking the Industry Together

May 2014 | Issue 07 | ISSN 2051-6495 Modern Claims Conference 2014: Charlotte Parkinson reports from the first of Modern Claims’ groundbreaking annual conferences. In the long run: Professor Dominic Regan explains why legal practitioners need to consider more than just the short term view, in order to successfully move forward in the modern legal era.

Modern Claims Magazine | May 2014 | Issue 07

“The biggest challenge we see from the insurer, legal ventures is that they are very formulaic and risk averse and it is very difficult for these larger ventures to build relationships” Alexander Alway

Andy Slaughter MP “This Government’s attitude is making the administration of justice much more difficult, they are not only not transparent, their reforms have been chaotic and ill-thought-out”

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Introduction

Welcome to T

he claims industry is riding the wave of flux and will be for some time; at least this was the overwhelming response from speakers and delegates alike at the first annual Modern Claims Conference: ‘What’s the future score?’ (full coverage from the event on pages 42-45). Listening to, delivering and nurturing the needs of the client and delivering a clear cut strategy was the other key message which came from the cross-industry panels of insurers, solicitors and sector experts.

Professor Dominic Regan, who spoke at the Modern Claims Conference, further explores some of the key messages from his address, as he asks ‘Where are we heading?’ (page 59), he also discusses the importance of maintaining and striving to increase industry standards, as he argues that claims are certainly not a dying bread.

Judging from the conversations I’ve had while putting this issue of the magazine together, the enormous advances in the speed and efficiency of delivering exceptional service to clients is only set to increase, as the ‘holy grail’ of service delivery – technology – continues to advance at rapid pace. This notion is compounded in our interview with Jean Lassingardie, of French-based professional services giant, Capgemini, as he discusses the findings of their recently published World Insurance Report (WIR) on pages 16-17.

I also urge you to keep an eye out for the Modern Claims Awards, launching soon. If you have any comments, feedback or suggestions for the publication, I’d love to hear from you, please do get in touch via charlotte.parkinson@charltongrant.co.uk.

I’d like to thank all the contributors to this issue of Modern Claims, as well as all those who attended, sponsored and spoke at this year’s conference. Thanks too, to our conference Chair, Tim Oliver, who expertly steered the day’s proceedings and who has penned this editions news (page 7-8). I hope to see you all at future events.

Charlotte

Charlotte Parkinson, Group Editor, Modern Claims Magazine

Modern Claims Magazine

Issue 07 – May 2014 | ISSN 2051-6495

Project Director Kate McKittrick

Advertising Group Editor Charlotte Parkinson Rachael Pearson

Accounts Director Karl Mason

Events Director Julia Todd

Design Matthew Phillis

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

All material is copyrighted both written and illustrated. Reproduction in part or whole is strictly forbidden without the written permission of the publisher. All images and information is collated from extensive research and along with advertisements is published in good faith. Although the author and publisher have made every effort to ensure that the information in this publication was correct at press time, the author and publisher do not assume and hereby disclaim any liability to any party for any loss, damage, or disruption caused by errors or omissions, whether such errors or omissions result from negligence, accident, or any other cause.

MC // May 2014

Contents

CONTENTS 19-40 THE OPINIONS

INTRO & THE NEWS 7

20 A numbers game

Tim talks news

11-18 THE INTERVIEWS 11 Interview with... Andy Slaughter MP

The changing scope for provision of legal services has been widely debated over the last year. Charlotte Parkinson, Modern Claims spoke to the Shadow Justice Minister, currently serving on the Labour Party’s frontbench, about the government’s ‘malevolent’ attitude to claimants and the Labour ‘ideal’.

14 Interview with... Alexander Alway

Charlotte Parkinson, Modern Claims, spoke to the Group CEO of Insurance Broker, Jelf, who were recently awarded the coveted ‘3 star’ award for client service, about his plans for embracing organic growth and the relationships between insurers and brokers.

16 Interview with... Jean Lassignardie

Charlotte Parkinson, Modern Claims, spoke to the Chief Sales and Marketing Officer at Capgemini about the findings from the recently published ‘World Insurance Report’ and what they mean for the insurance sector, now and in the future.

Craig Budsworth, MASS

20 A Private Investigation

Rob Cummings, ABI

21 Under the Radar

Alan Nesbit, ARC

21 What lies ahead...

David Johnson, FOIL

23 The tipping point

David Williams, AXA

23 Time for a spring clean

Dez Derry, mmadigital

25 Another nail in the coffin

Nicola Klimkowski, LAMP Group Limited

25 The right population

David Miller, XL Group

27 The Devil is in the detail

Gerry Lee, P.R Hanna Solicitors Belfast

27 The best of both worlds

Alistair Schuberth, Willis Risk Management Practice

29 The hour of need

Andrew Pemberton, Argent Rehabilitation

EDITORIAL COLUMNISTS Alan Nesbit Managing Partner Nesbit Law Group & Chairman, ARC

Craig Budsworth Chair, MASS & RTA Partner, Glaysiers

Alistair Schuberth Associate Director, Claims Defensibility, Risk Management Willis Group

Darren Gower Marketing Director Eclipse Legal Systems

Andrew Pemberton Director Argent Rehabilitation

David Johnson President FOIL

Andy Whatmough Director S & G Response

David Miller Head of International Property & Casualty Claims XL Group

Bippon Vinayak Chairman & CEO Doctors Chambers

Dave Southwell Head of Personal Injury Claims Zurich

Colm Nugent Barrister Hardwicke Chambers

David J Williams Managing Director, Underwriting AXA Insurance

MC // May 2014

Dez Derry CEO mmadigital Donna Scully Partner Carpenters Emma Emery Senior Associate, Litigation Freeth Cartwright LLP Gerry Lee Senior Partner P.R. Hanna Solicitors Belfast Jason Atkinson Managing Director Russam GMS Jonathan Hewett Group CMO Octo Telematics Mark Hanson Lawyer Berrymans Lace Mawer

Nicola Klimkowski Head of Business Development Legal & Special Financial Risks LAMP Group Limited

Ruth Graham Partner Berrymans Lace Mawer

Patrick McGuire Partner Thompsons Solicitors

Tim Wallis Mediator, Solicitor, Director Expedite Resolution & Trust Mediation

Paul Lawrence Managing Director Thompson & Bryan

Tony Rand Managing Director Partsave Ltd

Peter Savage Partner Medical Accident Group Professor Dominic Regan Richard Forth Managing Director Forths Forensic Accountants Rob Cummings Policy Advisor, Motor ABI

Contents

29 Real benefits

Dave Southwell, Zurich

31 A guided missile or a runaway

52 Mind the gap – tips for working with Interim Managers

train?

Colm Nugent, Hardwicke Chambers

31 Simpler and easier

Jonathan Hewett, Octo Telematics

35 Hearts and minds

Richard Forth, Forths Forensic Accountants

regime for Claims Management Companies

Darren Gower, Eclipse Legal Systems

38 Reputation is all

Paul Lawrence, Thompson & Bryan

38 Your car is safe in our hands

Tony Rand, Partsave Ltd

39 Losing the bet

Andy Whatmough, S&G Response

Following on from Kevin Rousell’s article last month, in which he set out the ways in which the regulatory regime has been tightened to drive out bad practice from the industry, Emma Emery of Freeth Cartwright LLP, explains the different types of enforcement action that can be taken against CMCs.

56 Legal Opinion

Tim Wallis, Expedite Resolution, Trust Mediation and others

39 A Reasonable prospect

Jason Atkinson, Managing Director of Russam GMS, a provider of Interim Managers for over 30 years, discusses the growth in insurance companies using interim managers and how they can make the most of this vital resource.

55 Managing the stricter regulatory

35 Cut the fat

Our legal experts, Ruth Graham, Mark Hanson, Donna Scully and Alan Nesbit discuss the latest news and views driving change in the claims sector.

It is not always best to concentrate solely on immediate developments, it is also vital to consider the ‘longer view’, as Professor Dominic Regan explains.

42 The Modern Claims Conference 2014

61 Choose wisely

47 A loaded deck of cards...

62 5 minutes with...

The inaugural Modern Claims Conference took place on 25th March 2014, at Stamford Bridge, Chelsea F.C, Charlotte Parkinson reports on the proceedings from the groundbreaking event. Patrick McGuire explains why the Court Reform Bill, currently progressing through the Scottish Parliament, will hand the insurance industry a gilt-edged bonus if it is passed.

59 Where are we heading?

41-62 THE FEATURES

All businesses need to advertise, but choosing a good mix is important. Lisa Beale explains how clients are accessing information now and questions how trust can be gained from perspective clients. Steve Chelton, Swinton Insurance

49 Where there’s a blame, there’s

a claim?

Motoring accidents are the reason behind three quarters of catastrophic injury claims and as Peter Savage reports, these claims are on the rise.

51 I would rather go to Jackson

Andrew Twambley explores the options for law firms who are facing the difficult dilemma between reducing costs and making senior staff redundant.

57 MC // May 2014

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Tim talks news

TIM TALKS NEWS...

Tim Oliver explores whether ABS structures can ever achieve brand trust.

ver the past few weeks we have seen two of the new entrants in to the legal and claims market, Co-op Law (CLS) and Quindell come under pressure, albeit for different reasons. CLS recently posted a loss of £22 million alongside enormous Group losses. Suffering a loss of any magnitude would, for most law firms, prove a fatal blow but the poor financial performance of CLS is undoubtedly compounded by the brand damage which probably is its biggest long term threat. The departure of the highly regarded Christina Blacklaws can only add to their woes, and CLS has the air of an organisation that may ultimately disappear as a front line service for the Co-op Group. Similarly, Quindell has seen its share price tumble following speculation about the sustainability of its business model. The Directors have fought a strong rear guard action pointing to similar margins being achieved by competitors, but the market has been slow to buy into its explanation.

‘Undoubtedly those who opposed the introduction of ABS’s in the first place, will point to what has happened to those two organisations as an inevitable consequence of allowing non-lawyers to get involved in the highly technical and professional world of legal services’ Of course many people, and undoubtedly those who opposed the introduction of ABS’s in the first place, will point to what has happened to those two organisations as an inevitable consequence of allowing non-lawyers to get involved in the highly technical and professional world of legal services. To an extent, there is some truth in that observation, in that there undoubtedly needs to be checks and balances in place as society transitions from qualified lawyers having a monopoly on how the public and corporations access legal advice, but those safeguards were widely debated at the time and I believe are genuinely in place. The issues CLS and Quindell currently face is typical of all developed brands. Brand trust is a key part of what can make a business successful in whatever field it operates, but equally once that trust is questioned it can take a very long time to rebuild it, if indeed it ever can. Further expansion We have seen also local authorities venturing into ABS territory. Cambridgeshire and Northamptonshire are likely to be the first county authority to be granted a license. But no doubt Kent County Council, pioneer’s already in many ways within the legal services field, will be closely behind.

The primary driver appears to be looking at cost reduction rather than necessarily an expansion into other service lines but once an ABS has been established then it will of course have the infrastructure to have a look at all regulated activities. It is also probably worth reminding ourselves what Parliament (if not necessarily all of the claims and legal supply chain) was trying to achieve and indeed whether any of those aims have been fulfilled. The Legal Services Act 2007 was intended to herald a new world of greater transparency of process and cost and to be a customer focused piece of legislation, which would wash away decades of cartel practice from all of those suppliers involved in the claims process. Or was that actually the intention? What positives have we seen 5 years on from this Act and from the Jackson Reforms over the past 12 months? There was undoubtedly a wider expectation that the consumer would see significant benefits from new entrants into both the claims and the legal market. Whilst the thinking was that these new entrants might not necessarily be experts in delivering those sorts of services, it was thought that established brands would bring extensive expertise in understanding what the consumer wanted and how to deliver those needs in a visible and cost effective way. In the event, that hasn’t really happened. There hasn’t been a Tesco Law, a Harrods Law or even an M&S Law and it’s not entirely clear whether there are any plans for any of the large consumer brands to enter the market now or in the foreseeable future. For some, that may be a

MC // May 2014

Tim talks news

‘Brand trust is a key part of what can make a business successful in whatever field it operates, but equally once that trust is questioned it can take a very long time to rebuild it, if indeed it ever can’ disappointment and in some measure a failure of Parliament’s intent, but for others (and maybe not least of all to the lawyer community!), an indication that, actually, the system wasn’t broke in the first place. Seamless services However, what we have seen is a gradual rise in the number of ABS’s being set up by the large personal lines insurer. DLG Law, Ageas Law, Admiral Law, AA Law and Saga Law, to name but a few are all looking to use their branding and their distribution channel to provide a broader service to their insured. The cynic’s suggest that these structures have been created simply to capture lost referral fee revenue, but even if that were the case, they do provide a very credible challenge to the traditional law firm. Many of them however have indicated that they intend to broaden out the offering of legal services into other consumer lines such as Wills and Probate, Conveyancing and Matrimonial and to provide a genuine alternative for the consumer in the way in which they purchase legal services. But that of course is what the Co-op announced with a fanfare when they established their ABS. Even ignoring the public perception of what has happened, other large consumer brands will no doubt be looking at the CLS experience with some degree of trepidation. But what the insurer can offer is not just Litigation Services but a much more seamless process. From issuing a policy of insurance, handling any claim within it, managing litigation on behalf of that insured or fulfilling other legal services, surely provides an effective one stop shop. That doesn’t seem to be a view necessarily shared by members of the public or perhaps other suppliers within the chain. Third Party capture has been heavily attacked on the basis that it is the insurer simply protecting their own interests, rather than looking after the injured claimant. Of course, the insurance industry fight back with statistics on claimants recovering higher damages when they deal direct and do not accept that for the more modest claims that lawyers are needed as part of the process. Will the insurer be any more trusted in looking after the consumer when delivering other legal services? Those critics perhaps forget that the ABS’s are tightly regulated by the Solicitor’s Regulation Authority and the insurance aspect by the FCA,

MC // May 2014

and would be a brave organisation that believes they can or indeed tries to circumvent that regulatory control, even if they want to. If the public believe that they will be treated fairly and compensated appropriately (perhaps because the brand damage would be so significant in doing anything other then that), then surely the public and the rest of the supply chain to the claims and legal industries should embrace the opportunity these insurer ABS’s bring to streamline process. There is of course a natural inclination to resist change, unless that change will transparently deliver something that is better. What looks better will have a subjective element (we are all human!) but it is important that there is collective agreement on the direction of travel. Solid foundations We are still at the very early stages of the transformative process within claims and litigation. The new structures legislated for by parliament provide a perfect foundation for taking costs out of the system, streamlining process and generally making the customer experience a more satisfying one. The early pioneers of this new world undoubtedly expected to come up against a level of resistance and there will be some casualties, as there always are. Some will be the result of their own behaviour, others perhaps from extraneous circumstances outside of their control. But we shouldn’t see any early failures as indicative of a flawed model. Any transition will be disruptive but it needs to be worked through and needs to remain flexible and receptive as it does so. The ABS structures provide a very real opportunity to re-configure behaviour and outcomes and we need to give them time to settle down. We need to have trust in those who have been charged with administering the system whether that be an insurer or a lawyer, but of course we need to have a robust policing system to gain public confidence. That is a given. We are on the cusp of a generational change in the way in which disputes are resolved and we should focus on bringing together all of those involved in the moving parts of claims resolution, properly overseen by good regulation, ensuring a good quality outcome, rather than get to hung up on the structure of the vehicle that can deliver that outcome. It will be interesting to see what the next 5 years bring, and when we look back whether the customer experience has been improved or if we are in reality simply treading water. Tim Oliver is CEO of the Parabis Group

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Interview with... Andy Slaughter MP

Interview with... ANDY SLAUGHTER MP

Q A

The party has previously said it plans to ‘reverse Chris Grayling MP’s proposed cuts’. Does Labour see the issues surrounding cuts to legal aid as a priority?

We are now seeing about £220 million of cuts to criminal legal aid. Labour are not saying ‘Yes, we will reverse these cuts’, what we are saying is that with effect from the financial year 2016-2017, we will have done a zero based budget review, which will comprehensively detail how the public finances should be cut. We opposed the cuts to social welfare legal aid in LASPO and will make it a priority to find a way of addressing what is now already a huge gap, where the poorest and most vulnerable people are not getting proper advice on a myriad of issues, including housing and welfare benefit. The cuts that are now taking place will have a dramatic effect on the provision of criminal legal aid, which will increase the risk of a miscarriage of justice. We want to sit down with the profession and discuss how we can make cuts in the MoJ budget, in a way that will not be so risky to the criminal law functions.

Q A

Do Labour see the introduction of pricecompetitive tendering for criminal defense services as high on their list of priorities?

The party is now of the view that price competitive tendering is not going to be an effective way of making savings. As soon as Grayling became Lord Chancellor, he had to back down on issues like solicitor’s choice and parts of price competitive tendering. This could still be massively damaging and will, ultimately, reduce the number of firms practicing and we have to find alternative cuts within the budget if we are to keep to our economic target.

Have the government been transparent enough in light of reform and what would you have done differently than this government in terms of reforms to the Justice system?

Andy Slaughter is a British Labour Party politician and is Member of Parliament for Hammersmith. He had previously been MP for Ealing, Acton and Shepherd’s Bush from 2005 to 2010 and before that, Leader of the London Borough of Hammersmith and Fulham Council. He is currently a Shadow Justice Minister, serving on the Labour Party’s frontbench.

They haven’t been transparent in terms of their agenda, they have clearly been finance driven and because of that there has been a lack of joined-up thinking. Through the partial implementation of the Jackson reforms, we have seen huge changes to the ‘no win, no fee’ model, which is hugely disadvantaging claimants. We have also seen massive cuts to the court service, which includes court closures and staffing cuts. This Government’s attitude is making the administration of justice much more difficult, they are not only not transparent, their reforms have been chaotic and ill-thought-out.

Q A

Is it too easy for opposition parties to say what they would do differently and were Labour to win the next election, would they not have to take similar steps, given the current economic climate?

We can’t just come out and say, “We are going to reverse cuts”, although it is right for us to criticise the way in which the Government is going about butchering the MoJ budget. We understand that government’s have to work within their means and because economic recovery is not yet fully assured, it is difficult. This Government show a continually malevolent attitude towards the innocent claimant and this is where our approaches differ.

MC // May 2014

Interview with... Andy Slaughter MP

Q A

If Chris Grayling’s position as Lord Chancellor continues, do you think that further cuts, not just to criminal legal aid will be rolled out and who will bear the brunt of further change?

The level of cuts is so dramatic, we are only just beginning to feel the full effects of LASPO and we won’t feel the full effects of some of the other cuts for another year or two. There are some additional proposed cuts if this Government do win the next election. The answer is definitely yes but we will not find out what they are until after the election in the unfortunate event that they do win.

‘The current government have cut all those budgets already, so there won’t be much of a system left to review and time will tell that this has been a disastrous way to go about making changes’

Q A

How important is media representation and preserving/improving media relationships to ensure the Labour voice is heard?

We still have a very Tory dominated media in this country and this is evidenced by media coverage of things like the Leveson debate. Media organisations are big, powerful conglomerates and most are owned by conservative supporters who line up with other people with vested interests, such as property developers; that is just a fact of life and something that we have to deal with. It is difficult when issues are misrepresented, such as we have seen with the reporting around the ‘compensation culture’ but that is the game we are in and we have to try and make our case as best we can.

Q A

Are regulators providing comprehensive enough boundaries in the case of reform and what should be being done to improve the regulatory/government/ consumer relationship?

This is a key point and the current government have ducked this, they started a review into ongoing regulation and that has since been kicked into the long grass. They are doing very little to tackle consumer issues. The best example of this is in the most recently published budget where there is a sudden and complete liberalisation of the pension industry. The immediate problem with that is that if individuals are suddenly going to be able to invest their life savings as they wish, who will be advising them and making sure that we don’t have the same miss-selling scandals that we had in the 90’s and, specifically, over payment protection in the last 10 years? There is continually less and less protection for consumers and this will be an incredibly high priority for an incoming Labour Government.

In an interview with Modern Law in December 2013, Shailesh Vara MP said ‘As a government, we are on the side of hardworking people and we want to do everything we can to help them with the cost of living’. Are this government showing this to be the case?

MC // May 2014

There is a cost of living crisis in this country, which goes from everything from energy bills, property prices and rental values. People now spend a huge proportion of their income on basic living and there is no relief. In this balance between corporate organisations, who make their money out of consumers and the consumers themselves, the balance is being tipped, more so than in any other government, to those who have the vested interest.

Q A

What ways are the Government actively going about driving efficiency, competition and innovation – at proportionate cost, in the changing legal landscape?

The Labour party and legal professionals wouldn’t quarrel with some of the things that Grayling has said. The Bar Council and the Law Society have come forward with hundreds of millions of pounds worth of proposed savings, some of which put the onus back onto Government in terms of decision making and championing people’s rights, as well as the efficiency of the Courts. The Government is looking at this but the problem with the advocacy review (and the general review of the criminal justice system), is that they are putting the cart before the horse. The Labour government would have undertaken a review on efficiency first and then considered the consequential savings, such as the legal aid budget. The current government have cut all those budgets already, so there won’t be much of a system left to review and time will tell that this has been a disastrous way to go about making changes.

Q A

Where do you see the legal services market in the next 10 years, from a governmental perspective?

There is no question the legal sector has witnessed great change, we are only starting to see the effects of the ABS legislation and we have seen a whole raft of changes that the current government have brought forward. There will be a continued contraction in the market and a further decline in the number of firms practicing. We must be careful of ‘conglomerate legal services’, such as Stobart’s and potentially companies like G4S providing legal services, as they are extremely bad in terms of consumer choice. We are already seeing a number of insurance companies owning legal practices and this can only be a bad thing as it causes a clear conflict of interest. The Government is going to have to look again, not just at the Regulatory aspect but the organisational aspect of the provision of legal services, to ensure that the consumer is protected and to ensure that there is confidence and trust in the profession.

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Interview with... Alexander Alway

Interview with... ALEXANDER ALWAY

How does the size of an organisation like Jelf impact on customer relationships? I.e. is the local approach lost or hindered or does the size allow for a louder ‘voice’ in the industry?

Alex Alway - Group Chief Executive FCMA Alex has been in the retail financial services sector for over 25 years. During this time he has worked for AXA where he held a number of different roles. He joined Jelf in 2001 as Group Chief Executive, with specific responsibilities for formulating and implementing strategy. Corporate responsibilities: Plc Board Executive Committee – Chair Risk Committee Compliance Committee - Chair

What is the Jelf Group’s current strategy, in terms of growth and means of increasing market share?

There are several strands to our strategy; the obvious thing in terms of growth is that we want to grow organically which means providing additional services for our clients. We call these ‘menu-sales’, in situations where we may have an existing client of the insurance business who we then look to introduce to the employee benefits business. We also want to grow through Mergers and Acquisitions, where we are principally looking to buy in the General and the Private Medical Insurance markets.

MC // May 2014

As an organisation grows, people can become separated from the ‘coal face’ and actually dealing with the clients on a day to day basis. On that basis, there is a danger that we lose our relationships with clients. At Jelf, almost everybody, apart from a few senior management team members, still maintains their own client relationships, all the way through, from the management structure to the Account Executives. We have a ‘Client centric’ culture within Jelf, where we aim to be the trusted adviser. Our national strength gives us a voice in the industry and we still have the ability to work in the communities that we choose, not just in a geographical sense but in terms of affinities and schemes.

You have previously worked for BP and AXA, why did you decide to make the move to Jelf in 2001 and how has the company changed during the 13 years that you have worked there?

There was a reorganisation and the time came for me to leave, I also knew Chris Jelf who I had worked with previously and I relished the opportunity to work in a smaller business. When we first started all those years ago, Chris, the team and I were overseeing a business with approximately £3.5million turnover and 60 staff; we are obviously a little busier now. As the business has grown, there

Interview with... Alexander Alway has been a natural progression at every stage, whether it has been through acquisitions or through recruitment, each step has felt genuinely right along the way.

Q A

What is the biggest challenge(s) that the Group faces in the new claims arena and what impact are insurer/ legal joint ventures having on the broker market, what are the main challenges for Brokers on the whole?

There are so many interesting stakeholders in the new claims arena at the moment and the challenge we have as a business is to differentiate the claims experience on behalf of our client. Realistically, the principal area we can do that is by spending the time and effort to ensure that our clients get an exceptional service every time they make a claim with us. We have and continue to invest heavily in our GI claims Service and I would confidently predict that over the next year or two we will continue to see a culture develop of continuous improvements. We also have additional skills, knowledge and expertise on our side of the fence, which enables us to deal with other stakeholders in the claims cycle. The biggest challenge we see from the insurer, legal ventures is that they are very formulaic and risk averse and it is very difficult for these larger ventures to build relationships. The contracts also tend to last for fixed periods, so no sooner has a relationship been built, you find you have to rebuild it again.

Q A

The Group has recently won an award for exceptional client service, in a crowded marketplace, how does Jelf go above and beyond for their clients?

We are extremely proud of the fact that we won the ‘3 star’ award from Investor in Customers (IIC). We have embraced exceptional service as a part of our culture within Jelf and have been running with the survey for 6 years and have continually improved our scores. We receive valuable feedback from our clients from conducting these exercises, which we are able to use to improve the way we look after them. This has also been one of the contributing factors that has aided the success of the acquisitions we have made, because they can completely understand the idea of making the client the centre of everything we do. The raw feedback from IIC has enabled us to develop this culture throughout the business, which ensures that whenever the client engages with Jelf, they get an above average level of client service.

Q A

What are the main reasons for Jelf’s financial performance in 2013 and where is the business going in financial terms in 2014?

We achieved a good performance in 2013 on the back of the fact that we are a balanced broker. In the old days, a lot of Brokers used to have the type of composite structure that Jelf has and we have built up resilience in the way that we perform as a business, so if one part is not doing so well, we have other areas of the business to fall back on. Underlying all that is the fact that there is a good level of continuity at Jelf with the management team, which other, larger Brokers, simply don’t have.

Should insurers listen to Broker feedback more than they do, in terms of experience of dealing with consumers ‘on the ground’? Are insurers good enough at doing this or is there more than could be done in terms of communication amongst insurers and brokers?

‘We are a ‘light-touch’ Brokerage and as a result, we can connect with other Brokers, without ending up running their businesses’

The reality is that most Insurers want to engage with Brokers and customers on the ground, whether they are capable of digesting the feedback that comes out of doing so and actively executing any remedial that comes from it, is another question. What differentiates the average from the excellent is the ability to digest constructive feedback. Insurers should listen to Brokers, as by doing so, there is a fantastic opportunity for them to understand what is taking place on the ground.

Q A

What was the initial purpose of the Purple Partnership, how is it performing and where do you expect it to go in the next 5 years?

The initial reason for the Purple Partnership was that we were approached by a number of Brokers who wanted to work with Jelf but who didn’t want to sell their businesses, which presented an opportunity to work together. One of the things that separates us is that we are a ‘light-touch’ network and as a result, we can connect with other Brokers, without ending up interfering with their businesses. It is performing extremely well as we have been in the right place at the right time, we have a number of new Brokers joining us as well as a healthy pipe-line. In the next 5 years, we don’t necessarily see it growing too much in terms of absolute numbers, what we really want to do is ensure there is exclusivity about the Purple Partnership and we want its reputation to be the differential reason for joining. How important is it for Jelf to further diversify their offering to the market?

We already have a fairly diverse offering, within both financial services and insurance, we have one of the most diverse ranges of products and services in the market at the moment. We can look after most of our client needs in these areas.

Q A

What are the Group’s main priorities over the next 2-5 years, you have talked of focussing on M&A rather than becoming the biggest broker in the market, why is this and what are the other main areas of focus?

We want to continue to be an exceptionally good Broker on behalf of our clients. The group won’t become so big that it loses the personal touch, as it is important that clients feel they are able to have the same touch points with people they have always dealt with. We will also, of course, be considering further selective Merger and Acquisition opportunities that come along, to enable us to grow with likeminded people. We are enjoying taking advantage of the disruption in the market place which is continuing to allow us to grow organically.

MC // May 2014

Interview with... Jean Lassignardie

Interview with... JEAN LASSIGNARDIE

Charlotte Parkinson, Modern Claims, spoke to the Chief Sales and Marketing Officer of Capgemini’s Global Financial Services, about the findings from the recently published ‘World Insurance Report’ and what they mean for the insurance sector, now and in the future. Jean Lassignardie Jean Lassignardie is a Capgemini Corporate Vice president, and since 2008 has been the Chief Sales and Marketing Officer of Capgemini’s Global Financial Services. He brings 32 years of experience in both Information Technology and Financial Services. Lassignardie began his career in 1982 working for Elf UK followed by IBM where he held a number of senior roles including sales representative, client executive, head of organization, and head of IBM France’s education and training service line. In 1995 he was appointed as IBM global head of client executive profession in charge of the top 200 IBM global accounts. In 1998 he joined GE Capital Commercial Finance as the CEO and then in 2002 he was appointed CEO of Crédit Agricole Leasing. There he developed the entire spectrum of working capital solutions and lending for large multinational corporations, small and medium sized enterprises, and professional organizations. Lassignardie has completed large and complex mergers in sensitive legal and social situations; turned around non-performing asset portfolios; and developed multichannel distribution networks for a range of financial institutions. He specializes in building long term / high value relationships with Board Members and Chief Executives Officers of large / complex / global organizations. He is regarded as a trusted executive in the handling of sensitive issues with financial services regulatory authorities in both France and the US. Lassignardie graduated from Supélec with a degree in engineering, is a qualified Chartered Accountant, and has an MBA in banking from the Centre d’Etude Supérieure de Banque.

MC // May 2014

Capgemini have recently produced the ‘World Insurance Report’, what were the most surprising findings of the report?

What is not surprising in the first section of the report is the ratio of efficiency in relation to increased overall performance. More importantly, when we look at the heart of the report, which is the customer experience index, the surprising findings are that there is still an enormous room for improvement. Only 39% of the customers from the 15,500 we interviewed said that they had a positive experience. In some ways this surprise is good as it highlights that even the leading insurance companies still have room for improvement.

Where should insurers be placing their main focus (financial, strategic etc) in order to remain competitive in the years ahead?

The disruption happening in the market means that the use of technology needs to continue to increase. The overall environment under which insurers are operating forces them to completely re-think the way they are doing business and the way they interact with their customers. It is not just a case of adapting; it is a case of re-thinking. 20 years ago, insurers understood the financial impact on their customers on the retails side of the market. If insurance companies anticipate what will happen in the market, they can remain competitive and relevant to their customers.

Interview with... Jean Lassignardie

Q A

How should Insurers be looking to improve performance, in terms of customer expectations, business and financial factors?

My view in the report is that the insurers have to bear the voice of the customer in mind and listen to them when they talk about their experiences. This must be the case whether their clients are citizens, professionals or companies. They must also use this feedback to remain relevant in a competitive and continually changing market place.

The WIR found that most customers describe their interactions with insurance companies as no better than neutral. Other than outstanding customer service, what are the best ways in which insurance companies can retain customers in an increasingly competitive marketplace?

Less than 40% of customers describe their interactions with insurers as a good experience, which leaves 60% of customers who think that service can still be seriously improved. Of course, the price of that product and service is a huge factor but if the customer experience is not satisfactory, then the price is totally irrelevant because a customer will not be interested in the service, even at a good price. The value of the report is that it provides granular detail into the thoughts of the customer. In a world that is so disrupted by mobile, digital technology and social media, it is important to remember to listen to the voice of the customer.

Q A

What are the most important factors for insurance companies to consider in the next 2-5 years in order to improve company performance?

As I said, improving the customer experience should be the short term imperative and should also be the mid-term agenda. The priority for all insurers, starting now, should be reinvention in order to stay relevant, otherwise – as the recent market trends demonstrates – corporate organisations like Google will go after the insurance companies in an attempt to dominate the market place. Insurers are the ones who understand risks, through actuarial work and history, so they should be the ones making sure they remain relevant in order to keep up with the pace of change in this market. What insurers should remember is that they must explore new channels and providing a good product base, as a new way of interacting with consumers. Technology can also assist insurance companies and as an example, if a provider of home insurance has the technology to do so, they could send a customer a text message if they have gone out and left a window open, to say that a rain storm is coming. This could ultimately prevent potential damage and thus, the pay out for a claim. New insurance companies offer the ‘valueadded’ services for the clients and these are fast becoming differentiators, instead of the insurer helping the customer cope with the disaster when it occurs, they help to prevent it happening at all. This in turn, helps the risk profile of the insurance company.

‘New insurance companies offer the ‘value-added’ services for the clients and these are fast becoming differentiators, instead of the insurer helping the customer cope with the disaster when it occurs, they help to prevent it happening at all’

Q A Q A

Should insurers be aiming to work more closely with brokers in order to properly understand what the client really wants during the claims process and how should they be doing this?

Yes, insurers should work more closely with Brokers but they should be better at understanding what the client wants during the claims process themselves and they do already have the means to do this. How is greater access to digital channels helping to improve the experience for the customer and is the ‘digital’ (mobile and internet) service currently on offer meeting client expectations?

In the eyes of the consumer, these channels are continuously growing and developing. In less than 5 years, more than 30% of all business will be done by internet or mobile. The voice of the customer confirms that there is a growing demand for this and 39% of consumers actually prefer utilising digital channels. It is crucial that security is managed in an effective way and that traditional channels, for the delivery of insurance services remain high quality, responsive and well equipped to respond to the customers. There has been a massive shift in the way insurance services are delivered but the complexity is to combine these new channels with the traditional platforms. The shift is fast and it is everywhere. Insurers need to reinvent themselves with a full transformation of strategy to reflect the changing market; mobile is only one part of this.

The WIR found that in the UK market, the nonlife insurance industry, ‘the use of aggregator websites is generating fee expenditures, as well as spurring competition based on low-cost pricing, rather than customisation and branding.’, how could aggregator websites impact the wider insurance industry in the future?

If insurers do not reinvent themselves for their customers, the aggregator websites will continue to ensure it is purely a price battle and increase the commoditisation of insurance products further. A true focus on the customer experience will not come through aggregator websites. These aggregator websites need to be used for niche services; otherwise they will damage the relationship interaction between insurers and their customers.

MC // May 2014

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The Opinions

19-40

THE OPINIONS

Sector Soapbox

Sector Soapbox A numbers game

Modern Claims’W experts from industry Associations, give a roundup of sector change and offer their predictions on what is to come in the months ahead

here has been some very good news for consumers recently with the announcement that insurance premiums have fallen 19% over the last 12 months, with motor insurance rates now at their lowest since 2009. However, you might wonder why have they fallen and what impact this has on access to justice. Insurers will no doubt argue that ‘we are meeting our commitment following the introduction of LASPO’. I need convincing that this is correct. The number of new claims logged on the portal is nearly 100,000 lower than for the same 2012-13 period as 2013-14. If you take into consideration that costs payable, including insurance premiums at an average £400 and success fees, on 100,000 cases, this would be around £175 million. When you then add the other 710,000 logged cases, costs are reduced further, and then you can see that the savings would be significant. In fact, with these averages and assuming every case stayed in the portal, then the total spend by insurers, on costs, in 2012-13 would have been £1.5 billion, whereas for 2013-14 this would be £387 million. So when insurers talk about passing savings on of over £1.1 billion actual savings in one year, not even mentioning the massive reduction because of fixed fees post issue, you have to ask yourself is this really only 19%? Far more importantly, you

have to ask yourself, are we happy that these savings are being passed on at a cost proportionate to the reduction in access to justice? The accident victim is only just beginning to understand what this means to them when their case is struck out because of the change to rule 3.9 or the deduction from their damages, to pay towards their own costs. Indeed, I’m certain that it will not be much longer before the accident victim faces a real challenge in actually finding an independent solicitor that will specialise in this area. I’ve been to a lot of conferences in the past few months where the worry, post Mitchell, is about how the PII market is going to react and the cost of premiums, come renewal season later this year. You only have to pick up a legal paper to read about the changes affecting the PII insurers themselves, which could well restrict choice and therefore push up the cost of insurance. This does not bode well for access to justice in general and I suspect that we will face a real shift in the coming 18 months that will take all the ability of ‘businessmen lawyers’, which fortunately we have a lot of in our area of the law, to make sure that law firms do have a future. The one thing that reassures me is that we have changed constantly over the last 15 years and this will just be another of those moments where we change again, only there will probably be fewer of us. Craig Budsworth, Chairman, MASS

The Competition Commission’s Private Motor insurance investigation

hen the Office of Fair Trading referred the market for private motor insurance (PMI) to the Competition Commission, the industry welcomed the referral as an opportunity to bring much needed reform to the market, particularly in relation to credit hire. The insurance industry has long highlighted how the intervention of non-insurers in the claims process, such as credit hire operators and claims management companies, adds unnecessary frictional cost which ultimately puts upward pressure on premiums. Only regulatory intervention can truly bring the much needed reform that is required to help tackle the disproportionately high cost of credit hire. The additional cost that credit hire represents was a key reason why the OFT referred the market for PMI to the Commission in the first place. It can’t be right that credit hire costs, on average, £555 more per hire than it would cost an insurer hiring the replacement vehicle directly. The Commission is currently looking at a number of proposals to tackle this issue. As one would expect with a range of business models, insurers have differing views as to what would be most effective. What all insurers want to see emerge from the Commission’s work, however, is a market that functions efficiently and effectively for consumers, in particular through: • a reduction in the inflationary pressure put on the price paid by consumers for PMI; • an increase in the control an at-fault insurer has over the claims they are paying; • increased certainty for consumers on the handling of their claims; • an improvement in the levels of quality and service insurers are able to offer their customers; and continued incentives for insurers to invest in product differentiation and improving customer service. The Commission is due to publish their final findings and remedies for consultation in the coming months with a final report due in September. It is too early to tell where the Commission will finally land on a number of the issues they are currently considering. However, insurers are committed to working with the Commission to ensure that remedies are implemented in an appropriate and proportionate manner to ensure the best possible consumer outcomes. Rob Cummings, Manager, Civil Justice and Data Strategy, ABI

MC // May 2014

Sector Soapbox

Under the radar Will the appearance of Fines for CMC’s breaching rules have any impact on the sector?

t is of course welcome news that CMC’s will face fines for breaches, however in their present format under the consultation there are some difficulties with the rules. At present, all breaches however small attract a fine, this cannot be correct. Surely if a CMC is able to rectify an issue and no harm is done to any member of the public or to the reputation of the sector, then this rectification should be sufficient. Not even the SRA go that far! There should either be a primary section of “trivial breaches”, or the scoring system that they have developed makes the most trivial breaches fine free. They would then go up in sliding scales based upon severity. They have however looked at the difference between the much larger and much smaller CMC’s and based the amount of the fines on turnover. Perhaps something the Premier League and the FA should look at! What is of greater concern, is the fact that there is the potential for this to punish those firms and companies that are at least trying to work within a regulated regime, whereas those that have relinquished their licence and are now working under the radar will get away with it completely. I am of course aware that the MoJ is now stepping up their pursuits of such companies, but as many are small it will be difficult for them to spot what is happening where. Similarly they will be unable to rely on the information from the SRA as to where the Solicitors are receiving those cases as of course those law firms will not be paying referral fees anymore and have no duty to disclose any nonreferral fee relationships. Anything being done by way of services or marketing collectives is not required to be specifically disclosed, only the methodology by which they are receiving work is requested. Alan Nesbit, Chairman, Association of Regulated Claims Management Companies (ARC)

What lies ahead...

here has been a lot of criticism of the Mitchell judgment and changes to CPR 3.9 but the likelihood is that over time they will come to be applied in a more measured fashion. If the net longterm effect is a more cost efficient system, delivering compensation to accident victims in a more expeditious manner, that will be no bad thing. Ditto other measures aimed at reducing the costs of the process - the ban on referral fees (if it can be made to work); the constraining effects of fixed costs in fast track cases; costs budgeting as a similar constraint on hourly rate cases (if effectively implemented); the re-calibration of costs distribution off the back of the funding and QOCS changes; and the positive impact that the ‘fundamental dishonesty’ exception to Part 36 may have in relation to the battle against fraudulent claims (if the term is appropriately interpreted). Such measures involve short-term pain for litigation lawyers but a long term cultural change is important. In recent years, this sector has faced allegations of profiteering and of fuelling a compensation culture. There has been talk of a correlation between claims costs and high insurance premiums; certainly claims have become commoditised. Whether or not you subscribe to this view, one cannot help but think that those resisting attempts to make claims costs more proportionate to the damages recovered are thinking short-term and only deferring the issue. The reforms may reduce the profitability of claims but they have not limited an individual’s right to make a claim in the first place. In the face of the current challenges around the Reforms, there is opportunity. Firms which cannot adapt to the new regime may have to diversify into other areas; those who can adapt will increase their market share and be stronger for it. The prospect of claims being dealt with by fewer but larger, more efficient and better resourced firms, able to concentrate specific types of claims within specialist departments bodes well for the consumer. We are only part way along the path of reform; it will be some time before the new legal landscape has fully taken shape. However, those with an eye on long-term profitability will be focused, not on complaining about the changes but rather on anticipating and adapting to what lies ahead. David Johnson, President, Forum of Insurance Lawyers (FOIL)

MC // May 2014

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The Opinions

The Tipping Point A recent Innovation Group survey found that British people are in favour of using telematics as a means of reducing car insurance premiums but are still not ready for the introduction of driverless cars – when will the industry reach a point where telematics become the norm and how can it convince consumers that this is an effective way forward?

ollowing the ‘record breaking deal’ signed between Quindell and RAC, you might begin to think that Telematics has reached that ‘tipping point’ where it moves to the mainstream. Targets of 4 million customers, income streams from black box rental fees, Personal Injury Claims and a promise of ‘cheaper’ Motor Insurance seem to have convinced investors. The reality currently however is that whilst every insurer seems to have a telematics offering, only ‘insurethebox’ have any meaningful customer numbers (100,000+), and the majority of ‘underwriting’ thus far isn’t based on any of the information gathered at all. Young drivers, maybe with a curfew option (with at least one example of disastrous consequences, it is alleged) were the obvious first target market, only there would premiums be enough to cover the costs of all the additional IT and monitoring, not to mention equipment installation. Now, however we have cheaper black boxes and smart phone apps, so it is easier to offer telematics more widely, but how on earth do you price these things? Easy seems to be the current answer, just assume that anyone who is prepared to have their activities monitored is clearly a better driver and give them a discount, usually 10-20%, though I have heard talk of up to 25% when that still wasn’t delivering sufficient customers! All this is justified by the need to gather sufficient policy/driving data to be able to really begin to see predictable patterns and build rating models for the future. So most insurers have an offering, but not enough data yet and no idea how to rate properly, motor average premiums are around £300 in a highly competitive market so not much ‘fat’ to fund installation of devices or software development; suddenly it sounds much less appealing! The future however is much rosier for telematics, for a start, motor manufacturers will fit these boxes as standard. There are additional services, savings or ‘income opportunities’ which might actually make the business case stack up. All we need to do is convince customers, they don’t really care about personal injury claims earnings, but do worry about privacy and whether insurers can even be trusted. The other issue is transferability between offerings, you can take your ‘no claims bonus’ anywhere, but until telematics stops chaining the customer to one provider, I don’t believe that tipping point will be reached.

Time for a spring clean “With 1.2 billion people accessing the internet via a mobile device, is there more that law firms can be doing to maximise their share of this new technology? Are clients really ‘reachable’ on the move and how can creating a ‘mobile’ presence generate leads?”

obile devices are everywhere and potential clients are using their smartphones and tablets more and more each day. According to the Office of National Statistics, 53% of the UK’s internet users are now browsing via their mobile device, up from 24% just a year ago and it is still rising. So, catering for the mobile user can no longer be ignored. According to new figures from the Internet Advertising Bureau, mobile ad spend almost doubled in 2013 and broke the £1bn mark. Digital advertising now accounts for every £1 out of £6 spent. The good news for law firms is that you can do the same and it needn’t be difficult. If you work with a digital agency, they can advise on what should be done in order to get your website mobile friendly. Be sure to put yourself in to the mind set of a user on the go, what should be there and what can be removed to ensure they are getting the user experience they want? First step is tidying up the homepage of your website. Unnecessary clutter will do nothing but drive a mobile user away. Make sure you are only showing the things a mobile user would want to see, quick and simple ways of getting in touch, big ‘thumb friendly buttons’ and most importantly, the information they came to get. Next take your page load time into consideration, as most users will be loading your website on a 3G connection and not WiFi. Google tells us that 61% of visitors will come off a website and try elsewhere if your site doesn’t load fast enough. They say “content is king” and this may well be the case, but with mobile users, less is always more. Be tough with your websites content and remove anything that is honestly not important. Add easy to find and relevant information such as a brief description of your services and direct them to that contact button. Mobile marketing is becoming more of a necessity and the time to start going mobile is now. Getting your website optimised for mobile users doesn’t have to cost the earth and the results can be fantastic. Make sure you build this into your online strategy or you will find that, while your competitors are mobile, you’ll be left standing. Dez Derry is CEO of mmadigital, online marketing for modern law firms.

David Williams, Managing Director, Underwriting, AXA

MC // May 2014

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The Opinions

Another nail in the coffin

he Ministry of Justice has confirmed that the increase in court fees will be implemented from the 22nd April 2014, but we are waiting for their response in relation to fee increases in relation to civil and commercial cases. Most lawyers would agree with the general principle that an increase in fees should result in a more efficient service being provided to the end user, as we are all aware that our courts are seriously over stretched, hugely under resourced and lacking in experience. Surely this is a positive step? I think not. This is another kick in the guts for the legal industry, who as a whole has witnessed a disproportionate fee increase which will have a major impact on all law firms, as well as chipping away at providing access to justice to claimants who want to have their day in court. Is this a further nail in the coffin for personal injury (PI) lawyers? Absolutely! The government is continuing with its mandate to eliminate the personal injury industry. How on earth can PI lawyers survive with a 70% reduction in fees, followed by an 81% increase in court fees? How can this make commercial sense to anyone in government? The PI practitioner will have to absorb the fee increase and bank roll the case and therefore bear the cost if the case should fail (assuming ATE has not been secured). I believe this will lead to cherry picking the best cases that will definitely win in the shortest space of time, as there is just not enough fat to run any case anymore without adverse selection, especially when you need to self fund the claim from start to finish. This will surely impinge on an individual’s right of access to justice if a firm declines to take on a case because they don’t have the funds to provide financial support throughout the life of the case. These fee increases could be so detrimental to the PI practitioner that we may see further firm closures over the course of the coming months and that is even before we get to Professional Indemnity Insurance renewals, which is a different topic of discussion completely. The Government is making the PI industry an impossible place to work in and earn a living. All in all RIP PI lawyers! Nicola Klimkowski, Head of Business Development Legal & Special Financial Risks, LAMP Group Limited

The right population... The FCA have announced plans to begin investigations into the conduct of commercial claims handlers, why do you think this is and what could the impact of the investigations have on the claims market?

he recently announced FCA plan to undertake a thematic review of Commercial Claims Handling later in 2014 has raised a few eyebrows. Perhaps some are questioning whether this should be a priority for the regulator, given all that’s vying for their attention as they broaden their remit. The FCA previously made clear that the principle of ‘conduct risk’ is equally valid between the Commercial and Consumer sectors, so we shouldn’t be surprised they’ve turned their attention this way. This increased focus has several possible explanations: Firstly, this has not been a priority before - while the FSA and FOS did take an interest in SME/ micro enterprise, maybe the FCA sees the need for a more structured view. So, potentially, its work this year might be a fact-finding and benchmarking exercise. Secondly, the FCA may be linking their review of the claims handling process and their work to understand the variety of distribution models in the commercial sector. That would make sense and they have signaled this by undertaking to look at the “cultural risks relating to product design, sales and post-sales handling” here. The growth in ‘deal direct’ arrangements and other such models in commercial insurance means that claims teams engage directly with more policyholders than before. Possibly the FCA wants to ensure that policyholders are getting a fair deal during the claims process. Thirdly, considering the increasingly wide and innovative array of products available to the commercial sector, it’s logical for the FCA to draw on their experience and aim to understand how policyholders are being supported. A key issue for claims managers will be clarifying the scope of the review. Commercial claims handling covers a broad range of business segments, industry sectors, products and distribution models. In addition many large commercial clients are often in a position to negotiate as equals with brokers and insurers. So, getting to the right population is going to be important. Judging by past reviews, commercial insurers can expect to be explaining to the FCA how their internal processes, authorities, controls, training and monitoring are functioning and how they are driving the right kind of culture within their organisation. The FCA may also be looking for ways to measure relative performance, which will be difficult in such a varied market. The results of this review will be very interesting! David Miller, Head of International Property & Casualty Claims, XL Group

MC // May 2014

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The Opinions

The devil is in the detail

he differences between the Legal Jurisdictions of the UK seem to be growing. This is particularly so when considering Northern Ireland (NI). It has long been the case that in the Legal sectors of Litigation and especially the area of personal Injury (PI), claims that arise in NI, need to be handled by qualified solicitors in NI. Levels of compensation for PI claims are considerably higher than would be awarded in England & Wales (E&W), a fact often attributed to our historically longer reliance on Juries. With the relatively recent transfer of Policing and Justice to the local assembly, the disparities in our legislation are now diverging into other legal sectors beyond PI Law, such as Defamation and Employment. The now operational Defamation Act 2013 has no applicability whatsoever in NI. This is most unusual as in the past, the law in NI has always been in all relevant terms, identical to that in E&W. This has led to claims that NI could become a tourist destination for libel litigants. In Employment terms, NI also appears to have fallen behind the rest of the UK in not enacting the recent changes in E&W and choosing not to follow the two- year qualification for unfair dismissal and the implementation of tribunal fees. Also, it seems the Anti-discrimination legislationis weaker when compared tothe GB Equality Act of 2010. For instance, the GB legislation provides for a free standing right to complain about harassment across a number of grounds, includes a wider and more effective definition of disability discrimination and imposes a wider equality duty on public authorities. What does all of this mean? At one level, some are worried that the disparities may impact negatively on NI with national UK businesses worried about doing business here. From a Lawyer’s perspective, the impact is stark and simple – when dealing with legal matters that arise in NI or that otherwise mean NI law may be applicable, one should always instruct NI Solicitors at the outset. Not doing so, will mean not only a client receiving inappropriate advice but the spectre of negligence for those not fulfliing their duty of care to their policyholders and clients in NI. Gerry Lee, Senior Partner, P.R Hanna Solicitors Belfast

The best of both worlds Proportionality: Does a good Part 36 offer totally negate the need for fixed portal costs?

art 36 is the normal mechanism by which litigants can make offers to settle claims prior to a final hearing. In general if the recipient of the offer fails to obtain ‘a more or equally advantageous’ judgment than an opponent’s offer the Court can apply costs sanctions such as:1.The recipient of the offer may have some or all of their costs incurred after their opponents offer expired disallowed 2.The recipient of the offer may have to pay their opponents costs, even if they ‘won’ at Court, from the date that their opponent’s offer expired. Therefore, you could form the view that if one party can limit their opponent’s costs via use of these offers, why do we need fixed fees to do this? The reason is that Part 36 is only a useful tool for parties where they are prepared to settle, it does nothing to control costs where liability is firmly in dispute. Nor is it always possible to ascertain what your opponents current costs may be with any certainty, particularly pre-litigation. By contrast fixed fees apply regardless of the litigation stage or liability position and bring certainty to costs. At any given moment, depending on the stage reached and the amount in dispute either party should be able to calculate the appropriate fixed fee in the case. In addition, there have been too many examples of disproportionate costs being incurred in relation to low value claims even where early offers of settlement were made. This has been exacerbated by a market where the winning party has little interest in controlling their own legal costs due to ‘no win no fee’ agreements and our ‘loser pays’ litigation system. Fixed fees control these costs making sure the amount incurred is proportionate to the damages sought. Therefore, whilst Part 36 and the fixed fees system share the same aim of controlling costs the fixed fee system achieves a more precise result, better proportionality, and assists even where liability is in dispute. As a result, I don’t consider that a good Part 36 offer negates the need for fixed fees but nor do fixed fees negate the need for Part 36. We need both systems. Alistair Schuberth, Associate Director, Claims Defensibility, Willis Risk Management Practice

MC // May 2014

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The Opinions

The hour of need

Real benefits

Should BTE policies be a mandatory part of the insurance purchase process?

n insurance product providing you with up to £75k of legal expenses cover for the price of a pizza and bottle of wine – that’s a good deal right? Well that’s certainly how it’s portrayed and seemingly many motorists appear to agree. The reality is if you have accident that’s not your fault you become a valuable asset, not just to your insurer, but to the claims community queuing up to represent you – typically for free. If the policyholder opts to buy BTE as a form of protection, for the retailer of course it provides premium incomes (around 5% GWP); more importantly the BTE customer becomes a captive for the insurer’s own supply chain where historically significant profits reside. With COR at over 90%, profit from capturing, the BTE policy becomes critical. Splitting out the BTE premium from the motor policy is in response to the challenges of comparison websites where £30 less on the premium can elevate you to the top of the table. That game seems to have played out and consumers are faced with BTE as a generic and almost identically priced item. Have we not hit a point where it should simply be included within the premium? How can a fully comprehensive policy that does not help you recover uninsured losses from the at fault person be truly comprehensive? If legal expenses insurance policies are to standalone and offer a level of genuine protection, then they must be transparent about the real benefits and not a revenue capture mechanism. The policyholder should understand they have choice over who represents them, what their exposure might be and the relationship between the retailer and the providers. The more enlightened underwriter may wish to add additional protection to the policy and provide cover for rehabilitation costs by way of differentiation. Customers face the prospect of employment, property or consumer disputes, all of which could be covered by a BTE legal expenses policy. If insurers want to build long-term relationship with customers why turn down the opportunity of protecting people in their hour of need? BTE should either be absorbed into a fully comprehensive policy, or a new market for a policy based upon value and claims experience, rather than the value it generates through claims, be created.

Is there still a need for lawyers in low value claims or should the process now be entirely handled by insurance companies?

ccording to HM Treasury the average earnings of the bottom decile is £8,600 per annum for one adult, but this does not tell the whole story when a Lollipop lady will earn £3,187*. So what has all this got to do with lawyers and low value claims you might well ask? One of the key barometers of success in our society is how we treat our most vulnerable citizens including the poor, the elderly and the sick. Any mechanism that delivers compensation to those that have been made vulnerable due to illness, must be affordable, fit for purpose and have an optimal time line. The injured party must be at the centre of a process that’s robust enough to ensure the most vulnerable are protected. That is the benchmark that we should be striving for. So how do we ensure that compensation in “low value” claims is delivered at the right level, and within the right time frame? How do we, as an industry, protect our reputations and our integrity to ensure that the public trust us? We, as an industry, have valuation systems that are tried and tested and can assess the valuation of any low value injury claim. Claimant lawyers accept these figures every day, so they cannot credibly argue against the very system that they tacitly support. The ABI have sought for a number of years to openly engage the claimant community to jointly tune such a system that would remove the need for paperwork and negotiation, therefore speeding up the process of compensating the injured claimant. So far they have not engaged in this process. Whilst we can only make assumptions regarding the reasons for this, we know that a faster and efficient claims process which reduces excessive paperwork and protracted negotiations, will inevitably bring down the cost of legal fees and ultimately reduce their income in this area. I am a strong advocate for ensuring lawyers remain in the process because the injured claimant undoubtedly needs legal advice, guidance and reassurance in what can be a complex process; but whilst we have the technology to deliver a faster and more efficient claims system, it requires collaboration between insurer and claimant lawyers to make it work. Let’s create a solution that delivers real benefits the injured claimant. Dave Southwell, Head of Personal Injury Claims, Zurich *Office of National Statistics.

Andrew Pemberton, Director, Argent Rehabilitation

MC // May 2014

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The Opinions

A guided missile or a runaway train?

n the very recent decision in Kaneria v Kaneria [014] EWHC 1615 (Ch), Mr Justice Nugee QC said that decision by the Respondent to oppose a prospective extension of time for service of a defence on a Mitchell v Newsgroup basis as ‘entirely rational.’ He was, of course, completely correct – the decision neatly sums up the dichotomy at the heart of the Mitchell decision. Mitchell was intended to change litigators behaviour and to bring to an end satellite litigation (on this topic). Whilst there may have been previous decisions which have generated more satellite litigation, in the writers 20 years experience, none immediately spring to mind. The change in litigators behaviour may not have been that which was envisaged either. Litigants are now emboldened, if not positively encouraged, to take adverse procedural points. In MA Lloyd v PPC1 , Mr Justice Turner criticised the Defendant for being too timid in not pressing it’s procedural advantage. Mitchell’s resulting draconian sanctions for modest deviation from the court timetable will probably improve compliance. But rather like the Network Rail equivalent, the court timetable will simply be looser to accommodate unforeseen problems and the courts will expressly give upfront latitude2 regarding compliance to avoid the Mitchell bear-trap. The Mitchell criteria as currently framed, construes triviality very narrowly and ‘good reason’ almost as narrowly. It is almost inevitable that the Judiciary will chafe at such restrictions on their discretion and case management powers. That, coupled with the tactical ambush litigation that the decision positively invites, is likely to result in a quiet but determined backlash. Whether for good or ill, until the draconian and inflexible consequences of Mitchell are ameliorated by further CA guidance (which I predict) both Judges and litigators will seek to work around the criteria to neutralise its most egregious impact. Mitchell was intended to be a guided missile aimed at perceived laxity as regards compliance, but leaving the remaining civil litigation infrastructure intact. Absent further CA intervention, some might in fact describe the effect as more akin to a train wreck.

Simpler and easier

s with any technology, consumers’ need to clearly understand how it makes their lives simpler and easier. The trick for any technology enabled product or service is first to clearly highlight what problem is being solved for the end user as after all, there are a lot of good ideas looking for a market!

Insurance telematics has the benefit of being able to reduce premiums for drivers and we are also now seeing Telematics being used to improve the core value proposition in the areas of safety and security. This is utilising the connectivity of the car to deliver help and assistance to the driver when they need it most with accuracy and precision. The launch of E Call and B Call in 2016 will deliver significantly enhanced levels of consumer awareness and consideration but insurers must start to develop their “connected” insurance policies now or risk being out manoeuvred by OEMs and Roadside assistance players. In terms of Driverless cars, definitions are important. There are a lot of initiatives around the globe that are looking at autonomous transport systems that ease congestion and facilitate more efficient movement of people and goods. But, I think we have to start with the consumer and I come back to my earlier point about what enriches consumers lives and makes the World a simpler and easier place to live. I think we will see cars that can drive themselves in circumstances that the “human” can choose to use, just as autopilot works on an aircraft. This may be in congested or slow moving traffic or on a cruise. In addition automatic interventions such as automatic braking will be a hugely significant driver aid and help to reduce accidents. So the key question is, what does this mean for the insurance industry? Well firstly, insurers need to understand the consumer and technology paradigm. This means that studying how technology can improve a consumer value proposition and improve the financial performance of an insurance portfolio must become a core insurance competency. The wheel and the compass were ground breaking technologies and the earlier adopters became the champions of their day, the laggards were left behind! Jonathan Hewett, Group CMO, Octo Telematics

Colm Nugent, Barrister, Hardwicke Chambers

1[2014] EWHC 41 (QB) 2See, for example, the standard 28 day compliance extension now approved by QBDin clinical negligence claims

MC // May 2014

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The Opinions

Hearts and minds Is there still a need for Lawyers in low value claims or should the process be entirely handled by Insurance Companies?

ithout a doubt, over the past decade, there has been a quantum leap in the way that claims have been handled by Claimant Personal Injury Practitioners, which has been driven both by the desire to streamline processes internally to enhance efficiency and the enforced changes in the external environment, such as the introduction of the claims portal and the corresponding reduction in fixed recoverable costs, for most matters valued up to £25,000. The net effect of these developments has been a more streamlined process, for lower value claims, with minimal touch points from inception to settlement. Therefore, the logical progression could appear to be a system with no external touch points, i.e. a process for small claims entirely handled by Insurance Companies. Whilst this would appear logical and, indeed, in many instances on the more routine type of claims would be practical, I believe that there are inherent problems with such a process, both from an actual and a perception perspective. The legal process, in respect of personal injury claims, operates to both provide legitimate injury victims with compensation in respect of general damages and special damages to put them back in the financial position that they would have been, but for the accident. Without any solicitors, I believe that general commercial considerations and internal KPI’s, within Insurance Companies, would inevitably, regardless of best intentions, drive a situation where people were undercompensated. There would inevitably be cases settled in the low value claims process, which should have found their way from the same into a represented system because of hidden complexities. I believe that, with even the appearance of apparent conflict of interest, in such an insurer led system, this would ultimately lead to adverse public perception of the way in which cases in general were being handled by the insurance industry. In recent years, the ABI, on behalf of the Insurance Industry, has orchestrated a very effective hearts and minds campaign with the public, against the perceived compensation culture and has had significant success in achieving its objectives through revised legislation etc. It would appear counter intuitive to undo this success through the introduction of a perceived one sided system.

Cut the fat What are the biggest and best drivers of efficiency in the claims process and how are claims handlers using these techniques to promote efficiency and great service for their clients?

y far the best tools for the job are those that: a) cut the fat away from operational processes; and b) provide just the right amount of data to the claims handler It’s no surprise that trimming the fat from processes and streamlining activities will drive benefits. But the number of organisations yet to embrace this is still surprising! The core solution here is an effective claims management software solution. By providing claims handlers with the on-screen tools to manage tasks, the way in which claims are managed and progressed can be tightly monitored and incremental efficiencies can be built in based upon past performance. Automation cannot be underestimated here - any administrative process that can be done by a machine rather than a person should be handled as such. The claims management software system will be able to handle multiple administrative tasks at once (e.g. creating documents, emailing information to associated third parties, and scheduling a reminder for future actions) - all instantly carried out at miniscule actual cost. Human time can be put to better use at the customer service end providing fast and personalised contact with claimants and associated organisations. And as for “just the right amount of data”? Clever software solutions will ask the right questions at the right time for claims handlers. They will provide the correct type of ‘next action’ prompts and will structure information in an intuitive and user-friendly way. By pushing too much extraneous data at claims handlers, there is a risk that the best course of action won’t be followed; that a sandstorm of information makes claim progression difficult and hampers efficiencies. In a nutshell - cut the fat and cut the data! Darren Gower, Marketing Director, Eclipse Legal Systems

Richard Forth, Managing Director, Forths Forensic Accountants

MC // May 2014

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The Opinions

Reputation is all

he recent announcement by the Financial Conduct Authority that it intended to investigate commercial claims handling caused a few raised eyebrows in the general insurance community; reactions were generally on the line of bemused puzzlement. However, as a practitioner for many years representing policyholders in their first party claims, mostly in the commercial sector, I can see why this investigation is necessary. As a result of legislation and the availability of specific dispute procedures, claims handling for the private policyholder has recently become more user friendly, and some of the harsher rules of insurance law which give insurers an imbalance of power in the contractual relationship have been softened. No such advantages have accrued to commercial policyholders. In any commercial claim cash is central: cash to replace damaged property; cash to pay suppliers; cash to manage the recovery of the business. But cash has become a scarce resource for many businesses after an insured event. Delays are endemic. Insurers offer many reasons – excuses? – for this, each of which merits more detailed examination than this column allows. It’s enough to enumerate them here, but there is a common thread: it’s the bureaucratisation of claims, the loss of the commercial instinct that drives the buyer of the policy, but which is absent in insurers’ claims departments. It takes far too long for insurers to admit liability. Of course investigations into facts, causes and policy terms are essential. But, for example, where there is a potential subrogation against a third party for a fire, insurers will not split the cause investigation into two parts, one to determine whether the policy operates, one to nail the negligent other party. Instead, they will ordinarily only admit liability when the entire enquiry is complete. Reservations of rights are frequently raised as a matter of routine, without any explanation. Sometimes this can seem like an attempt to ambush, when good faith, ICOBS and TCF require a two-way dialogue based on transparency and openness. There are other attitudes and approaches which I shall deal with in future articles. For the moment, let us just remember this: a commercial policyholder who doesn’t feel that he is receiving the support and understanding that a claim demands, is never going to be an ambassador for the insurance industry. Reputation is all. Paul Lawrence, Managing Director, Thompson & Bryan

Your car is safe in our hands...

ntil recently the quality of vehicle accident damage repair services has never been an issue. The untested assumption being that insurer network managers maintain proper controls over repair quality – “your car is safe in our hands”. Yes, there was plenty of anecdotal evidence of poor repair work and rogue repairers, but these cases were considered to be the exception rather than the rule. All this changed when the Competition Commission added repair quality to the ongoing enquiry into the motor insurance industry. The results were disappointing but not surprising, with defective repair work found in nearly half the vehicles examined. Insurers have emphatically challenged these findings but there is little doubt that vehicle repair quality is now firmly on the agenda. Quite how the debate will evolve will depend on the appetite of regulators to challenge customs and practices established over many years. These would include the primacy of cost reduction over repair quality, the undisclosed sourcing of sub-standard replacement parts from Asian producers and pressure to repair rather than replace badly damaged panels. Insurers have a fiduciary and contractual duty to deliver a high level of repair quality to policyholders, but quality systems currently in place are totally inadequate. Guarantees offered to customers are for the most part meaningless. Parts fraud is endemic. It may be tempting to hope that the Commission and enforcement bodies such as the FCA will prioritise vehicle repair quality behind other aspects of the motor insurance investigation. This could be a dangerous assumption. The trend of financial services oversight is towards more vigorous enforcement and draconian retribution. Insurers have an opportunity to demonstrate that the findings of the Competition Commission are taken seriously and necessary remedies implemented, backed up by an industry wide Code of Conduct; far better than waiting for the imposition of external controls. It is inappropriate that repair quality and cost should become an element of competitive advantage in policy pricing. Repair quality audit is almost totally absent from repair management as currently practiced. The proposed post repair inspections would be ineffective and expensive and extremely inconvenient for policyholders. Remedies are neither difficult nor expensive to implement. Indeed, our own Partsave process goes a long way to providing the necessary quality assurance, with process cost saving as an additional benefit. Tony Rand, Managing Director, Partsave Ltd

MC // May 2014

The Opinions

A reasonable prospect? Should BTE policies be a mandatory part of the insurance purchase process?

good question with no easy answer; I suspect that we are going to see a change in consumer approach to legal expenses and the traditional “add-ons” over the coming years. No one insurance can cover everything and underwriters impose various exclusions on a policy to hopefully protect loss ratios and produce a profit on their core books - hence the reason BTE exists at all - to plug the gaps in the master insurance policy and help the consumer recover “uninsured losses”. However, to make it a mandatory part of the insurance purchase process would come with certain risks and implications as far as the consumer is concerned. Just as an IFA has to undertake a full evaluation of an individual’s requirements from life, including their attitude to risk, so should the insurance sales process. We should also be mindful of mitigating any potential conflicts of interest; to make a sale mandatory would give the consumer no choice but to take a product of the insurers own provider or if purchased through a broker the likelihood would be a most favoured provider. a) It would add cost for the consumer typically £20 to £30 per unit b) Will they get value for money? c) Is it comparable to other products on the market? d) Are they already covered through their partner’s policy/packaged bank account policy etc? e) Some insurers won’t take on a case if the amount that is being claimed is likely to be less than the case costs. Insurers also insist that there has to be a reasonable prospect of the claim being successful otherwise it may be refused. The current model of BTE provision allows insurers a certain leeway in picking and choosing the claims it wants and may be weighted to drive the more lucrative cases through their supply chain to derive the most revenue. There needs to be a robust consumer protection model in place. So if it was to become mandatory, would this be tipping the balance firmly in the favour of the composite insurers and giving the consumer less choice once again?

Losing the bet How potentially damaging could an increase in court fees be in financial terms, for the area of the industry you work in?

he increase in court fees, effective from 22 April 2014, represents a bet by the MoJ. Their wager is that court fees represent such a small proportion of overall legal costs that parties will, in austerity mode, simply pay up. They may win this wager but there are plenty of reasons why they may not. To begin with the steep increases for some of these fees will certainly capture the attention of paying parties. Examples are the hikes in respect of: • claims between £5,000 to £15,000 - an 81% increase from £245 to £445 • general application to court, on notice - a 93% increase from £80 to £155 • permission to apply for judicial review - a 125% increase from £60 to £135. These new fees are now in place and this is before the MoJ considers introducing further increases, whereby the better off will pay enhanced fees. The Civil Justice Council have expressed concern “… about the potentially chilling effect on lower to medium value claims of the fee increases, as litigants may opt not to bring claims where the court fee represents a significant proportion of the legal costs and is significant in relation to the overall value of the claim.” All of this is set against a context of reduced legal costs and a poor (some would say deteriorating) level of service from the courts. There is also the pitiful record of a failure to invest in the IT that Lord Woolf said was necessary back in the mid nineties. The recent “jam tomorrow” announcement of some IT investment will not allay the considerable concerns in this area. All of the above adds up to a risk of a reduced volume of claims, because some claimants will not pay high fees, plus a disenchanted group comprising practitioners and those defendants who are regular users of the courts. If this group heads for private dispute resolution, be that arbitration, mediation or private compensation schemes the MoJ could lose its bet in grand style. Tim Wallis, Solicitor and Mediator with Expedite Resolution, Trust Mediation and others.

Andy Whatmough, Managing Director, S&G Response

MC // May 2014

The Features

41-62

THE FEATURES

MC // March 2014

The Modern Claims Conference 2014

THE MODERN CLAIMS CONFERENCE 2014 The inaugural Modern Claims Conference took place on 25th March 2014 at Stamford Bridge, Chelsea F.C, Charlotte Parkinson reports on the proceedings from the groundbreaking event.

odern Claims’ first ever conference sold out within weeks of tickets going on sale and almost 400 delegates flocked to Chelsea football club to hear the thoughts on market change, pressures and updates from a myriad of influential individuals. It was testament to the exceptional calibre of the programme which cemented the excellent turn out from industry leaders. Following a lively introduction from conference Chair and CEO of Parabis, Tim Oliver, the first speaker to take to the stage was Justice Ramsey, who has been instrumental in implementing the programme of reforms introduced by Lord Justice Jackson in April 2013. Ramsey began his Keynote Address, ‘Where are we now?’, by reaffirming the uncertainty that many claims practitioners are still feeling, “the big ‘blip’ of 2014 is still making its way through the system, which is a traditional trend in periods of huge change such as this. As Damages Based Agreements (DBA’s) are now a form of funding there is potential for highbred agreements”. Ramsey went on, “The overall dynamics of the revised funding process are now going as expected however as many practitioners are still having to adapt their business models, it is causing internal pressures”. The nature of compliance in the legal sector is also continuing to change and Ramsey confirmed this; “Practitioners didn’t think they needed to comply and Mitchell has changed all this, they now need to seriously consider non-trivial breaches and have a good reason for non-compliance.” Justice Ramsey’s address ended on a note of cautious optimism as he said, “the Jackson reforms are creating a change in culture and only in 5 years time will we be able to tell whether these reforms have created access to justice at proportionate cost”.

MC // May 2014

The Solicitors Panel

A state of flux The exuberant Professor Dominic Regan began his aptly titled address, ‘What is going on?’. Regan was quick to voice that practitioners are missing the opportunities that costs budgeting creates and that the industry is still very much in a state of flux. “When are costs proportionate? No one knows. There will, however, be a massive change long term following the complete demise of the hourly rate. The argument for increasing the small claims limit has diminished”, he argued. While Regan believes that issues arising from the Mitchell case will not go away, he was quick to draw examples from more recent cases, such as Durrant, where “a trivial breach became a major breach because they waited two months to apply for relief from sanctions”. He also called Part 36 ‘more important than ever before’ and added; “fixed portal costs are irrelevant if there is a good Part 36 offer, it is the primary weapon in the armour of claimants”.

Conflict of opinion... The content of the second panel, ‘How have the Associations supported their members through the Jackson reforms?’, had been highly anticipated prior to the conference, given the cross industry representation; the Association of British Insurers (ABI), the Association of Personal Injury Lawyers (APIL), the Forum of Insurance Lawyers (FOIL) and the Motor Accident Solicitors Society (MASS). The ABI’s Assistant Director James Dalton kicked off the debate Andrew Richie QC

The Modern Claims Conference 2014

‘The industry needs to stop emoting, the customer is key and they will not benefit from discussions like this, there needs to be a changing of the guard throughout the industry’ Rob Smale when questioned over the organisations response to change by Tim Oliver, responding, “Costs have been disproportionate for too long, change needed to happen.” This statement clearly riled the representatives from APIL and MASS, as APIL CEO, Deborah Evans commented “APIL didn’t like the reforms but we can only try and influence government decisions, we can’t change them” and Craig Budsworth, MASS Chairman, added, “The Government had a script written by Insurers, our hands are tied behind our backs, we try and do the best for our members”. FOIL President, David Johnson spoke next, voicing their standpoint; “the reforms are not removing or delaying access to justice, they are encouraging proportionate costs”. Conference Chair, Oliver was next to probe Dalton (frequently dubbed the industry ‘pantomime villain’), following a discussion of fraud in the industry, asking, “Why don’t people Tim Oliver trust the insurance industry?”, to which the ABI representative replied, “It is everybody’s duty to fight fraud but why should it be the insurers duty to obtain medical reports? If claimant lawyers don’t want premed offers, stop asking for them”. The panel agreed that collaboration amongst representative bodies is improving, as Budsworth ended “we get on better as organisations and can sit round a table and discuss the issues facing the industry, which has got to be a good thing”. A step too far? Oliver greeted the ‘Insurers perspective panel’, by asking, “Why is there so much cynicism around insurers?”, to which Rob Smale, Claims Director, Ageas, responded, “The industry needs to stop emoting, the customer is key and they will not benefit from discussions like this, there needs to be a changing of the guard throughout the industry”. Insurer heavyweight LV=’s Director of Claimant and Technical Services, Martin Milliner spoke next, addressing how insurers are approaching change, “We want to make the process quicker and more economical for all and we want to cut out lawyer fee’s in order to do this”. Oliver continued to steer the debate in the direction of the consumer, asking the panel if the reforms will make the claims process quicker and fairer, to which John Latter, Director of Technical Centre UK Claims, Zurich, responded, “Results pre and post-reform were and are fair, it is the path to get to this conclusion which has changed”. David Williams Managing Director, Underwriting, AXA added, “none of us liked much of the reform, as a result,

only the efficient law firms will survive and for insurers it is back to business as usual, there hasn’t been the ‘massive drop’ in premiums as the government expected”. The debate then turned to the arguably controversial topic of whether lawyers were still required in low value cases, to which the panel responded a resounding ‘yes’, a point which Milliner wholeheartedly agreed with, “It is right and proper that legal representation is provided. The alternative to lawyers is not a good one”. Big is beautiful? By means of achieving a balanced discussion, Oliver posed the same question “Are lawyers still required in low value cases?” to the ‘Solicitors Panel’. David Bott, Senior Partner, Bott and Co Solicitors responded first, “We can’t trust insurance companies to come up with the right number and clients need someone to give them the right answer”. The founder of Injurylawyers4U, Andrew Twambley, was quick

‘For insurers, times are good because the MoJ listen to them and produce consultations based on insurer-led issues. Insurers should enjoy it while it lasts, the tide will turn’ Andrew Richie QC to interject, raising the issue of consumer opinion, “to the man in the street, lawyers are a necessary evil”. Donna Scully, Partner at Carpenters added that “lawyers should be trying to facilitate early settlement, lawyers must move with the times but if we are doing a good job then of course we should be here”. Anthony Hughes Lead Consultant of recently established Jackson Hughes

MC // May 2014

The Modern Claims Conference 2014

‘The overall dynamics of the revised funding process are now going as expected however as many practitioners are still having to adapt their business models, it is causing internal pressures’ Justice Ramsey

The Hon. Justice Ramsey

Consulting, spoke next offering the defendant perspective, “It has been too easy to become a lawyer, big is now beautiful and there are far less defendant firms. This will be the same for claimant firms as time progresses”. Bott agreed: “the days of the high street firm have been numbered for some time and practitioners need to find alternative routes to market”. The third panel drew to a close as Oliver touched on the resounding impact of Jackson, questioning the panel on their thoughts over what had been missing from Jackson’s programme of reform. Scully voiced her view that the fundamental flaw in the package was the lack of an industry impact assessment, saying that was her ‘biggest regret on behalf of the government’, a point which was echoed by the other members of the panel. The changing face of claims An eclectic mix of industry experts made up the final panel session of the day, ‘The changing face of claims’, which focused on the practical implications of the changing claims industry, for the consumer and for the profession. Panellists Sharon Denby, Director of Costs, Ontime Group; Zoe Holland, Managing Director, Zebra Legal Consulting; Alan Nesbit, Managing Partner, Nesbit Law and Chairman of the Association of Regulated Claims Management Companies (ARC); and Tim Wallis, Mediator and Director, Expedite Resolution, joined Oliver on the stage. With the extensive disruption in the industry set to continue for some time, much of the discussion centred around alternative methods of settling claims, particularly certain forms of Alternative Dispute Resolution (ADR) and Mediation. Wallis, the mediator on the panel, went first, explaining that mediation is entirely relevant in personal injury claims (the majority of which are often low value cases), despite Professor Dominic Regan

industry scepticism. “There will be more and more costs consequences if mediation is not used, clearly mediation is relevant for personal injury but understandably it is more difficult in complex cases such as clinical negligence.” he said. Nesbit agreed with Wallis’s assertions, adding: “mediation can often help specific areas of a case and early mediation can save costs”. Denby added that practitioners had been slow to use mediation “The costs ‘prize’ will appear at the end if ADR is used. At the moment it is difficult for the industry as, even if we use ADR, we can’t give our clients clear advice as the Government aren’t allowing use to do so”. Holland took this notion further as she highlighted it should not always be a case of ‘driving down costs’, “access to justice for the injured person should be the primary driver. Brand protection and due diligence should also remain high on the agenda. Ultimately though, the market needed a shakeup and there are still some firms that need to go”. A straightforward system To close the proceedings, Andrew Richie QC took to the lectern to deliver his address, ‘An Overview of the Day’. Richie began by drawing attention to his view of the problem with the civil justice system: “we no longer trust it and it doesn’t trust itself. It has made procedure the master and justice the servant.” Richie’s address echoed earlier points made by Justice Ramsey and Tim Wallis amongst other speakers: the need to adopt arbitration. Richie called his proposed scheme the ‘Personal Injury Claim Arbitration System’ (PICArbS) and enthused, “the large claimant firms go to the large insurers and strike arbitration deals, which says they will not litigate and hourly rates are agreed in advance. They will then use Judges they choose, who understand Personal Injury Law. Nobody is struck out, nobody is ‘Mitchelled’; what I am proposing is a straightforward system that commercial firms have been using for years. Why don’t we do it?”

MC // May 2014

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Richie went on to highlight the much of the industry frustration with the current government standpoint. “All the government wants is for no cases to go through a Court system that it doesn’t want to pay for, either that or they make us pay for an inadequate system.” Richie clearly pointed out that both ‘sides’ of the industry need to take control of the process and build in arbitration as a constructive method of settling cases by means of early and neutral evaluation. He also drew attention to issues surrounding costs budgeting, “In PI litigation, the budget is an estimate; all that is guaranteed is that it will be wrong, this must be flexible.” Consolidation will continue to strike through the market and, as Richie believes it is still ‘tough on the claimant side’ but, he pointed out that if ‘the claimant solicitors go out of business, so do the defendants’. He ended with a message to take away from the day, “for insurers, times are good because the MoJ listen to them and produce consultations based on insurer-led issues. Insurers should enjoy it while it lasts, the tide will turn”.

Modern Claims would like to thank all our Speakers, Sponsors and delegates who attended this year’s Modern Claims Conference.

MC // May 2014

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The Features

A LOADED DECK OF CARDS... Patrick McGuire explains why the Court Reform Bill, currently progressing through the Scottish Parliament, will hand the insurance industry a giltedged bonus if it is passed.

ou may suggest that it has been naïve of me not to see this coming but I confess to having been absolutely flabbergasted as I have watched the insurance industry lobby give evidence around the Court Reform (Scotland) Bill, which is currently progressing through the Scottish Parliament.

The Bill is currently being considered by the Justice Committee of the Scottish Parliament for the purpose of preparing its Stage 1 Report, in which the Committee shall make recommendations to the Parliament as to whether or not the general principles of the Bill should be agreed. I have written about the Bill in this magazine in the past. It is our Jackson reform moment but without the political edge that was experienced in England and Wales. Accordingly, our Bill was never intended to deliberately decimate the body of pursuers’ personal injury representatives or to aggressively turn back the clock on the rights of victims of accident, injury and disease. However, as I pointed out in a previous article, through less than precise drafting, the Bill, as it is currently framed, has handed a gilt-edged bonus to the insurance industry. If the Bill passes in its current form, they will have been handed a gift wrapped, loaded deck of cards in terms of access to justice and equality of arms. So obvious are the flaws in the current draft that is brought together an odd coalition of organisations to push for amendments. It is not very often that you see trades unions, churches and the Faculty of Advocates stand together and argue the same issue in terms of civil justice! Having won a watch, you would have thought that the sensible thing for the insurance industry to do was to keep their heads down, say nothing and draw as little attention to themselves as possible. But like the spoilt child for whom the present is never enough, the insurers have decided to try and take a mile from the inch they have been given by the Scottish Parliament.

‘[This bill] is our Jackson reform moment but without the political edge that was experienced in England and Wales’ One of my favourite movies is “The Usual Suspects”. There is a fantastic scene in which Kevin Spacey’s character utters the immortal line that “the greatest trick the Devil ever pulled was convincing the world he didn’t exist”. To convince the Justice Committee of the merit of their argument, the insurers are attempting a similar feat. The entire thrust of their argument is to paint themselves as the victims. Our poor, weak and morally responsible insurers (who, they tell the Justice Committee, want to see everyone who has suffered in circumstances where compensation is due to receive that compensation as quickly and fairly as possible!) are being forced to pay disproportionate legal fees. It is hurting them; it is hurting their shareholders; and it is hurting all of us in the form of increased insurance premiums. I do not know about you but a certain Sex Pistols album title springs to mind. What the insurers of course fail to point out is that is only necessary to raise court proceedings in the first place because, having gone through the Pre-Action Protocol, they have denied liability, refused to make an offer of compensation or have made an offer but one that is patently too small. In other words, the need to raise court proceedings is a situation entirely of their own making and, in those circumstances, they most certainly should be paying legal costs for the victims initially denied justice by their actions. I have every faith that the Justice Committee will see through the insurers’ sheep’s clothing to the wolves beneath but only time, and Stage 2 of the Bill, will tell. Patrick McGuire is a Partner at Thompsons Solicitors

Enter “proportionate costs” to the debate. From their evidence before the Justice Committee, the insurance industry are pushing for all personal injury cases with a value of less than £5000 to proceed under our newly named small claims procedure, “Simple Procedure”, on the basis that the legal costs will not be recoverable; and in higher value cases victims should only be entitled to employ Counsel in the most complex and difficult of matters.

MC // May 2014

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The Features

WHERE THERE’S A BLAME, THERE’S A CLAIM? Motoring Accidents are the reason behind three quarters of Catastrophic Injury Claims and as Peter Savage reports, these claims are on the rise.

‘Three quarters (73%) of the catastrophic injury claims that we have been approached for over the past six months were for injuries caused by serious or fatal road traffic accidents’

ecently, a report released by the Government stated that there’s been a steady decrease year-on-year in the combined total of serious and fatal car injuries, falling from 72,751 in 1979 to 22,358 in 2012. Whilst there may have been a decrease in reported incidents throughout the UK, at Medical Accident Group we’re seeing a steady rise in the number of people coming forward to enquire about, or make claims for catastrophic injuries, particularly relating to motoring incidents. It’s no surprise that more people than ever are coming forward to enquire about whether or not they have a claim; the public are inundated with adverts for legal companies looking to represent them even if they’ve had the smallest of accidents - ‘where there’s a blame, there’s a claim’. It’s far more common these days to sue a company or a person for any injury you’ve suffered that wasn’t your fault – and why shouldn’t you? If an injury is bad enough, you have to take time off work; you then lose money which then affects you day-to-day life. Wondering if you’re going to be able to afford to pay the bills, let alone purchase the comforts you’re used to, is a worrying thought. A steady increase Catastrophic injuries can be the result of various incidents, yet when we recently analysed the claim enquiries we have received over the past 6 months, the top 5 most common

catastrophic injuries were revealed as spinal injury (33%), brain injury (23%), neck injury (17%), amputation (15%) and burns (12%). By analysing company claim enquiries and records, we were able to determine that three quarters (73%) of the catastrophic injury claims that we have been approached for over the past six months were for injuries caused by serious or fatal road traffic accidents. Catastrophic injuries can affect the day-to-day lives of anyone involved, and can last for years or even a whole lifetime. Many people living with catastrophic injuries accept this and don’t think to make a claim of any kind, yet they’ve lost so much. Not only have they potentially lost the ability to work and to do everything they used to, but when you factor in their suffering, mental and physical pain and medical bills the losses soon mount up. One client that we recently represented was the victim of a serious road traffic accident who had suffered spinal injuries that left them permanently disabled – we took on the case and helped them to win £2.75 million in compensation. Whilst the compensation won’t take away their injuries, it will help them to lead a more comfortable life and be able to afford the treatment and help they’re going to need. Whilst there is a steady increase in the number of people coming forward wanting to make a claim for their catastrophic injuries, we’re sure there are just as many out there not coming forward to make a claim. This might be because they’re not sure if they have a claim, or they don’t want to cause any fuss, but whatever the reason it’s always worth at least making an enquiry to see if there is a claim there or not. At the very worst the claim will be rejected. However, even if there’s

even the slightest bit of hope that they do have a claim and could get the compensation they deserve, who wouldn’t want to find out? The wrong place at the wrong time It’s not just road traffic accidents that can be the cause of catastrophic injuries; sports incidents are the second most common cause for catastrophic injuries. All it takes is one tiny mistake, or simply being in the wrong place at the wrong time, and your life can change forever. Typically, people that have incurred catastrophic injuries through sport don’t always realise that they could have a claim – but if the injury was caused by another person or because of poor equipment, there’s a good chance there is a claim there. Many Britons also have the misconception that there are time restrictions with regards to making a claim surrounding catastrophic injury, however, if a minor has sustained catastrophic injury resulting in a lack of capacity then there will be no time restrictions and the limitation period will continue to run indefinitely. In addition, if an adult has sustained a catastrophic injury resulting in a lack of capacity there will be no time restrictions and the limitation period will also continue to run indefinitely. It’s important for Britons to be aware of these time restrictions so that they know all of the options available to them. Making a claim is very important, as by doing so people could be preventing a terrible experience from happening to somebody else. Peter Savage is a partner at Medical Accident Group, a firm that specialises in catastrophic injury cases; particularly brain & spinal injuries, fatal injuries, accidents involving children and sporting injuries.

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The Features

I WOULD RATHER GO TO JACKSON “Well, go on down Mr Jackson; go ahead and wreck our health. Go play your hand you big-talkin’ man, make a big fool of yourself.”

rom “Jackson”, sung by Johnny Cash and June Carter 1963. We are now over a year into, what an unnamed oppo from a large insurance company recently called “The Jackson Act”. There are numerous and notable orators and scribes out there telling us how it is, but I would like to speak up for a class of personal injury victim that receives little attention and even less sympathy, the experienced lawyer, over 35, who is not well endowed with a largely multi track caseload. Let us travel back in time, a few years and see what we had. Law firms tended to grade fee earning staff according to experience and the intricacies of their particular case or the special needs of their clients. When cases came in, each case was considered on its individual merits and complexities and allocated accordingly; either directly to the appropriate lawyer or to a senior manager who would similarly allocate the case/client. The system was not perfect, but the clients were well catered for and the lawyers were generally paid based upon the type of case allocated to them. Pile ‘em high However, “The Jackson Act” and subsequent developments in the legal system have changed all that. The vast majority of personal injury cases fall into The Fast-Track and are subject the dreaded fixed costs system. Now, us PI lawyers are a malleable lot and are not adverse to change, per se, but Houston, we have a problem. We are all still seeing the (ever decreasing) benefit of our pre, fixed cost work in progress, and we know that soon that war chest will be plundered down to zero. We will then be relying on a caseload, largely populated by fast track fixed costs cases. We have all (hopefully) done our projections and the common conclusion is that margins will be slashed. So if a firm carries on as it always had, it is unlikely to survive. Those firms, who have not come to this conclusion, are already dead! One solution is to pile ‘em high and do more cases using the same resources. Hence we see in the market place the current trend for acquisitions and consolidation. That should work. An additional or in the alternative, a solution is to have a long and hard look at our fee earners. In order to counteract the reduced fee income per case we need to cut (slash) personnel. The first place to look must be the team leader or highly paid skilled lawyer who now has a caseload of good cases but those which attract low fast track fixed costs. I am not referring to the lawyer with a large multi track caseload dealing with highly complex cases, but that usually excellent class of fee earner with vast experience who dedicated his/ her working life ensuring injured clients gain the best possible

‘We are all still seeing the (ever decreasing) benefit of our pre, fixed cost work in progress, and we know that soon that war chest will be plundered down to zero’ outcome in the case. Why would I pay an 8 year qualified solicitor to run a file, when I can process the file using a newly qualified lawyer on half the salary? Cutting corners This is a tragic situation, where a group of first class lawyers see their market worth reduced to zero (a bit like the Brontosaurs, though there are doubts that beast ever existed but that’s another story!) We will still see the same cases coming through but, as a necessity, they will be handled by a much less experienced lawyer and this just cannot be good for the client. It is another body blow to our (formerly) great justice system. We could cut corners with client care! I recently had a sit down with the Big Man at The Legal Ombudsman, a man who you can talk to, and says it how it is. I mentioned this situation and he said, something along the lines of; “If I need to travel to Glasgow, I can fly by helicopter or I can cadge a lift in the back of my secretary’s mini (he is at least 6ft 2”) as long as I know at the outset how I am getting there, I can’t complain”. That’s good, I thought so decided to redraft all client care letters, giving the clients the option of the Gold Service or the Fixed Costs Service. The latter included a paragraph saying, “Never call us, never write to us; we will let you know when/ if something is happening. If you breach these conditions we will bill you massivo amounts of dosh”. Then I thought of all the complaints that this would cause and time I would spend attending The SRA and answering complaints to the Legal Ombudsman. I thus abandoned that plan and commenced redundancy procedures. I would hate to be a 10 year qualified PI solicitor! I would rather go to Jackson. “Where I’ll be dancin’ on a Pony Keg They’ll lead me ‘round town like a scolded hound With my tail tucked between mylegs Yeah, Jackson, you big-talkin’ man” Andrew Twambley, Ex Amelans, Country Singer dressed in Black. Andrew Twambley is Founder and Owner of Injurylawyers4U and Managing Partner of Amelans Solicitors

MC // May 2014

The Features

MIND THE GAP Jason Atkinson, Managing Director of Russam GMS, a provider of Interim Managers for over 30 years, discusses the growth in insurance companies using interim managers and how they can make the most of this vital resource.

report from Ernst and Young, ‘Global Insurance Outlook 2014[i]’ suggested that the global insurance industry is finally emerging from the combination of financial turmoil and economic uncertainty and suggests positive times ahead for the sector. There are opportunities for insurers to garner a competitive advantage and thrive, and indeed the report highlights in the United States, Europe and Canada, many insurers have rebuilt their capital positions in the wake of the financial crisis and are poised to wisely allocate it to competitive advantage and strength. Open the parachute With these positive trends in mind many insurance companies will hire interim managers during 2014 as a short term, cost-effective recruitment resource to take advantage of this growth. One insurance company to have done this is Barbon Insurance Group who offer a range of insurance products and services to the UK’s growing private rented sector. Last year the company was seeking senior level interim managers to take over a number of key roles whilst they recruited permanent people. They found that one of the biggest benefits of having the interims in-situ was the fact that new employees had a great handover and were able to seamlessly pick up their roles, and it was still business as usual for their clients. Interims can provide a flexible and strategic, high level resource that is cost effective and low risk - turned on and off to an organisation’s exact requirements often in response to market conditions. However, interims are often parachuted into companies at a time of change or crisis – called in to run specific strategic projects or supply skills that don’t exist in the organisation. Our latest snapshot survey of 12,000 Interim Managers showed that over the past year, half of all interims were recruited to provide specialist skills absent in a business, 34% to design or implement new strategies and a third to undertake specialist projects. Many insurance companies could be facing merger or acquisition as part of their growth strategy and may lack the skills in-house to oversee such activity. The right fit The demand for change management specialists is also growing, with change management and transformation the number one interim job discipline, representing over a

MC // May 2014

TOP 10 TIPS ON HIRING AN INTERIM MANAGER 1. Check if you really need an interim manager or whether the skills and knowledge you require already exists within your organisation. 2. Have an ideal candidate in mind to ensure you pick the right person for the job. 3. Always use a reputable interim provider that can find managers with the right balance of management skills, technical know-how and market knowledge. The IMA (www.interimmanagement.uk.com) is the industry body which sets out the ethical standards for the interim management industry, and its members adhere to a strict code of practice. 4. Don’t waste time as the best interim managers can get snapped up quickly. 5. Remember that interim managers can speak openly to clients about changes such as job losses because they don’t have emotional attachments to companies. 6. Agree the aims and timescales of the assignment at the outset, so that both parties know their objectives, and review as the assignment progresses. 7. Ensure the interim manager understands your needs from the start; once a contract is signed; an interim has five working days to understand the role and requirements. 8. Clarify the role of the interim manager to permanent staff, so that they understand the person is being taken on for a defined period of time and can transfer skills to permanent employees. 9. Don’t make pay comparisons to permanent staff; it is misleading because the interim manager is chargeable at an inclusive rate and does not enjoy benefits such as pensions or holidays. 10. Interim managers can work for any size company and may be suitable for an SME that lacks skill in certain areas but is not able to justify employing someone full time.

The Features

‘It’s important the interim is the right corporate ‘fit’ and we would advise any company to introduce the interim to relevant team members and the board as part of the recruitment process’ quarter (26%) of all interims currently on assignment. As companies emerge from financial turmoil they often have to change the way they do things to gain competitive edge or market themselves in new ways to new customers. Due to the often sensitive nature of such roles, interims can face resistance, suspicion or even antagonism from employees. To ensure assignment success, companies need to manage the recruitment process carefully to ensure they recruit interims with the right skills, experience and cultural fit – applying the same rigorous recruitment procedures they would use when hiring a permanent member of staff.

assignment. Regular programme assessment should be provided to ensure everything is going to plan. Preparations for after the interim’s departure must also be made well in advance of his/her end date and the question, “how will this look when the job is done” needs a clearly defined response. Interim managers should always be provided with a clear scope of work and terms of reference for their assignment. They must be given enough responsibility to carry out their role without encumbrance, but also have a route through to a responsible Director (or equivalent) to oversee and approve their activities in the best interest of the hiring organisation. Jason Atkinson is Managing Director at Russam GMS

A clear business case needs to be created from the outset, with companies outlining the kind of person they want, the job brief and their objectives. It’s important the interim is the right corporate ‘fit’ and we would advise any company to introduce the interim to relevant team members and the board as part of the recruitment process. Objectives and targets should be set and companies also need to consider the support they will provide for the interim during their

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The Features

MANAGING THE STRICTER REGULATORY REGIME FOR CMC’S Following on from Kevin Rousell’s article last month, in which he set out the ways in which the regulatory regime has been tightened to drive out bad practice from the industry, Emma Emery of Freeth Cartwright LLP, explains the different types of enforcement action that can be taken against CMCs.

regularly advise CMCs and their directors who are subject to regulatory enforcement action. What has struck me over the last couple of years is that, although they are becoming aware of the tightening of regulation, they often aren’t aware of the types of action that might be taken, the severity of the penalties that can be imposed or that action can be taken against directors personally and not just the CMC. Restriction, Suspension or Cancellation of MoJ Authorisation If the MoJ receives a complaint regarding conduct which is in breach of the conduct rules, it may place restrictions on trading, suspend authorisation or even cancel its authorisation altogether. The rules were tightened in 2013 to require CMC’s to notify clients of any variation or suspension of authorisation and for signed contracts to be entered into before any payment is taken. From my point of view this was a welcome change because I have dealt with several cases where there was a dispute about when a contract had been formed and when a CMC was entitled to take payment. The rules are likely to be tightened even further in 2014, following a recent MoJ consultation, which is likely to require CMCs to carry out a more thorough investigation into the merits of a potential claim before taking it on. Enforcement Orders Local authorities (Trading Standards), have the power to commence a claim in the county court for an order that you do not breach the regulations

complained of again. These orders usually contain a ’Penal Notice’, which means that if a further breach is committed, the directors of the CMC could be penalised by imprisonment. Whilst an Enforcement Order could contain restrictions, which could seriously damage trading, it is possible to negotiate the terms of those restrictions so that the concerns of the local authority are met but whilst not being overly restrictive on the continued trading of the CMC. Criminal Prosecutions Trading Standards can also bring a criminal prosecution for the same breaches as those for an Enforcement Order. The maximum fine in the Magistrates court is £5,000 per offence. We have recently dealt with a case where a criminal prosecution was brought for two breaches of the CPUTR’s in respect of two clients. Even though the breaches were identical for each client, it amounted to four offences in total and therefore the maximum fine could have been £20,000. CMCs should be aware that trading standards may try to get prosecutions transferred to the Crown Court where a judge has the power to order an unlimited fine or even imprisonment if found guilty. This is even in cases which a CMC may consider not to be serious. Prosecutions are usually brought not only against a CMC but also against its directors or any individual who has a special relationship with a CMC.

same way as it does for complaints made against solicitors. Its powers are expected to be wide ranging which could see it requiring anything from an apology to be given or payment of compensation to be made to a complainant. The new law will also allow the CMR to issue fines for poor quality service. Director Disqualification Where a CMC has been wound up, whether voluntarily or by order of the court, the Official Receiver or the appointed liquidator has to complete a report stating whether he thinks the directors conduct warrants further investigation with regard to whether they are fit to act as directors. This could result in court proceedings being brought to disqualify directors of CMCs on the basis that allowing the CMC to breach regulations is evidence that they are not fit to act as a directors. Depending on the seriousness of the conduct, the period of disqualification can be from 2 – 15 years. CMCs should be aware that regulatory bodies work often work together and share information. Avoiding the regulatory action can be a minefield but being aware of the consequences is usually a good starting point towards better compliance. Emma Emery is a Senior Associate at Freeth Cartwright LLP, a national commercial law firm, and specialises in advising CMC’s on regulatory action.

Legal Ombudsman (LeO) and Claims Management Regulator (CMR) A new law was passed in 2013 to give the LeO powers to investigate complaints made against CMCs in the

MC // May 2014

Legal Opinion

Legal Opinion Modern Claims asked our resident panel of legal experts to discuss the latest news and views driving change in the claims sector. Donna Scully argues that raising the small claims limit is a ‘draconian step’ in the quest for access to justice, as she claims it should be used as a ‘last resort’. Ruth Graham and Mark Hanson explore whether the claims industry is ready to embrace telematics solutions, such as driverless cars and Alan Nesbit considers whether lawyers are still a necessity in low value claims, as he argues that there are several other ways in which the claims process can be streamlined, without removing lawyers from the cycle completely.

A sledgehammer to crack a nut At the Modern Claims Conference in March this year, Professor Dominic Regan said that ‘the argument for increasing the small claims limit has diminished’. Do you believe this to be true and if so, why?

he starting point is that raising the small claims limit is a very draconian step to take in relation to access to justice for innocent accident victims. It has to be a “last resort” when nothing else works.

In the MoJ Whiplash Consultation, the Government said that raising the limit was under consideration to reduce the number of fraudulent whiplash claims. That came after all the reform LASPO brought and the huge reduction in legal costs too: a lot of reform in a very short space of time. Why is the answer to dealing with the problem of fraud, to take such a huge step of taking away legal representation and support from innocent accident victims? Isn’t the answer to tackle the problem of fraud head on and improve how we fight it first? Otherwise, it’s the old sledgehammer to crack the nut syndrome. Prior the MoJ’s Response to the Whiplash Consultation, the Transport Select Committee (TSC) issued a report in April 2013 recommending that there be no increase in the small claims limit and thankfully, the MoJ agreed with that, in their Response.

MC // May 2014

The TSC, in its report, referred to the fact that any rise in the limit would restrict access to justice for genuine accident victims, as there would be a lack of legal representation, increased opportunities for CMCs to offer advice services to the “litigants in person” and would encourage fraud. They also felt a rise would create an inequality of arms between the parties to a claim. Whilst the Government followed the TSC’s recommendation, in relation to not raising the small claims limit, it is keeping it under review. In the meantime, the MoJ are looking at ways to fight fraud without raising the limit and that is a good thing. They are considering how they can improve medical experts in whiplash cases, how we can fight fraud more collaboratively and, very importantly, how we stamp out any bad practise on both sides to reduce any unnecessary costs in the process. The MoJ are moving fast and furious on this. As access to justice and protecting innocent victims of accidents is so important, I welcome what is happening now. I am optimistic that, together as an industry, if we have the will, we can clean things up and have a good system where the good continue to get justice and the bad do not. Donna Scully, Owner, Carpenters

Legal Opinion

A thing of the past? A recent Innovation Group survey found that British people are in favour of using telematics as a means of reducing car insurance premiums but are still not ready for the introduction of driverless cars –will the industry reach a point where these become the norm and how can it convince consumers that this is an effective way forward?

riverless cars are certainly a hot topic at the cutting edge of automotive developments. The Innovation Group survey suggests motorists are becoming more open minded to new forms of technology. The increase in telematics has been slow and steady but the driverless car is a much more revolutionary concept. Despite the fact driverless cars change almost every aspect of car ownership, the modern trend of thought is that, while such technology will take time to establish itself, it is a case of when, and not if, driverless cars appear on our roads. Indeed, it could be argued the slow process to entirely self-drive vehicles is already under way – cruise control is well established while a number of manufacturers now fit their latest models with driverless parking technology. Driverless cars are only likely to become more acceptable to consumers once the technology has been comprehensively tested and this is not the case at present. The USA is much further forward in their development – possibly due to their wider roads and absence of roundabouts. Although Google is in the process of meticulously testing their own self drive vehicle (it has been reported that the vehicle has driven 300,000 miles without any accidents), there is clearly a long way to go before the public at large accept this technology as ‘the norm’. However, the public’s acceptance of this new technology could be enthused by the possible reward of lower insurance premiums.

An independent view Is there still a need for lawyers in low value claims or should the process now be entirely handled by insurance companies?

here is absolutely a need for lawyers in low value cases. Even the most straight forward of cases can have complications. Had the question been one where the need was in claims dealt with in the portal, then even then I would still have said yes there is a need. Even in Portal cases which are now up to £25,000 and therefore not so low value, at the very least an independent view from a lawyer who is not on the insurer’s pay roll is essential. My own firm has dealt with several cases where insurers have significantly under valued cases, but bearing in mind their duty is to their shareholders rather than the injured person, this is hardly surprising. Furthermore, when the claims drop out of the portal but nevertheless remain low value, there is even more requirement for independent advice from lawyers. These cases drop out for a variety of reasons, liability, causation, particularly low velocity impact arguments, and of course allegations of fraud. The impact of receiving an allegation of fraud can turn a Claimant’s world upside down, it can stop them from ever receiving insurance again, it can even end up in a custodial sentence. There is no way that an insurer can fairly deal with any case where liability or causation is in issue as they are clearly subject to a huge and insurmountable conflict of interest. There are several ways in which the process can be streamlined without removing lawyers from the system, some of these are already happening. For example the PICAS+ system which allows insurers and solicitors to automatically settle cases if the value of the damages falls within a set profile. So to repeat, the answer is a resounding yes. Alan Nesbit, Managing Partner, Nesbit Law Group LLP

The rise of the driverless car is likely to be unrelenting but at this stage it is simply too early to guestimate when this technology is likely to become the accepted form of vehicular transport. At present, this scenario appears many years away. There is likely to be an eye watering amount of rigorous testing and quality assurance work required before this technology obtains the support of the general public. Another barrier to the extensive use of driverless cars in the near to mid-term is the cost of these vehicles. One would expect the substantial costs of developing such cutting edge technology to be passed on to the end consumer. Also, as another note of caution, it is not just the consumer that needs to consider the future for driverless cars. The widespread implementation of such technology is also likely to raise questions for insurers. For example, would road traffic accidents (and by proxy, car insurance) be a thing of the past if this technology can be perfected? Ruth Graham, Partner, Berrymans Lace Mawer Mark Hanson, Lawyer, Berrymans Lace Mawer

MC // May 2014

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The Features

WHERE ARE WE HEADING? It is not always best to concentrate solely on immediate developments, it is also vital to consider the ‘longer view’, as Professor Dominic Regan explains.

‘Nothing, not even the law, is immune from the incursion of technology. To harness and use the best case management systems will cut costs but ultimately there must be someone there who knows what they are doing so that standards are maintained’

or me, there is one almighty, recurring theme. The hourly rate is doomed. Last year saw two incursions into the ancient method of charging. The damages based agreement permits a lawyer to take a percentage of up to half of the damages recovered. Sadly, the permitted cut is much less in personal injury cases. The blatant beauty of this arrangement is that it is nothing to do with the hourly rate. On a good day, a fast settlement could produce a return higher than any hourly rate ever countenanced in civil litigation. Later this year the Regulations are to be amended so as to permit the lawyer to charge his own client something, anything, as the matter proceeds. At present, such a hybrid deal is not allowed. Solicitors are justifiably wary of having to shoulder all risk and have shunned the DBA. That will change, big time. Lord Justice Jackson actively promoted the DBA. It does not offend him because the fee is one agreed to and paid by the client. What is anathema to Jackson is one party being hit by a preposterous bill from an opponent. The sanctity of contract means that a willing client should be free to agree to share the booty in the event of recovery. The end of July 2013 also saw the arrival of a fixed costs matrix for lower value injury cases. Costs are determined by reference to quantum and stage of

settlement, not units of time. At every opportunity Jackson urges that all types of fast track dispute be costs managed in the same way. Indeed, he urged that fixed costs be introduced ahead of all other reforms. Why? It avoids both grim arguments about whether costs are proportionate and also it is surgical. The formula dictates the costs and that is the end of it.

employing dim staff. Nothing, not even the law, is immune from the incursion of technology. To harness and use the best case management systems will cut costs but ultimately there must be someone there who knows what they are doing so that standards are maintained. Skimming is not the answer; it will provoke negligence claims for inept settlements at too low a level.

Indeed, Sir Rupert has recently been musing over whether multi-track cases worth up to a not inconsiderable £250,000, might not benefit from the same approach. You have been warned. As I write this note at Easter, I am anxious about the imminent review of guideline hourly rates likely to be published in mid May. Since so many dislike the hourly rate, I fear that the outcome will be grim. If I am wrong then rejoice.

Claims are certainly not a dying breed. At the recent Civil Justice Council event Sir Rupert Jackson flourished figures to demonstrate that the number of claims being commenced had not diminished. There are and will continue to be part of our society, what will continue to evolve are new methods of resolving them. I am certain that paper will become obsolete with statements of case, disclosure and trial bundles all filed electronically. The photocopier will be as useful as a telex machine (look it up in a history book!).

The Intellectual Property Enterprise Court has a ceiling of £500,000 in damages and £50,000 in costs already. That economic model could so easily be rolled out elsewhere. One glimmer of hope is that the injury small claims limit, set at £1,000 as long ago as 1991, may be left intact. The arrival of fixed injury costs described above, coupled with specific changes to address whiplash, may well serve to placate those who argued for an aggressive hike in the limit to as much as £10,000. I am told that nothing will be done this side of the 2015 election and the appetite for startling reform has waned.

I hear from all sides of the claims profession that there has been a stupendous increase in disease claims, no doubt because fixed costs barely operate in that arena. How long will it before that perceived gap in the claims structure will be addressed? It has already been identified as worthy of scrutiny. My ultimate guarantee is that a decade from now insurers and claimants will still have a significant workload. Professor Dominic Regan is a Legal speaker, broadcaster, columnist and author.

What is tempting but must be avoided is any effort to dumb down claims work by

MC // May 2014

The Features

CHOOSE WISELY

All businesses need to advertise, but choosing a good mix is important. Lisa Beale explains how clients are accessing information now and questions how trust can be gained from prospective clients.

heckaprofessional.com offers a site which prospective clients trust and understand. This style of online service is now spreading, from the well established travel / hotel choices, e.g. TripAdvisor and finding a reputable household trades person, our sister site Checkatrade.com, to selecting a Solicitor or insurance provider that`s right for each prospective client.

Why is it such a great idea? This development answers key needs for the consumer in the process of choosing a professional service and from your point of view, provides a very effective marketing aid for your business at a single annual cost - likely to be much more cost effective than your own marketing activities. By using a software model that makes it easy to find and evaluate `signed-up `professional providers, these sites effectively provide a click-through service from home or mobile platform that will provide all the necessary information for consumers to choose the right Solicitor, insurer, or claims handler for their needs. Visibility This site will attract traffic by having a very strong presence online through professional SEO, paid for marketing support and offline by using traditional media to create site traffic in large numbers. So, having built a strong market profile and maintained ‘top-of-mind` amongst all consumers, including those looking for a professional service, all that has to happen is for the user to click on the site and put in search criteria and a range of professional services will be presented. Much more than a directory Verification by the online service provider that specific services are provided enables the cost-effective matching of prospective clients to the range of options you are offering. So, if someone is looking for an Insurance Claims Handler, or Legal Services, your profile pages will be displayed for the clients to take a look at, with all your verified contact and accreditation details, along with your previous client testimonials, which again have been independently verified, thus giving reassurance about your services. This means that at the click of a button, prospective clients can download a one-page report about your business from your profile page. The report is a tool to show that you are professional, trustworthy and transparent.

‘Positive feedback from genuine customers is powerful, just like traditional word-of-mouth’ an appreciation of the services that you provide. So when clients contact you via this service, they trust you already. Having read your profile page and customer feedback, they are already warm to your service. You are also likely to cut out the timewasters and random contacts by receiving genuine, committed enquiries from the site users. Easy content management As well as the customer feedback, your profile page should allow you to describe your business, your accreditations and awards, and your contact details. It gives customers a one-page snapshot of your business. You will be able to customise your profile page by writing your own descriptions and adding photos to create a welcoming portfolio. This facility is designed for non-tech users and is accessed through a security protected code so you have complete control. Value for money The site is free to the user and does not require the consumer to register in order to sell the lead to the awaiting members. It is important to ensure that there is no barrier for the consumer to use such a service, but this does mean that you, the provider, will be paying. However, if you are going to get this service for less than the price of a cup of coffee per day, you are going to have access to a service that is likely to become the first choice means of finding a service whether an claims handler, architect or a solicitor. In other business areas experience has shown that up to 40% of new income can come from an online search and feedback site. In today`s economic climate that can be a business’s profitability…or not. Lisa Beale is Head of Checkaprofessional, a one stop shop, which offers an informative place to find all professional services Contact us on: www.checkaprofessional.com or Freephone: 0808 901 9042 and find out more.

Immediate trust and confidence A key feature will be client feedback so you can let your previous clients do your marketing for you. Positive feedback from genuine customers is powerful, just like traditional word-of-mouth. It convinces new customers that you are honest and trustworthy, while providing them with

MC // May 2014

The Features

5 MINUTES WITH... Q

Steve Chelton, Swinton Insurance

Has the industry changed drastically since you started working in it? It certainly has! I started working in a high street branch office in the 80’s at a time when computers were something only NASA used. Quotes were calculated by reference to huge leather bound guides and policy documents took a month or more to deliver. Today it’s all about speed and technology, which have brought about huge improvements to the quality of customer service and the process of buying insurance. Our high street branches still provide a face to face personal service, which I think is a priceless commodity for the insurance buying public. What has been the key positive or negative impact of change in your market? Speed of claims handling by use of technology is often an unrecognised element of what we do.

Q A

Customers expect it these days and rightly so, but it’s not that long ago that a repair needed 2 estimates and an inspection before being authorised, and that could take a couple of weeks. The ambiguity has been removed and with it lots of complaints from disillusioned customers. There have also been massive steps forward over the past few years in the detection of fraud, both at application and claim, resulting in vast sums of money being saved and retained within the industry. Who inspires you and why?

I’ve worked for my boss at Swinton, Chris Collings, for about 12 years now. He is a wise (not so old) sage who over the years has taught me many things about the insurance business and introduced me to a central position within the world of claims, which I am very grateful for. He told me almost as soon as I started working with him that listening and developing an attention to detail are hugely important and also that poor time keeping is unforgivable. If you were not in your current position, what would you be doing? I dream of being an author and I’d certainly complete the writing of a novel I started whilst on holiday a few years ago and have never had the chance to pick up again. Alternatively, Id run a garden centre or market garden growing fruit and veg - an extension of my allotment where I spend a lot of time in the evenings and at weekends; its great therapy.

Q A

Steve Chelton is Head of Claims at Swinton Insurance

Richard Branson and Alan Sugar, both of whom demonstrate dogged determination and endless energy in everything they do. Stephen Hawking, who despite his disability, manages to challenge and change the worlds perceptions, My mum who has the best social life of anyone I know at an age when she really should know better and Alicia Dixon for being Alicia Dixon Have you had/got a mentor? If so, what was the most valuable piece of advice they gave you?

PROCLAIM LEADS TO 700% GROWTH AT PERSONAL INJURY SPECIALIST Who are they: Founded in 2001, Leeds based Michael Lewin Solicitors has grown into a large nationwide Personal Injury practice employing over 120 staff across 5 offices. The Challenge: Back in 2009 Michael Lewin needed to replace its incumbent Case Management system with a platform and a supplier that were in line with aggressive growth plans. The solution needed to be easy to use, scalable and allow for high volumes of cases to be processed whilst maximising client service. The Solution: A Proclaim Practice Management System was chosen and is utilised by all Michael Lewin staff, providing a core centralised solution for a range of injury

MC // May 2014

claim types from minor RTA (Road Traffic Accident) claims - processed seamlessly with Proclaim’s Application to Application integration with the Government’s Claims Portal - through to £multi-million Clinical Negligence matters. The firm also adopted Proclaim as its practice accounting and reporting toolset, providing full integration with fee earner activity. Eclipse also conducted a data migration from the incumbent solution. The Results: Michael Lewin has announced explosive growth at a time of challenging legislation for claimant solicitors. Since implementing Proclaim in 2009, headcount has grown from 15 to over 120, an increase of over 700%. Michael Lewin’s expansion is not complete; Proclaim’s flexibility has been invaluable in allowing the firm to introduce a range of non-Personal Injury services - all using Proclaim - including Debt Recovery and Employment work.

Key Facts: • 700% growth since implementing Proclaim • Integrated Practice Management Solution • Claims processed with greater accuracy and speed • Single solution for multiple work areas • Direct integration with Government Claims Portal “Proclaim has delivered over and above expectations, providing an easy to use and incredibly scalable solution. We can process claims with greater speed, greater accuracy, and in greater volumes.” Abbie Keech, Director, Michael Lewin Solicitors For further information, please contact Darren Gower, Marketing Director at Eclipse Legal Systems via darren. gower@eclipselegal.co.uk, or call 01274 704100. Alternatively, visit www.eclipselegal.co.uk

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