Modern Claims Magazine issue 8 by Charlton Grant

Linking the Industry Together

July 2014 | Issue 08 | ISSN 2051-6495 How low can you go? Patrick McGuire explains why insurers need to recognise a balance between the costs a claimant is entitled to recover and the cost of securing legal representation. APIL Conference 2014: Emma Waddingham, Modern Claims, summarises the proceedings from this year’s annual Association of Personal Injury Lawyers event.

“The current DBA Regulations are a farce and are as useful as a submarine in the Sahara” Professor Dominic Regan Modern Claims Magazine | July 2014 | Issue 08

Ant Gould “You would expect your doctor to be up to date with the latest medical developments and you should expect the same level of professionalism from claims personnel”

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his issue of Modern Claims is jam-packed full of the usual array of industry experts, offering their views on everything from risks in the insurance market to the changing perception of innovation (see more in our ‘Opinions’ section – from page 19 onwards). We have a special interview with Professor Dominic Regan on page 12, as he brings us bang up-to-date on the latest legislation and findings from the Transport Select Committee’s fourth report into fraudulent whiplash claims. We also spoke to Ant Gould about how insurers can best manage risk and whether the insurance market is still an attractive proposition for young talent (page 15). Emma Waddingham went along to the APIL Conference and discovered how the use of technology, a strong brand and a bold vision are key to future-proofing PI practices (page 47-48). Utilising technology as a means of embracing change is also highlighted by Graham Bosson as he explains how the sector can learn from other markets and embrace

Modern Claims Magazine

vital change on page 61. The question of balance is also raised by Patrick McGuire, as he explores why insurers need to recognise a balance between the costs a claimant is entitled to recover and the cost of securing legal representation on page 55. The first ever Modern Claims Awards will be taking place in January 2015; full details of the event will be announced soon, so I urge you to watch this space! As ever, if you have any idea’s or thoughts on this issue of Modern Claims, or would like to be involved in a future issue, please get in touch with me via charlotte.parkinson@charltongrant.co.uk or call 01765 600909.

Charlotte Charlotte Parkinson, Group Editor, Modern Claims Magazine

Issue 08 – July 2014 | ISSN 2051-6495

Project Director Kate McKittrick

Consultant Editor Group Editor Charlotte Parkinson Emma Waddingham

Accounts Director Karl Mason

Events Director Julia Todd

Advertising Rachael Pearson

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

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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 // July 2014

CONTENTS 19-40 THE OPINIONS

INTRO & THE NEWS

07 Tony Walton talks news Tony Walton takes an in-depth look at the shape of things to come for the claims market.

11-18 THE INTERVIEWS 12 Interview with... Professor Dominic Regan

The Transport Select Committee (TSC) released its fourth report into how to combat fraudulent whiplash claims and reduce insurance premiums at the start of July. Charlotte Parkinson, Modern Claims, spoke to Professor Regan about what its findings mean for the profession and his wider view of the clams market.

15 Interview with... Ant Gould

Charlotte Parkinson, Modern Claims caught up with the Director of Faculties at the Chartered Insurance Institute and asked him how insurance companies should be best managing risk and whether the insurance market is still an attractive proposition for young people.

20 Sector Soapbox

Modern Claims spoke to the representative industry Associations to gauge their perception on the current state of the claims market.

23 A world away?

David Williams, AXA Insurance

23 Innovation versus Risk

Michael George Davidson, Parabis

25 Great expectations

Jonathan Hewett, Octo Telematics

25 An obvious answer?

David Sothwell, Zurich

27 Automated engagement

Darren Gower, Eclipse Legal Systems

27 A proper court IT system? Fat chance! Tim Wallis, Trust Mediation and others

29 The tip of the iceberg

Nigel Bamber, XL Services UK Limited

29 A modern claims system

Derek Cooper, [Veracity] Claims Solutions Consultancy

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

David Miller Head of International Property & Casualty Claims XL Group

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

David Simon Chairman Triton Global

Chris Dobson Broker Distribution Director, Ageas Insurance Limited Craig Budsworth Chair, MASS & RTA Partner, Glaysiers

David Southwell Head of Personal Injury Claims Zurich David J Williams Managing Director, Underwriting AXA Insurance

Darren Gower Marketing Director Eclipse Legal Systems

Derek Cooper Managing Director [Veracity] Claims Solutions Consultancy

David Johnson President FOIL

Dez Derry CEO mmadigital

MC // July 2014

Donna Scully Partner Carpenters

Katherine Howells-Price Project Manager Lyons Davidson Scotland

Paul Lawrence Managing Director Thompson & Bryan

Emma Waddingham Director Emma Waddingham Consulting

Lisa Beale Head Checkaprofessional.com

Rob Cummings Policy Advisor, Motor ABI

Graham Bosson Commercial Director and Partner Auto3P Uk Ltd

Michael George Davidson Head of Business Development Parabis

Helen Grimberg Partner BLM

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

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

Hilary Meredith CEO Hilary Meredith Solicitors Jon Gouldsmith Head of Legal Support Box Legal Limited Jonathan Hewett Group CMO Octo Telematics

Nigel Bamber Regional Manager UK & Ireland Insurance XL Services UK Limited Patrick McGuire Partner Thompsons Solicitors

Tony Walton Managing Director Questus Vanessa Latham Partner BLM Zoe Holland Managing Director Zebra Legal Consulting

05 31 The tools are there

Dez Derry, mmadigital

55 How low can you go?

31 Basic Principals

Alex Bagnall, Lawords

35 Reservation of rights

Paul Lawrence, Thompson & Bryan

35 Back to basics

57 Was Jackson wrong?

Zoe Holland, Zebra Legal Consulting

37 A downward trend?

Alistair Schuberth, Willis Group

37 Driving Innovation

Chris Dobson, Ageas Insurance

39 Quality is everything

40 Critical business

40 A fundamental difference

Peter Jones , Costs Manager, R Costings Ltd

43 Legal Opinion

Modern Claimsâ&#x20AC;&#x2122; legal experts tackle the burning issues facing the claims sector.

Hilary Meredith explores why reintroducing Crown Immunity would be a catastrophic injustice for military claimants and their families.

61 Moving on

Nicola Klimkowski, LAMP Group Ltd

41-62 THE FEATURES

In his Review of Civil Litigation Costs, Lord Jackson proposed the introduction of one way costs shifting for personal injury claims, he expected that this would spell the end of ATE insurance but, as Jon Gouldsmith reports; this is far from the case.

59 The Fog of Law

Lisa Beale, Checkaprofessional.com

39 True understanding... Robert Parness, Burcher Jennings

Patrick McGuire explains why insurers need to recognise a balance between the costs a claimant is entitled to recover and the cost of securing legal representation.

The UK Motor Insurance and Accident Repair sector is facing difficult times and has been recognised by a leading government body as being dysfunctional. Graham Bosson explains how the sector can learn from other markets and embrace vital change.

62 5 minutes with...

David Simon, Triton Global

62 Eclipse Case Study

Lance Mason Solicitors experiences 2,500% growth

47 Business First

Emma Waddingham, Modern Claims, joined delegates at this yearâ&#x20AC;&#x2122;s headline Association of Personal Injury Lawyers (APIL) Annual Conference, at the Celtic Manor, South Wales, to hear how, despite the pressure to remain ethical and client-focused, the use of technology, a strong brand and a bold vision are key to future-proofing PI practices.

51 Extraordinary circumstances...

Regulation (EC) No. 261/2004 came into force in 2005 and was brought in to increase consumer rights and specifically air passenger rights, but as David Bott reports, recent developments may mean customers have to wait even longer to receive compensation that is rightfully theirs.

53 Success Stories

Modern Claims spoke to some industry movers and shakers to find out how they are making the most of changes in the sector.

61 MC // July 2014

Tony Walton talks news

TONY WALTON TALKS NEWS... Tony Walton takes an in-depth look at the shape of things to come for the claims market.

e’re too close to them. Claims, I mean. There are so many news stories and opinions these days that sometimes it’s hard to step back and judge what’s really going on. Do you think our world of claims is changing and if so at what pace? You’ll hear plenty of people say that the reforms last year haven’t been the earth-shattering revolution which everyone expected. Some will be sad about that, others relieved. That’s not to say-if you ask me-that change isn’t continuing in a big way. If you join the dots of four recent stories to an event just over two years ago and another event less than a year away, a picture might emerge. Dot one “Jackson” is the catch-all word used to describe what was in fact a story in two distinct parts. Firstly, there was the Jackson Report itself. Secondly, though, there was the politicisation of reform by the Coalition. It is easy to trace that politicisation back to a single event-the infamous Valentine’s Day meeting with the insurance industry at Downing Street in 2012. As soon as “compensation culture” and “insurance premiums” were put together by the Prime Minister, prompted by those insurers, claimant personal injury (PI) lawyers were on the ropes. The high point for the Coalition was undoubtedly the slashing of lawyers’ fees for most, but not all claims up to £25,000; especially arising from road traffic accidents (RTA). On the other hand, the “ban” on referral fees has turned out to be anything but, thanks to generous loopholes. Has David Cameron achieved what he wanted two years ago? I don’t think so. Much has been made of reducing volumes of claims as evidence of the success of the reforms. Take a step back and look at some figures. We all know every claimant firm submitted as many claims notification forms as humanly possible in the run-up to the fee reduction in April 2013. It should be no surprise that 2012-13 figures were unusually high as a result and 2013-14 figures commensurately lower. The reduction from 2012-13 to 2013-14 is cited as evidence of a fall in claims. In fact that supposedly lower figure in 2013-14 (772,482) is almost identical to the annual total for 2011-12 (796,924). 2014-15 has started at a similar level. Granted there will be employers’ and public liability claims in there now, but these represent only a small percentage. Dot two The practice of offering cash advances of damages, coupled with a volume of small print, used to be cited by solicitors as evidence of shabby practice by claims management companies (CMCs). As we know, the Ministry of Justice outlawed the practice for CMCs. Fair enough. Now that CMCs couldn’t do it, surely it was a formality for solicitors to stop too? In a bizarre twist, the Solicitors Regulation Authority (SRA) applied a very cerebral reasoning to the

problem and said solicitors could carry on offering them. The government has now intervened and proposes a ban. There is no evidence that such payments encourage fraud. There is much to be admired in a PI firm’s business model which can manage its cash flow to permit so much cash to go out before it comes in. Some small print is unavoidable. So why do I agree with the proposed ban? Because cash advances are just so sleazy! They taint a branch of the legal profession which for so long had the moral high ground as the chief facilitator of fair compensation for accident victims. The truth is that some solicitors’ marketing for PI claims has jettisoned dignity and good taste over the last ten years. Coupled with the divisive “no-win, no-fee” label, no wonder a typical claimant these days asks so many questions at the outset. This leads me onto the next dot. Dot three Last summer, largely unheralded, the Bar Standards Board decided to permit barristers to “conduct litigation”. The ability actually came into force in the first week of January. At a barristers’ conference recently, I heard it described as “the most significant development since the Bar came into being as a separate entity two hundred years ago”. After years of being marginalised and suffering a loss of volumes of work to solicitor-advocates, something snapped. There has been direct public access to the Bar for ten years but, now able to “conduct litigation”, barristers can take on solicitors in offering to handle PI claims. The “Barristers’ Working Lives” survey published in June revealed that already 14 percent of barristers plan to apply to conduct litigation.

MC // July 2014

Tony Walton talks news

‘Just because there weren’t a thousand ABSs overnight a couple of years ago doesn’t mean that the Legal Services Act, which broke the monopoly on lawyer ownership of law firms, was unnecessary’ What they may be able to offer is a premium brand which, expertly marketed, will differentiate itself from the bargainbasement strategy of a minority of PI firms which affects the rest. What is more, without the overheads of traditional law firms, barristers will be able to do so at a lower cost. This may permit competition on the percentage of success fee, for example; and all done in the best possible taste. Dot four Next, we have news from the SRA. There is no doubt that their ultra-methodical approach to the granting of ABS licences initially was in itself a disincentive to those who craved ownership of law firms. The burden of regulation once within the profession was a further problem. The SRA has now reported a reduction in the time it takes to process an ABS application (ours took five months and was granted in May, by the way) and appointed a new chief executive who has promised to review “one-size fits all” regulation and ask whether the whole thing is “too bureaucratic”. Again, just because there weren’t a thousand ABSs overnight a couple of years ago doesn’t mean that the Legal Services Act, which broke the monopoly on lawyer ownership of law firms was unnecessary. Far from it, I think non-lawyer ownership of law firms is just starting to move up through the gears. That will mean cultural change within the profession and intensified competition. Dot five No assessment of anything to do with civil litigation is complete without Mitchell v News Group Newspapers (Mitchell). In a way, this is a different type of monopoly disappearing. Whatever powers to impose draconian case management were available to the courts right back to the Woolf Reforms in 1999 and earlier, they were mostly unused. At the time of writing, three cases have gone to the Court of Appeal which may soften the death-sentence-for-aparking-offence approach applied in Mitchell. Nevertheless, what has gone forever is, in effect, self-regulation for litigation solicitors as far as timetabling and compliance with the rules is concerned. Litigators will have to be largely immune to human error or risk a professional negligence claim in all but the most trivial of shortcomings. This comes at a time when professional indemnity insurance is already likely to rise sharply. Have PI lawyers lost their cachet and invulnerability? This brings me to the final dot. Dot six On 7th May next year, we have a General Election. The Conservative-led Coalition, as we saw, politicised the pursuit of personal injury claims and the costs paid to lawyers. One everpresent topic of debate at election time is the National Health Service. The Times ran a headline last month “£2bn NHS black hole will cause care crisis”. Tory-friendly Sunday paper editors are now running stories about the levels of costs claimed against the NHS in some clinical negligence claims.

MC // July 2014

I detect a win-win vote-winner in the making. Everyone knows that many law firms migrated from volume road traffic work into clinical negligence to escape the low fixed fee regime. Advertising for clinical negligence claims will generate more claims. More claims means more expense for an NHS which cannot afford it. The opportunity for the Conservatives to present themselves-for once-as the safest hands for the NHS is too good to miss. So will the Conservative manifesto include a pledge to save billions in legal fees (not damages for victims) over the lifetime of the next Parliament by extending portal-style fees to clinical negligence claims? The savings will fill the funding gap for the NHS. The voters are already reading the propaganda about lawyers’ fees being a burden, so, if it was ever difficult, it’s going to be easier to persuade them that lawyers get paid too much for too little and will have to make a financial sacrifice for the good of the NHS. How quickly will the Stafford Hospital scandal be forgotten? A proposed new duty of candour would require doctors to tell patients that their treatment has caused them moderate or severe harm. Surely that in itself is going to create additional claims? Reducing the fees available to pursue them will surely mitigate the problem. If you join dots one to six together, there is still one more line to draw. Trace a line back from dot six-the General Election to dot one-the Valentine’s Day meeting in 2012. There are votes to be won by a party with unfinished business in the scapegoating of PI lawyers. As a final insult, they might tighten up the referral fee legislation as well. Change in the world of claims is still very much in progress. I hope there is time to respond. Tony Walton is Managing Director at Questus.

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The Interviews

11-18

THE INTERVIEWS

MC // March 2014

Interview with... Professor Dominic Regan

Interview with... PROFESSOR DOMINIC REGAN The Transport Select Committee (TSC) released its fourth report into how to combat fraudulent whiplash claims and reduce insurance premiums at the start of July. Charlotte Parkinson, Modern Claims, spoke to Professor Regan about what its findings mean for the profession and his wider view of the clams market. definitely coped and moved on, quickly and efficiently. There is, however, more change on the way. The Transport Select Committee (TSC) announced last week that they are very keen to ban incentives, whether in the form of cash or I-Pads. I attended a talk by Mrs Louise Ellman MP who is the Chair of the TSC and it is plainly clear that they think RTA cases are a ‘work in progress’ and that the changes are not over yet. In the report they give their recommendations and the government have hinted that they will consider these. The Committee is certainly very uncomfortable about bribery, as they feel it is encouraging fraud.

Q A

A reform of DBA’s is anticipated in the autumn, how would you amend the regulations if it was in your hands?

Q A

Has the claims profession moved on and adapted to change or is there still a long way to go until the turbulence in the market subsides? It is remarkable how the storm about ending recoverability has abated. Lawyers have

MC // July 2014

The one and only change that is being made to DBA’s will allow for the ability to charge the client a fee as they go. The biggest of the City and Magic Circle firms who I talk to and train do not want to utilise DBA’s for the very simple reason that they do not want to take all the risk and work on behalf of a client who is untouchable. If a client is willing to pay something, why should the rules stop the client from entering into a lawful contract whereby they pay a fee to the lawyer? The current DBA Regulations are a farce and are as useful as a submarine in the Sahara, they are certainly not what Jackson recommended or wanted. A solitary amendment so as to allow a willing client to pay something as the case proceeds will make DBAs a serious new funding alternative, though not in injury where the numbers will not stack up. In the right circumstances utilising this system, lawyers could make a hell of a lot of money.

Interview with... Professor Dominc Regan

‘If [the increase in mental trauma reports] continues, it will just reinforce the perception that it is all a ‘big con’, to be sorted out by putting up the injury limit to £5,000 or £10,000, ultimately meaning that valid claims could be undone’ Do you think satellite litigation is set to increase and if so, why?

No, it is not set to increase. The Mitchell guidance which has recently been produced was designed to damp it down. The specific mention was that people should co-operate and consent more and if they don’t, they will be punished through costs. The only real area for satellite litigation that myself and Lord Justice Jackson highlighted is the elusive new proportionality test; it is undefined and open -ended. How do you think reforms to costs budgeting are affecting the sector?

Budgeting will succeed, it is healthy to compel parties to think and plan their spend. I am convinced that Judges will be sorely tempted to dispense with a detailed assessment where the winner has adhered to the budget. People are still getting to grips with it and there is currently no case law, everything is still based on the pilot schemes. I am quite confident that when the profession gets into the swing of it, the system will sort itself out and it will make people think, plan and consider proportionality. I am certain that the number of detailed assessments will diminish because Judges can vet cases at the beginning; there is no way they will want to do the job twice over. Judges will be massively tempted if people are on budget to say; ‘take the money and run’. Where should the balance lie between risk for claims handlers and risk for clients?

Clients ought to have some exposure and involvement in their case. The aftermath of Mitchell has also had a huge impact. I tell countless numbers of solicitors that unless they tell their clients that they must give them their full and immediate co-operation, no matter how brilliant their argument, the case may be dismissed if they don’t comply with the rules. In that sense, the client must now jump when the lawyer tells them. It is dangerous for a representative to carry all risk when they can only go on what they are told by the client. Jackson wanted to change the recoverability rules, which is why he looked at recoverability from the clients own damages because they then become an ‘involved party’ with the running of their case.

Q A

Do you think there is still any weight in the assertion that the Jackson reforms would cause a reduction in volumes of claim? Is this still a possibility?

There will always be claims and claimants. The impact of rapacious court fees may well impede claims. In March at the Civil Justice Council meeting, Jackson quoted court figures to show that the number of cases had not fallen so far. We are still very early on and the fright of Mitchell is one thing that might encourage people to settle without the need for litigation. The increase in Court fees is also another factor that could impede litigation, which would be a really bad thing. I also think ADR is at last going to make an impact.

Q A

Has risk around being ‘Mitchelled’ now been mitigated by the amended CPR 3.8 or do litigants still face some risk if they do not act quickly enough?

They do face risk but the combination of 3.8 and the guidance has alleviated the load. Where people are in default (serious or significant), they needed to make it harder for them to get out of trouble. There is certainly still a risk today but the risk is not as great as it was at the start of July when the Appeal Court guidance was published. What are your predictions for the future of the UK claims market?

For the RTA section of the market, the House of Commons committee would like a total ban on recovery of damages, where there is an exaggeration; even if part of a claim is valid, no damages should be recovered. I would also expect that we will see a portal scheme extension to catch disease and deafness work as insurers are going up the wall with the cost of deafness. In industrial disease and deafness claims, the cost presents the biggest disparity between the cost of the litigation and the damages. It would not surprise me if, at some point, there was not some attempt to bring those under control. Stories that some RTA claimants are now lobbing in mental trauma reports also cause me concern and the TSC doesn’t like this. In some cases there will certainly be some psychological trauma but historically, situations such as this have been in the minority in low value RTA cases. If this continues, it will just reinforce the perception that it is all a ‘big con’, to be sorted out by putting up the injury limit to £5,000 or £10,000, ultimately meaning that valid claims could be undone.

‘The current DBA Regulations are a farce and are as useful as a submarine in the Sahara’ MC // July 2014

Interview with... Ant Gould

Interview with... ANT GOULD

Charlotte Parkinson, Modern Claims caught up with the Director of Faculties, Chartered Insurance Institute and asked him how insurance companies should be best managing risk and whether the insurance market is still an attractive proposition for young people.

Q A

How should insurance companies look to manage and reduce risk in light of changes to the claims market?

The claims market is constantly evolving and developing. Change is driven by a host of outside factors including legal reform and case law, medical developments, new repair techniques, new manufacturing processes, new technology and increasing legislation. With claims as the shop window for the insurance industry, all claims professionals need to ensure they are completely up to date with all the latest developments in order to ensure fair and right outcomes for customers. All CII members - and we have nearly 120,000 members in 150 countries have to complete at least 35 hours of continuing professional development a year. This is the minimum requirement and many do much more as they look to maintain their levels of competence, and so they should. You would expect your doctor to be up to date with the latest medical developments and you should expect the same level of professionalism from claims personnel. As the insurance industry strives towards becoming a recognised profession such as law the focus on CPD, combined with conduct and ethics, and keeping up with change will become ever more important. So to answer the question directly, the best way to manage and reduce risk within the claims sector is to be competent, professional and ethical.

Ant Gould Ant took up the role of director of faculties at the Chartered Insurance Institute in April 2011 and is responsible for developing and driving forward strategy for the CIIâ&#x20AC;&#x2122;s series of specialist faculties. He also has lead responsibility for identifying the key issues and priorities for the sector going forward and developing solutions for the instituteâ&#x20AC;&#x2122;s broad membership. Ant was previously group editor in chief of Incisive Mediaâ&#x20AC;&#x2122;s insurance division with responsibility for the editorial content of all the insurance division brands in print, online and in person (events) and identifying and developing brand extensions. Having started at Incisive Media as editor of Post in 1999, he became editor in chief in 2003 taking on responsibility for Post, Insurance Age, Professional Broking, Reinsurance, the Actuary, Cover and Employee Rewards & Benefits. Ant has been a business journalist for over 20 years, previously specialising in UK manufacturing in all its guises (from shipyards to nuclear plants) as news editor of The Engineer, the UK automotive industry as deputy editor of AutoTrade, as well as general news reporting.

MC // July 2014

Interview with... Ant Gould

‘You would expect your doctor to be up to date with the latest medical developments and you should expect the same level of professionalism from claims personnel’

Q A

What global trends are emerging/have emerged in the claims market to date?

The claims function is growing in stature across the world, and we are seeing developing markets in particular embracing our professionalism agenda. We have almost 17,000 international members, mostly working in general insurance, with many aspiring to the highest levels of our qualifications which has to be good news for customers.

Q A

Is the Insurance market still an attractive proposition to young people to enter in to?

The insurance (or risk) profession really is an attractive one for young people to consider. With a range of Apprenticeship and graduate pathways that contain CII qualifications now available from more companies than ever, students should be able to find a scheme that meets their aspirations. The challenge that the CII continues to meet is the lack of understanding of our sector among students, advisers and influencers. There are two key words that we must bear in mind – information and opportunity. The CII, through its student-facing events in schools, colleges and universities, opens students’ and teachers’ eyes to the breadth of experiences that insurance can provide. Our Discover Risk events have consistently had an 80% approval rating. In other words, four out of five students who interact with the CII at an event are interested in working in the sector. However, converting that interest into a tangible experience, be it work shadowing, work placement or internship, has proven more difficult for most companies. Smart companies are doing this by involving their recent

MC // July 2014

graduates in managing and mentoring new entrants, whether they are fulltime or a summer intern. The current oversupply of law graduates gives the claims function particular scope to attract those keen to work in a linked area. While companies often recruit for attitude more than technical capability, this could be an area for companies to consider. The CII tells students that our profession is global, successful, dynamic and rewarding. The more employers who echo the message and provide opportunities for students, the easier it will be to recruit the best. The CII’s Discover Risk programme relies on industry support, it is also a great development opportunity for insurance staff, please contact us at discover@cii. co.uk to find out more.

Q A

What are the best training options for young people looking to enter the insurance market?

One area that has had a lot of attention recently is that of apprenticeships which are now becoming an accepted part of talent development within the insurance industry – and not just for attracting new talent but also for developing existing staff. They are cost effective too as many (though not all) are eligible for government funding. In essence, apprenticeships are work based training programmes that allow an apprentice to develop competence whilst also developing technical knowledge. In the case of insurance the technical components are CII units and professional qualifications. There are a number of apprenticeship pathways available at present offering the chance to specialise. The Treasury acknowledged their importance by including apprenticeships in last year’s Insurance Growth Action Plan. By 2018, the industry has promised to double the number of technical apprenticeship starts – technical meaning including a professional qualification. A challenging but obtainable target. The CII also runs an annual skills survey (this year’s survey results will be out in the autumn) and last year’s survey showed that awareness and willingness to take on

an apprentice is on the rise with 67% aware of insurance apprenticeships – an increase from 46% since 2009. It also showed that 53% of firms said they would consider employing an apprentice, up from 41% last year. I would expect an even stronger result this year. Change is on the way though. The system is evolving so that apprenticeships will be employer-led. Groups of employers, known as ‘trailblazers’, will work with professional bodies to create new standards that meet the needs of the sector. Our role is to help ensure robust standards and to test the draft standards with our members. The insurance ‘trailblazer’ is already underway and in essence, a group of employers, led by Aon, has almost completed its entry level ‘insurance apprenticeship standard’ ahead of submission to ministers. It is currently out for consultation with the market. The CII has been involved in the development of the standard and in particular with the high level assessment approach and this standard was submitted to ministers in June. Once this is signed off, further work will begin on a more detailed assessment approach. Of course, it is not all about trying to attract new talent into the insurance industry, it is equally important to ensure those working in the industry are well supported and developed. This is a fundamental driving force behind our continuing professional development services. The CII’s Claims Faculty is there to support CII members by providing up to date and relevant continuing professional development opportunities – be these videos, face to face events, articles, specialist research etc – all designed to help ensure claims staff are fully up to speed with new developments, to help broaden their understanding and ultimately ensure a better customer experience. The faculty is supported by an advisory board of leading insurance claims managers, many of whom regularly contribute to Modern Claims. The present chair is David Bonehill from Ecclesiastical and he and the rest of the board give up their valuable time to support the

‘Low prices are not the problem, but ensuring people have the right level of cover for their needs is the real challenge’

Interview with... Ant Gould

‘If you are doing the right thing in the first place then meeting any future regulatory demands should be a walk in the park’ work of the faculty. We also have the New Generation Group programme, now in its third year, the establishment of which is probably my proudest achievement in my three years at the CII. This programme takes around 40 CII members a year who have on average about 5-10 years experience and are qualified to at least DipCII level, across claims, underwriting, insurance broking and the London market. It provides them with insights into how to drive change, including face to face engagement with Parliament and Westminster and the Financial Conduct Authority and media training. In return each group undertake a project, of their own choosing, designed to improve the profession and customer outcomes. The Claims Faculty New Generation Groups over the last few years have looked at a number issues including third party motor damage processes and flooding, the latter the topic this year’s group are looking at. Last year’s group developed a protocol to address problems over the use of section 29.3 of the Data Protection Act (used to share information for the prevention and detection of crime) and their project has now been adopted and championed by the Insurance Fraud Bureau (Share and share a-like, Modern Claims July 2013); in fact by the time this issue is published it should have been officially launched and organisations will be able to sign up to it. Proof I believe that young claims professionals, given the opportunity, can really drive change in the market for the good of all.

your business should be. That may sound a little glib but over the years I have had the good fortune to have interviewed thousands of businesses from small car accessory shops through to major high street retailers. All of the successful businesses had a few things in common, a strong customer focused culture and an ability to listen and adapt to customer needs, all of which make it easier to deal with any potential roadblocks from legislation to economic downturn. And that is the same for insurance. If you put the customer at the centre then everything else falls into place. In terms of insurance, all members of the CII have to meet and follow our ethical standards in order to join. Once they become members they are bound to the CII’s code of conduct which guides practitioners in ethical practice and requires them to put the customers’ best interests before financial earnings. Of course we appreciate that having a code in itself is not enough, and nor is simply paying lip service to it, so with that in mind we produce a host of practical guides, videos and online materials to support members in doing the right thing in the workplace. We also police our members where they are in breach of our standards, and in the last year we have initiated over 500 disciplinary procedures.

Q A

Has the insurance market in the UK become too price driven and will this be to the detriment of the consumer in the long run?

The retail personal lines market has certainly become commoditised over the years, a process accelerated by the growth and use of aggregators. Many people tend to go for the cheapest insurance option and overall this focus on competition is driving the price down as companies look to provide the lowest rates. Low prices are not the problem, but ensuring people have the right level of cover for their needs is the real challenge. From the CII’s perspective, we encourage people to consider the best policy for them instead of opting for the lowest price and to understand what they are getting for their money and we are presently in the throes of developing a campaign to help consumers understand how insurance works. We will be able to talk more about that later this year.

Q A

How can insurers ensure they maintain ethical practices when under compliance and financial pressures?

I’ve always believed that compliance should not be a problem for any business that truly puts their customer first. If you are doing the right thing in the first place then meeting any future regulatory demands should be a walk in the park. The more you put customers at the heart of everything you do, the more successful

MC // July 2014

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The Opinions

19-40

THE OPINIONS

Sector Soapbox

Sector Soapbox Modern Claims industry experts discuss the most pressing issues facing the claims industry. MASS Chairman, Craig Budsworth considers the impact of the recent responses to the Competition Commission’s inquiry into private car insurance; Rob Cummings, ABI, takes an in depth look at the recent findings from the Competition and Markets Authority (CMA) report and David Johnson, FOIL President, asks whether the Government is finally getting serious about fraud.

In the spotlight

peaking at an ABI conference recently, I was reassured that some insurers recognise the value that a claimant lawyer brings to the table. Perhaps this shouldn’t have come as such a big surprise bearing in mind the recent responses to the Competition Commissions inquiry into private car insurance where nearly every insurer did not want option 1B. This was the proposal that the insurer have first refusal for providing a replacement vehicle and this speaks volumes on the desire for insurers to be involved in a case from day 1. With the ABI trying to throw the small claims limit into the spotlight again, they should actually consider the reduction in their work that a claimant lawyer brings. Can you imagine the number of complaints that would inundate the FCA from claimants being left on hold for unto 45 minutes trying to get an answer on liability. Or explaining a split liability case to a claimant who is going to be resistant to the compensator saying that ‘case law dictates you will only get 50% of your claim’. Coming from their own lawyer, claimants are a lot more accepting of this because they know the advice is real and not swayed by trying to reduce the amount being paid. Another element to consider is rehabilitation, those cases where liability is being investigated and the insurer fielding the calls from claimants requesting it to be undertaken. Or when it actually comes to explaining the value of a case to someone whose friend down the pub has got £3000, so why

MC // July 2014

are they only being offered £2000. Alternatively when it comes to issuing proceedings and the compensator would be explaining all about the complexities of this to the person they are ultimately paying out. All of these examples would create work for an insurer that is currently undertaken by the claimant lawyer. The question is : ‘Is this being done at proportionate cost?’ and I would suggest that with fixed fees at the level they are at then this is not only proportionate but actually undervalued. An increase in the small claims limit would actually increase the running costs of insurers and end up being disproportionate. Craig Budsworth, Chairman, MASS.

Sector Soapbox

Competition and Markets Authority’s provisional decision on remedies

n 12th June, the Competition and Markets Authority (CMA) published their provisional decision on remedies (PDR), as one of the final steps of its ongoing investigation into the private motor insurance market. On the claims side, the CMA focused on the issues of credit hire and quality of repair. The CMA had initial raised concerns in their provisional findings with the quality of repairs and had recommended increased audits. However, having reviewed the evidence further, the CMA revised their findings and found there was not an adverse effect on competition (AEC) in relation to the quality of repair. The area where the CMA did recommend a number of proposals was in relation to credit hire. To help tackle the cost of credit hire, the CMA is proposing: • • •

a cap on the charges passed to theat-fault insurer for the cost of providing a replacement vehicle, to more closely reflect the costs incurred; hire duration to end 24 hours after completion of the repair or seven days after the submission of the total loss payment; and the completion of mitigation declaration statements by first notification of loss (FNOL) providers and countersigned by non-fault claimant.

Specifically on the cap, the CMA is proposing the introduction of a ‘dual rate price cap’, with a low rate cap based on average direct hire rates plus fixed replacement vehicle arrangements costs, and a high rate cap calculated as a multiple of the low rate cap. However, for insurers to achieve the lower cap rate, they would need to make decision on liability within 3 days, a significant difference on the current 15 day period within Claims Portal. These proposals are a step in the right direction – indeed the ABI supported the CMA investigation from the start - and have the potential to play an important role in bringing under control the extortionate credit hire rates that insurersface. However, by failing to tackle some of the trickery issues such as credit repair and referral fees, the CMA leaves a gap for entrepreneurial CHOs to abuse the system in the future as they look to retain excessive profits through other revenue streams. We need to ensure this does not happen. Rob Cummings, Manager, Civil Justice and Data Strategy, ABI

Is the Government finally getting serious about insurance fraud?

hris Grayling would have you believe that the answer is “Yes” and the Government’s end May announcement suggests that some stringent strides towards tackling fraud are imminent. Prominent among those is the tougher approach to fundamentally dishonest claims, the starting point for the Courts now to be to strike out claims falling into that category. Key within that announcement was the specific use of the words ‘fundamentally dishonest’, as opposed to merely fraudulent. Those words first appeared within the new rules surrounding Qualified One Way Costs Shifting (QOCS), in particular the exception to QOCS whereby fundamentally dishonest claimants will remain liable for the Defendant’s costs, in spite of QOCS. Conventional thinking is that ‘fundamentally dishonest’ is a deliberately wider term than ‘fraudulent’, the exception thus applying more widely than simply to staged accident claims. The opening salvo of case law on the issues –Gosling v. Screwfix 2014 – suggests that to be the case. If Mr Grayling’s words were specifically chosen, the new default strike-out position would seem to apply not just to fraudulent claims but also to those with a pleaded value that has been exaggerated out of all proportion. That would represent the culmination of a long campaign that can be traced back to Summers v. Fairclough 2012, the Court there having recognised it had power to strike out such claims but declaring that power would only be used in exceptional cases. Those campaigning for a clear Government directive to expand the use of that power were left crestfallen when the Law Commission announced the issue would not feature in its 12th programme of reform, only for spirits to then soar on hearing Mr Grayling’s announcement. The presumption is that enabling legislation will now follow quickly, given the May 2015 General Election. Thereafter, there will inevitably follow legal battles over what constitutes dishonest exaggeration. In the context of future loss of earnings claims, for example, what one party considers to be blatantly misleading statements about future career prospects will be said by another to be no more than reflections of ambition, overreaching or, at best, sub-conscious self-delusion. Nonetheless, the Courts certainly appear to be being armed with new teeth when it comes to tackling the dishonest. The path ahead is going to be an interesting one. David Johnson, President, Forum of Insurance Lawyers (FOIL).

MC // July 2014

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The Opinions

A world away?

Innovation versus Risk

The recent World Insurance Report (WIR) produced by Capgemini found that only 39% of the 15,500 customers that were interviewed had had a positive experience with their insurer. How can/should insurers be aiming to change these statistics and what methods are most effective when attempting to change consumer perception? Will insurance always be an indifferent/grudge purchase?

Is there room in the UK Insurance/broker markets for new products? Or is the investment/launch of new services to market a pointless exercise if companies fail to have the support/interest of consumers?

uch as I dream of a world where the man in the street recognises the value of insurance as much as I can see it brings in terms of social and economic benefit, the likelihood is it will remain a grudge purchase. The whole pricing mechanism whereby premiums are kept at generally an affordable level whilst spreading the risk of the few over the many, means that the majority of customers won’t see any ‘Return’ from “all those premiums I’ve been paying all these years”. Based on that customer mindset, no matter how far away we move from the ‘small print’ mentality of the past, unless we instantly send a cheque for the amount claimed plus a little on top, we still only fall in the territory of giving people what they feel they deserve, rather than a good and valued service. That said all this negativity shouldn’t stop us from at least trying. Service has been poor historically, so some significant steps are relatively easy and - some would say - long overdue. Transparency is key, elements of a claim not being covered should not come as a surprise to a customer – sadly that seems often to be the case currently. As well as ensuring that any exclusions are clear and understood however, let’s make sure that customers are clearly told what they can claim for, and what extra benefits are available, rather than bundling them in and hoping no one notices later! Am I joking on that last point? Maybe, but it wasn’t that long ago that the market standard approach on a Travel Claim was to send such a lengthy document for completion it inevitably put many customers off. TCF? I think not. Hopefully those days are gone (If you are reading this and it’s not yet changed at your firm, do something about it!), and a combination of transparency aided by clear and regular communication is the obvious way forward. If a customer only hears from us when we send a bill, is it any surprise that they are confused by the claim process and think poorly of us as a result? These changes combined with recruiting staff based on a true customer focus might not get us to the top of the popularity charts, but will certainly move us in the right direction! David Williams, Managing Director, Underwriting, AXA Insurance.

recent poll from AIRMIC 2014 found lack of innovation in the market was among the top industry concerns. The UK is the largest insurance industry in Europe and the third largest globally with more than 976 entities registered and licensed to sell insurance to over 63m potential customers. There should, therefore, be plenty room and opportunity for new products especially when we know that 90% of the 26.4m households in the UK have at least one insurance product already. So, plenty of room for innovation, although this does not mean a license to launch anything to anyone! Especially with the ever increasing sophistication of the UK consumer who is more demanding in an ever increasing digital marketplace. Brokers and Insurers certainly hold some interesting distribution opportunities for new products/innovations. Brokers especially, as they are now responsible for over 50% of insurance sold. Certain principles must be at the heart of new product strategy and any new product innovation should seek to address the following consumer-insurer/broker challenges: 1. Meet the greater demands of customer service and complaint resolution (customers want to rate service) 2. Customers expectation that regulators will provide greater protection for them and penalise 3. More engagement in data use and risk based pricing 4. Greater segmentation and targeting 5. The digital revolution; distribution strategy for multichannel relationships. In short there are really only two main strategies when launching a new product to a defined customer base; “Me 2” or “differentiation”, both has their pros and cons and both are determined by a brands appetite for disruptive innovation and risk. The question of failing to gain support/interest of the customer often stems deep within the strategic planning process and poor engagement is a likely result of often fast-tracked vanity offerings i.e. those who can? Do! This results in not always servicing the genuine interest of the target consumer. Other markets would define this process as entrepreneurial suicide. Genuine consumer interest and support is well within the grasp of innovating brands who can successfully harness a strategy encompassing the above, combined with the importance of know your customer/demands and needs and TCF principles. To survive in a digitally dominated world new product/service innovation is a must! Michael George Davidson, Head of Business Development, Parabis.

MC // July 2014

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The Opinions

Great expectations...

An obvious answer?

Would the MOJ’s proposal to ban solicitors from owning medical agencies be an unfair restriction of trading or would it help stamp out unscrupulous practices?

he issue for Insurers, and for that matter, the Financial Services industry, is that consumers have built up a negative sentiment to the products on offer and the service delivered. This has been driven by some pretty foolish behaviour on behalf of the industry and some fruity reporting by the media. In addition, consumers’ expectations are growing at a faster rate than the industry’s ability to deliver. The types of product and service experience delivered by the likes of Apple and Amazon are delivering a new paradigm where very often the customer is in control of the sale and ownership experience. So, what does this mean for the insurance industry? Well, it means we must try harder and look at the problem through the eyes of the consumer without being clouded by legacy systems, antiquated practices and the “we’ve always done it that way” perspective. Listening to customers and using research techniques to understand the visceral needs of consumers has always been a fundamental process in developing and improving products and services but in an increasingly digitally native world some of these techniques are losing their lustre. In my view, combining qualitative and quantitative techniques is crucial. In addition, I think consumers have an increasing expectation to share their data in return for a better service or deal. This is what has fuelled the boom in price comparison and aggregator services. Insurers need to find better ways to encourage customers to share data from which they can build greater insight and more tailored products to a segment of 1. This may sound fanciful but the technology is not the constraint. Telematics is a good example of fair and transparent data sharing between consumer and insurer to allow fairer pricing, loyalty rewards and help and assistance when consumers need it most. Devices are able to collect driving behaviour data and create driver scores for pricing and to show the end consumer how they are driving so improvements can be made and accident frequency reduced. Devices can also detect crashes allowing the insurer to activate FNOL process for greater claims financial efficiency and hugely increased customer service. This then can be transformational at a product and services level. Whoever would have thought there would be an insurer who rewards me for how well I drive and calls me when they know I need help!

ecently I had the misfortune to develop significant hip pain, probably the result of too much robust sport in my younger days. A fair price to pay for my youthful exuberance and my indestructible self-perception one might say. Eventually I limped into my G.P surgery to hear the pathway was to a consultant surgeon to pass judgement on my condition. Fortunately I have the benefit of private health cover so I was given a list of four surgeons, all within reasonable limping distance. “Which one do you suggest I asked my GP?” “They are all competent consultants and any one of them is qualified to assess your condition.” He could have said: “Mr Scalpel is very good and he’s a personal friend of mine, and he gives me a cut of his fee too which is great for me and great for you, as he will treat you very well.” But, I wanted an objective focussed medical opinion, untarnished by any financial driver. Lawyers have no business owning medical agencies and the only reason they could possibly have to do so is well, let’s think about that for a nano-second - as that is all it will take to work out the answer. Medical agencies should be independent of both lawyers and insurers. So far they have delivered a credible product efficiently. Yes, there is always room for improvement and we can improve the delivery both in terms of time and cost. We are working with the claimant community to achieve that goal. The claimant lawyers I have spoken to have no issue or concern with these proposals and why would they? Sensible, pragmatic lawyers seeking to ensure their clients receive the right level of compensation and behaving in a transparent manner. The answer is as clear as the MRI scan of my hip. Allocation is electronic and we utilise an automatic system so the choice is removed from both lawyer and insurer. The medical agencies should be left to do what they do best - running medical agencies. And the hip…? After a lot of twisting and turning, physiotherapy is the answer – obvious really… David Southwell, Head of Personal Injury Claims, Zurich.

Jonathan Hewett, Group CMO, Octo Telematics.

MC // July 2014

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The Opinions

Automated engagement How can IT solutions best help customers engage with the claims process?

A proper court IT system? Fat chance! The Lord Chief Justice has said the country has a “once in a lifetime” opportunity to build a proper court IT system and failing to make a success of it would be a “disaster”. Will the sector take this opportunity and undertake a full and proper overhaul of IT in the UK court system?

ervice provision is changing – end client and business partners are demanding increasingly more engagement at lower costs. So how can IT help? Technology can put the client at the centre and personal the experience - creating ‘automated engagement’ regardless of the client’s location. There are now applications available that will enable you to deliver that level of engagement - tightly integrated with your back-office Case Management software system. Let’s look at an example scenario: Meet Ian – he’s been involved in a car accident and is looking for a firm to take on his injury case. One firm he visits online is utilising a system that holds Ian’s hand throughout the entire process. So as soon as Ian has completed the initial online form, his data is captured in the firm’s Case Management system to trigger next steps. Even the ‘signup’ process can be done via secure online methods. Personalisation of the online system means that Ian can create a personalised map and snapshot of the accident site. He can also access plain-English explanations of the process, and useful FAQs. Ian can upload images of the accident scene, and / or any injuries, which are incepted into his file within the Case Management system. Ian stays informed and in control throughout as he has access to ongoing claim milestones and ‘next steps’. He can check on his file and its documentation any time and from anywhere. It’s a transparent view which gives Ian the full picture and a greater understanding of the injury claims process. Through marketing features in the online system, Ian also receives tailored communications, news feeds, blogs and even special offers that are relevant to him. He is free to just pull information, so he won’t get irritated by blanket ‘junk mailers’. A more positive relationship can develop, and once the claim is finalised and compensation received, Ian can then take part in a satisfaction survey - the results of which are automatically captured in the Case Management solution, triggering relevant tasks inside the firm and providing critical client data. Darren Gower, Marketing Director, Eclipse Legal Systems.

y brutally frank answer is: Not a chance. I would love to be proved wrong but those with the responsibility for making this happen have got “form”. The form sheet includes a long list of dismal failures. I will mention a couple of them, starting with the Lord Woolf’s report of 1996, nearly 20 years ago. His IT recommendations included: 1. Establish an IT strategy body (to be part of the Civil Justice Council) to promote the development of long term IT strategy, to review projects and to co-ordinate initiatives. 2. Research how existing court administration systems can be extended for use by judges and practitioners, especially the caseload management facilities which deal with the allocation of resources, the scheduling of judges’ workloads, the listing of cases and the electronic diarising of cases. 3. Analyse and specify the requirements of simple, PCbased case flow management systems for judges. 4. A ‘Courtroom of the Future’ exhibition should be created, similar to those in the USA and Australia, to capture a vision of, and to stimulate interest in, the future. None of these recommendations were implemented. Not one. Fast forward to 2009 and Lord Justice Jackson’s Costs Review, which included a list of IT recommendations. The first recommendation was nearly identical to Lord Woolf’s: Appoint a strategic oversight body, including judges and practitioners, for all IT systems for the civil courts. These recommendations were ignored in just the same way. The good news is that we are told that, finally, some money has been voted. Well that’s a welcome change, but it does raise questions. Where is the strategy and thinking behind the allocation of funds? If it is more than a “fag packet” figure, why have the strategy and plans not been published? Has the Civil Justice Council been involved? Have practitioners and the judiciary? Maybe there are answers to these questions and maybe the MoJ will make me happy by proving me wrong. Tim Wallis, Mediator and Solicitor with Expedite Resolution, Trust Mediation and others.

MC // July 2014

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The Opinions

The tip of the iceberg Getting ahead of the rising risk of cyber-attacks.

s organisations around the world rely more and more on the widespread interconnectivity of the internet, they become increasingly vulnerable to one of today’s biggest risks: cyber-attacks. No corporation is immune to a cyber-attack and as a result it has become a hot topic for the insurance industry and corporations alike as they work through the challenges of managing the associated risks. Cyber-attacks can come in many forms – from broad infiltration and extortion to intellectual property theft and data breaches. The immediate damage of a cyber-attack can be just the tip of an iceberg, causing a domino effect of compromised data, damage to operations and/or supply chains, and negative publicity, all of which can be very costly and have a long-lasting impact on the target. Often companies are unaware of their vulnerabilities and the risks are opaque and fluid. Also, the insurance cover companies would have traditionally purchased such as property and general liability do not cover claims stemming from cyber events– so cyber liability insurance was created to respond to cyber perils. That was a good start, but it may not be enough moving forward to the future, where these risks are going to continue to evolve, so we must keep innovating. As technology becomes more and more prevalent in our everyday lives, it is becoming increasingly important that underwriters across the entire organisation understand technological risks and foster cross-functional dialogue in order to find innovative and current solutions for their clients. The most successful insurance companies will continue to evolve by identifying integrated products across lines that cover a wide array of cyber related exposures. And these solutions can be formed by collaboration. This is the view of XL Group’s CEO, Mike McGavick. At the recent Arimic conference, he encouraged partnerships to pursue innovation. He said; “Intellectual horsepower can come from outside the industry – use consultants and seek expert advice.” And in today’s environment, that statement very much applies to a best practice approach for managing cyber risk. Nigel Bamber, Regional Manager UK & Ireland Insurance, XL Services UK Limited.

A modern claims system...

o the famous quote, “Nothing is certain but death and taxes”, we should add “change in the world of motor insurance”. The recent report published by the Competition and Markets Authority (CMA) is a case in point. After an investigation lasting (so far) two and a half years, insurers, claims management companies and CHOs all face further significant operational process changes and upheaval. For some, this will be an opportunity to reduce costs and improve the customer journey, but for other this will present yet another challenge which they may struggle to adequately adapt to. Whilst as consumers we’ll all be looking forward to £3 reduction in our premium next year, this will never materialise if the cost of administering these changes actually ends up costing more. Initial feedback and public comment suggests all sides are unhappy with the somewhat limited proposals from the CMA. Talk has already turned to possible loopholes, or ways that organisations can gain “competitive advantage”, by using repair arrangements to deliver back any reduction in referral fees on credit hire. It is worth noting that neither referral fees nor credit hire itself will be banned. Whatever the eventual shape of these reforms, a flexible and modern claims system supported by well thought out operational processes will be key. However, it is important to remember that handling motor claims it is not just a case of having a good system. When the “computer says no” the human being needs to step in. A significant proportion of PI claims fall out of the MOJ portal and so it is not unreasonable to expect that a similar thing will arise with the proposed CMA solution. For direct insurers the process will be a challenge enough – for brokers and fleets it will be more complicated still and simply being reactive will mean that three days to admit liability will be almost impossible to achieve. So, change is coming and those organisations who want to achieve a competitive advantage need to plan and resource accordingly. To do this they need a good understanding of the whole end to end process and an appreciation of where all parties are coming from. Derek Cooper, Managing Director, [Veracity] Claims Solutions Consultancy.

MC // July 2014

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The Opinions

The tools are there...

Basic Principals

Can a law firm really take it upon themselves to generate leads and create their own future business success, or are lawyers too set in their ways to think as a consumer led business?

What impact has last year’s legislative changes to the Rules relating to proportionate costs had on the claims market to date?

t might sound a bit harsh but if lawyers are not prepared to change to meet consumer demand, then they’re going to find the future very tough. There are still ways for third parties to help generate work. Bott & Co’s profitability calculator shows how expensive it can be to comply with LASPO and still receive third party generated leads. For example, during their research they found that after the cost of acquisition and overheads, they would make aloss of £71,091 per year for every third party generated employer’s and public liability case. Unsurprisingly Bott & Co have used these findings to justify their decision to generate all their own work. So, what can you do to generate leads ahead of competitors and increase your own profit? Video: Cisco predict that by 2017, 69% of all global consumer internet traffic will be video. A 90 second video can show your firm has personality and capture your audience in a fresh, informative way. Websites: Your website needs to load fast, be free from clutter, have free resources for clients, and contact forms for them to get in touch. It also needs to be viewable on multiple browsers and mobile devices too. The Office of National Statistics reports that 53% of the UK’s internet users browse the web via their mobile device. Pay Per Click (PPC): AdWords on Google and PPC on social media target exactly who you want to target, and only charge you when a client clicks your advert. This means you can easily drive warm leads to your website regardless of your budget. DIY lead generation need not be hard. The tools are there and yes you need to adapt and learn how to use them but with support from digital marketing experts, generating your own leads with these tools puts you in a strong position to reach the audience you need for maximum profit. Dez Derry, CEO, mmadigital, online marketing for modern law firms.

fter completing his review of the civil litigation system in the mid1990s, Lord Woolf identified eight basic principles which should be met by a civil justice system to ensure access to justice. The third of these principles was that “procedures and costs should be proportionate to the nature of the issues involved”.

Despite forming a cornerstone of the CPR, very little guidance was found in the Rules as to how the proportionality of costs should be determined. The Court of Appeal soon formulated what came to be known as ‘the Lownds test’. This two-stage test provided that, if global costs were disproportionate, only costs which had been ‘necessarily’ incurred were to be allowed. In the years that followed, many involved in civil litigation formed the view that the requirement for proportionality – and, in particular, the Lownds test – was doing little to control costs. Lord Justice Jackson made a number of recommendations in relation to proportionality, including that a definition of proportionate costs (which required costs to bear a reasonable relationship to certain factors) should be included in the Rules; and that disproportionate costs may be disallowed or reduced even if they were necessarily incurred. In April 2013 these Rules changes were implemented. It is a little too early to identify with certainty whether the changes have had a significant effect on the level of costs. Anecdotal evidence, however, would suggest that base costs which are being incurred in non-portal cases are no less than they were pre-Jackson, with some suggestions that base costs are actually increasing to reflect the lack of a recoverable success fee. The fact that many judges appear to struggle with the new proportionality test has been a frequent topic of discussion amongst costs lawyers. Dominic Regan was recently quoted as saying that “nobody has a clue” how the test is supposed to be applied. This apparent lack of understanding is more pronounced when Courts are considering Precedents H, with esoteric and quirky decisions being made across the country on a daily basis. The changes were met with initial scepticism from various commentators: the phrase “the emperor’s new clothes” was found frequently in articles which discussed them. There is now a widespread feeling that these commentators may well have been right. Alex Bagnall, Head of Commercial Litigation Costs, Lawlords

MC // July 2014

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The Opinions

Reservations of rights

ollowing on from my previous Article in last month’s edition I wanted to highlight further the Reservation of Rights issues which I touched on which are experienced in the day to day running of Thompson and Bryan.

Insurers frequently use a reservation of rights (RoR) to protect their position while they are considering matters of policy liability. This is a quite proper tactic to give time to investigate such matters as possible non-disclosure, compliance with warranties and conditions, and the operation of exclusions. The main purpose of a reservation is to ensure that actions of the insurer in working with the policyholder cannot be interpreted as a waiver of any policy defence. All too often, though, the reservation is used as a delaying tactic with neither explanation nor apparent reason. There is a group of privileged policyholders, members of Airmic, whose commercial bargaining power has resulted in an agreement that reservations shall be limited in time and subject to transparency about purpose. Unhappily, such protection is not available to less powerful policyholders and RoRs are often used capriciously: sometimes as a delaying tactic, occasionally to conceal the insurer’s maladministration, and too often because the insurer doesn’t like the claim but has no evidence to suggest any wrong act by the policyholder. The writer is currently involved in litigation where an RoR has been in place on a private claim for almost two years and insurers have refused even to explain why. It is arguable that such behaviour is a breach of the FCA’s ICOBS 8.1 rules which require fair and prompt handling. There is also a provision for clarity and openness in communication. A breach is likely to give rise to an action for breach of statutory duty for damages beyond the amount payable under the policy. It’s instructive that the Airmic guide requires the insurer to give information about the reasons for the RoR, what information is needed to move the matter on and why and what the possible consequences are of the matters being investigated. Such protection is not offered to less powerful policyholders and there is too much inappropriate – even abusive – issue of reservations. This is not an aspect included in the Law Commission’s current draft legislation on insurance contract law. At the moment powerful corporations will get the benefit of the Airmic agreement, and consumers and micro-businesses are likely to find such protection through the FOS. It is the large sector of businesses in between who are left unprotected. Paul Lawrence, Managing Director, Thompson & Bryan.

Back to basics Would the MoJ’s proposal to plan to ban solicitors from owning medical agencies be an unfair restriction of trading or would it help stamp out unscrupulous practices?

n a recent letter to all interested stakeholders, Lord Faulks, the justice minister, made it quite clear that the Government has continued concerns regarding the ownership of medical agencies by Solicitors. To simplify, the Government proposes to ban Solicitors from using medical agencies that they own, be it ownership in whole or in part. There has been no evidence published by the Government (that I have seen) to confirm that the cost of medical reports to the paying party is higher when the medical agency is Solicitor owned. If a fixed-fee system becomes mandatory as is also proposed, then this becomes a moot-point. Looking at this issue from another angle, common business sense tells you that the undoubted economies of scale that some of the larger and more well-known (and non-Solicitor owned) medical agencies will undoubtedly benefit from, would mean that they could effectively do the same job for a lower overhead. Under any fixed-fee regime therefore, it is arguable that the profit per instruction made by those larger organisations would be higher than those of the Solicitor owned agencies. The proposal is self-defeating in this regard. The independence of medical experts must be taken as a given. Safeguards are in place in both the CPR and the Solicitors’ code of conduct to ensure that the opinions given are unaffected by the financial arrangements involved. Again, I have seen no evidence published by any stakeholder of either the finite or wholesale failure of medical experts to remain independent. The Governments further review of the accreditation process of medical experts is already in full swing to address any residual issues that may arise in this regard. If the Government is concerned that medical agencies do add an unnecessary layer to the claim process (together with an associated cost) then it must ban the use of medical agencies altogether, not just Solicitor-owned ones. To target Solicitors ownership in this way is a flagrant restraint of trade of the Solicitor firm or individual. Legal practices have innovated with alternative revenue streams. If this is linked to the core of its business, it makes perfect sense. Medical agencies are here to stay; Solicitors should be able to own and operate such businesses as much as the next. Zoe Holland, Managing Director, Zebra Legal Consulting.

MC // July 2014

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The Opinions

A downward trend? The number of EL/PL claims submitted via the portal has risen to 60,000 and the number of EL/PL cases is increasing, with some claiming that it is in the interest of defendant firms, why is this?

Driving Innovation Are Broker ‘schemes’ becoming increasingly harder to establish and sustain and why?

or RTA and EL/PL accidents valued at under £25,000 and occurring after the 31st July 2013 any claim must now be submitted via an online ‘portal’. Data is periodically released by the company responsible for running the portal, Claims Portal Ltd and for the five months to the end of 2013 this showed 22,955 claims had been submitted in the five months since the portal went live*.

t is true that the schemes market has become just as competitive as the mainstream general insurance market. However, we all know that competition is a driving force for innovation and, from our perspective, we’re seeing plenty of opportunity for scheme business from brokers who are alert to the possibilities that exist. In fact, there are some very successful examples that provide a good model for the development of future scheme business.

By comparison, Compensation Recovery Unit (CRU) figures, from the Department for Work and Pensions for 2012/13, indicate EL and PL notifications to the CRU (a process required for claims involving injury to ensure the state recovers any payment in respect of benefits payments or care) would average 81,000 for a 5-month period. Despite these initial figures it is still too early to say if this indicates a continuing downward trend in claims numbers or simply a temporary drop whilst Claimant representatives adjust and sound out the new portal system.

At the crux of any successful scheme is the fact that the broker has recognised an emerging ‘gap’ in the market in response to the way in which society and underwriting strategies are constantly shifting – even in a very subtle way. For example, the increasing use of data enrichment tools by the direct players has allowed them to reach the best risks for their business. As a consequence, those people who went online to locate the cheapest quotes for their insurance have started to find this is not necessarily the most cost-effective channel.

What is clear is that lower claims would be good news for insurers and insured parties as they have to pay for these either directly or via increased premiums. Lower claims means less payments.

Brokers have latched on to this shift in underwriting strategy and developed schemes business to attract and serve customers who don’t fit neatly into the box determined by the direct players. The key point of schemes is that they allow brokers to include those risks with a deviation from standard offerings, for example younger, higher risk customers for motor insurance.

However, the story is less rosy for defendant law firms. Their position is simple, claims form their revenue stream and therefore, lower claims means less revenue, higher claims mean increased revenue. There has already been a marked effect since July 2013, with almost every week seeing another announcement of redundancies or closure from at least one claimant or defendant firm. The reason often cited is the new fixed fee system and lower income available from each claim being brought. Fixed fees are nothing new on the defendant side but these are becoming tighter and tighter every year. Therefore to maintain income the defendant firms need to ensure that their share of the cases increases, either by winning work from competitors or increased claims increase across the board.

At the heart of any good scheme is a very clear focus on the target customer needs. The broker needs to assess the size of the opportunity, the sales and marketing work required to launch the product within the market, as well as the target loss ratio/past performance. This should all be done in close partnership with an insurer with proven experience in scheme business that has the appetite to work in collaboration with the broker to make the scheme a mutual success. Chris Dobson, Broker Distribution Director at Ageas Insurance.

Therefore the answer to the above question is simple, more claims through the portal means more work for defendant firms and increasing, or at least steady, revenue. * www.claimsportal.org.uk/en/about/executive-dashboard/ www.claimsportal.org.uk/en/about/behaviour-committee/ Alistair Schuberth, Associate Director, Claims Defensibility, Risk Management, Willis Group.

MC // July 2014

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The Opinions

Quality is everything

nsurance is very much needs must purchase. With this in mind it can be seen as a purchase which actually does not benefit the client if, or until they need to claim on it. With the grudge purchase being the case, it has opened the doors to many insurance companies to compete for business by placing their product onto a price comparison site, where the main objective is to match the requirement placed online by the purchaser, to a desirable purchase price. The results are mainly displayed in ascending order, along with the provider and other benefits being offered, usually provided as an ‘included or not’ into the policy. This form of marketing, placing an insurer, or product in front of their prospective client can be extremely effective, but can mean that their products are compared purely on price only, which means the client not knowing an awful lot about the company they are purchasing from, the quality, customer care, or previous customer satisfaction. As we rarely get to know the real benefit of insurance until we need it, why is there the need to constantly sell such an important product purely on price? Surely this clashes with the important message on the need for insurance in some cases, as well as the relief it brings to so many when they have to claim on it. When making a claim, clients are usually at their most vulnerable, it is at this time the need for a quality product and quality service is required. It is important for insurers to market themselves digitally, as this will place them in front of their prospective clients, however, if as the figures suggest that nearly 70% are looking to switch who they purchase from, how can a provider stand out and provide that crucial reassurance clients are seeking and how can they prove this independently, which is the only way a prospective client is going to trust in a provider. It is time to think outside the box and the first insurance company to place their heads above the parapet and clearly show how transparent they are, by providing previous client experiences to be independently verified by a third party will move their businesses onto a new level. This will provide clients with a new and completely independent way to view them and will provide trust, along with an appreciation of their services. Previous client testimonials are the most powerful marketing tool a business can have, why not use them! Ask us how effective this can be: www.checkaprofessional.com or call Freephone: 0808 901 9042. Lisa Beale, Head of Checkaprofessional.com.

True understanding... How have the new rules on proportionality impacted on civil costs since Jackson?

he Jackson reforms swept away the Lownds test for determining whether or not costs are proportionate. Indeed, CPR 44.3(2)(a) expressly states that costs may be disproportionate notwithstanding that they were reasonably and necessarily incurred. The new test is laid out at CPR 44.3. (5) Costs incurred are proportionate if they bear a reasonable relationship to – (a) the sums in issue in the proceedings; (b) the value of any non-monetary relief in issue in the proceedings; (c) the complexity of the litigation; (d) any additional work generated by the conduct of the paying party; and (e) any wider factors involved in the proceedings, such as reputation or public importance. But, more than a year after the implementation of the 60th update of the CPR, no one seems keen to grapple with what the new rules actually mean. However, there is strong anecdotal evidence that the concept of proportionality, or at least a distorted version of it, is creeping into costs management where it is having a deleterious effect on justice. As predicted prior to its implementation, costs management is bedevilled by judicial inconsistency and caprice. Some judges, apparently focussing exclusively on CPR 44.3(5)(a), are refusing to hear argument and are employing a formula restricting costs to the amount damages claimed, or damages plus a small percentage. The problem is that although PD 3E 7.3 says that the Court will not conduct a detailed assessment in advance, judges presiding at costs management hearings make arbitrary decisions which bind the court at detailed assessment unless the receiving party can show good reason to depart from the approved budget under CPR 3.18. To make matters worse, no one yet understands what constitutes a good reason to depart from a budget. Such decisions can only have a chilling effect on justice - preventing claims from going forward, forcing undersettlement and potentially leaving Claimants with no option but to discontinue. Surely a more sensible approach where a budget or budgets appear disproportionate is that adopted by Coulson J in Stella Willis –v- (1) MRJ Rundell& Associates Limited & (2) Grovecourt Limited [2013] EWHC 2923 (TCC) where he declined to make a costs management order or to approve either budget and left the parties to fight it out at detailed assessment, a forum where proper argument can be heard and where all the variables of the case are known. Robert Parness, Costs Lawyer/Civil Costs Team Leader, Burcher Jennings.

MC // July 2014

The Opinions

Critical business How can insurance companies minimise risk when recruiting senior members of staff?

n today’s commercial world, regulatory compliance and statutory compliance is business critical to the insurance industry, a role which cannot be underestimated and supports the corporate governance strategy of the business. To some extent, it is horses for courses and very much dependent on the risk profile and size of the business, but as a business grows and the business model becomes more complex, a key component to managing risk is to ensure that staff are competent and trained, in addition to identifying when to recruit, who to recruit and how to recruit. There are two angles to achieving this objective; firstly the recruitment process and secondly ongoing monitoring, training and support. Recruiting experienced members of staff is the first step in the process to managing risk. Insurance companies should have an established recruitment procedure in place. A job specification should be drafted by the department head, which should include required experience and reporting lines, the purpose of the role, key tasks and any management responsibilities. How the role will be advertised and attract the right calibre of candidate should also be set out. Once candidates have been selected for interview, be prepared with a list of specific questions, based on practical experience and competency. A two stage interview gives you and the candidate the opportunity to explore further questions or concerns. If appropriate, other members of the team may meet with the candidate, because at the end of the day they will be working closely together. Asking the candidate for their reasons for leaving previous positions will give you a good insight as to what they are looking for and how they tick. Obtaining references is always recommended. When the new person commences employment, an induction should take place and a job description and Contract of Employment provided. An appraisal/review should take place at the end of their probationary period and moving forward there should be regular appraisals and KPI’s set to make sure they are achieving the objectives of the role and business. Recruitment can be a time consuming and costly exercise so whilst this is not rocket science, you need to make sure that you have identified the right candidate for the job, with the right skill set who will grow, develop and move the business forward as part of a strong and happy team. Nicola Klimkowski, Head of Business Development Legal & Special Financial Risks, LAMP Group Ltd.

The fundamental difference What impact has changing legislation surrounding costs/proportionality had on the claims market to date?

roportionality was a key feature in the Jackson reforms with CPR 1.1, emphasising that the Courts need to deal with cases ‘at a proportionate cost’. Costs which are disproportionate in amount may be disallowed or reduced even if they were reasonably or necessarily incurred. The fundamental difference between the test pre and post 1 April is the removal of the ‘necessity’ test. CPR 44.3(5) (a)-(e) states costs incurred are proportionate if they bear a reasonable relationship to the sums in issue in the proceedings; the value of any non-monetary relief in issue in the proceedings; the complexity of the litigation; any additional work generated by the conduct of the paying party; and any wider factors involved in the proceedings, such as reputation or public importance. So far Vitol Bahrain EC v Nasdec General Trading LLC and others [2013] All ER (D) 38 (Nov) is the main case whereby the Court have been asked to review proportionality. Here, the Claimants costs came to £242,760.48 and the Defendants costs were roughly 70% of their opponents at £165,421.80. The Court allowed £75,000 sending out the message that because costs were broadly similar they would not allow disproportionate costs because of this. There does however appear to be inconsistency in how proportionality is applied. For starters, bills need to be split to reflect the new tests as otherwise how can the Courts apply the different tests? One would assume that given proportionality applies only to standard basis costs then any doubt would be resolved in favour of the paying party, and thus the more stringent. Certainly, in the Provisional Assessment process, I am yet to see this apply as it would appear the Courts are reluctant to rule upon proportionality at this stage. PD 7.4 supplementing CPR3 states ‘as part of the costs management process the court may not approve costs incurred before the date of any budget. The court may, however, record its comments on those costs and will take those costs into account when considering the reasonableness and proportionality of all subsequent costs’. This is a new process as it enables the Courts to document their concerns with regards to proportionality at that stage. Lord Neuberger, commenting previously on proportionality confirmed that: “The law on proportionate costs will have to be developed on a case by case basis. This may mean a degree of satellite litigation while the courts work out the law, but we should be ready for that, and I hope it will involve relatively few cases.” Only time will tell. Peter Jones, Costs Manager, R Costings Ltd

MC // July 2014

The Features

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THE FEATURES

MC // July 2014

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Legal Opinion

Legal Opinion The Buffer Direction – Relief from Mitchell? P

rofessor Dominic Regan recently pointed out that we have a new verb. Lawyers do a “Mitchell” – or worse – are “Mitchelled”. The Court of Appeal’s decision in Mitchell to restrict relief from sanction sent shockwaves through the industry. The intention was to improve the efficiency of the process for all litigants - an aim we all share. Many believe however that Mitchell had the opposite effect, resulting in technical points being taken and good cases failing for procedural breach. The Law Society has complained that the decision has generated a raft of satellite litigation that has clogged up the courts. The Bar Council has also been critical. Rule 3.8 of the CPR has been changed to mitigate the effects of Mitchell. It

previously prevented the parties from agreeing to extend any time limit with consequences attached. Under the amended Rule 3.8 introduced this month, the parties can now agree an extension provided they do so in advance, for no more than 28 days, and do not prejudice a hearing date.

This amendment is undoubtedly good news. Reputable firms will act sensibly in requesting and agreeing extensions. That will reduce the need for applications, satellite litigation, and the associated cost and delay. The concern is whether this amendment goes far enough. Some lawyers may continue to take technical points, and the amendment does not help where the breach has already occurred. In those scenarios there remains a risk of a disproportionate or draconian outcome. The three cases heard by the Court of Appeal earlier this month may provide further relief for litigants. The issues

involve the late payment of fees, delay in serving witness statements, and whether two trivial breaches constitute a significant breach. In urging the Court to soften the impact of Mitchell, Counsel suggested it had created a series of tripwires for litigants. The cases are being heard by Dyson LJ (who gave the judgment in Mitchell) and by Jackson himself, so if the regime is harsher than intended, this is the perfect opportunity to correct it. The Buffer Direction has helped to reduce the restriction of access to justice arising from the new rules on relief from sanction, and their interpretation in Mitchell. The majority of the legal profession and their clients are hopeful that the Court of Appeal will adopt a sensible approach, and continue the good work of The Rules Committee. Donna Scully, Partner, Carpenters.

An issue of independence Would the MoJ’s proposal to plan to ban solicitors from owning medical agencies be an unfair restriction of trading or would it help stamp out unscrupulous practices?

ot only would this be an unfair restriction of trade, but it is completely unnecessary, will drive all medicals to the biggest players and will do nothing to help stamp out unscrupulous practices. The issue surrounds the term “independent”, whereas the MOJ with their ABI paymasters see this as being independence from the solicitors, the only really important independence is that of the medical experts themselves. Solicitors own medical agencies to deal with the administrative aspect of getting claimants seen by an independent medical expert. This helps keep costs down and allows for claims to be run efficiently, which is clearly a benefit to both the Claimant and the Defendant sides. Whereas in the past this has also been a profit centre for those law firms, the new rules will limit costs of a report to £180, restricting the charge to the insurers to the same level as the larger AMRO agencies fees. As long as the experts themselves are truly independent it really doesn’t have any wider complications or issues.

MC // July 2014

The ABI will say that the larger associated Claimant law firm owned agency applies pressure to ensure that physiotherapy and psychological symptoms are included on a much higher percentage of reports than one might expect, and that this is done simply to increase profits rather than because of a genuine requirement. However, if those experts are truly independent then everyone can be reassured that the reason for stating such requirements is genuine rather than simple profiteering. I am sure that even the ABI accept that where genuinely required such items should be paid for by the at fault party. The other issue is that this is going to generate even more satellite litigation, as the penalty for a breach is likely to be that the report cannot be relied upon and a further report must be obtained. This issue of independence will therefore be regularly tested in court and will provide significant delay to the portal type cases. Alan Nesbit, Managing Partner, Nesbit Law Group LLP.

MC // July 2014

Legal Opinion

Ticking the right boxes... How can insurance companies minimise risk when recruiting senior members of staff?

ood risk management dictates that insurance companies should always identify the risks within their business and then put in place strategies to eradicate those risks. Recruiting staff can give rise to two different types of risks. Firstly there is the risk of a claim by a candidate for the way in which the process Helen Grimberg was handled and the second flows from the appointment of the candidate and their skill in undertaking the role to the standard expected. The Equality Act 2010 makes it unlawful for employers (or prospective employers) to discriminate against staff on nine protected grounds (race, sex, disability, age, religion or belief, sexual orientation, marriage and civil partnership, pregnancy and maternity, gender reassignment) and this applies to recruitment and offers of employment as well as for existing workers. Recruitment starts with advertising the role and the use of seemingly innocuous words such as ‘energetic’ could result in the risk of a claim. When selecting candidates for interview employers should be very cautious about making any judgements which could be discriminatory, for example, that a blind person cannot be a computer operator. Having standard questions asked of all candidates will help reduce the risk during the interview process but of most importance is ensuring that staff are fully trained in equality of opportunity. The Data Protection Act is another area to consider and insurers would be wise to consider the Information Commissioner’s Code of Practise, which has a section on recruitment and selection. The underlying principle is that candidates should be advised on how their personal information will be handled and how long it will be retained. When considering the risks that will flow following recruitment, areas such as negligence, business risk, regulatory risk, reputational risk and dishonesty pose particular threats to insurance companies. Regulatory risk is by far the greatest risk facing the insurance industry in the present climate with waves of new regulations being introduced at local and international levels. Other high ranking concerns for insurance companies are the EU’s Solvency II Directive and the uncertain state of financial markets. The financial fallout from these threats can be crippling for an insurance company. However, insurance companies can minimise these risks by recruiting senior member of staff who are: • committed to the industry / market • established and stable • knowledgeable • expert • commercial • qualified • able to talk to clients • able to handle claims • able to improve customer experience • able to take account of the size, growth, risk

MC // July 2014

What impact would Scottish independence have on the claims industry in Scotland? T

his September people who live and work in Scotland face one of the biggest decisions of our generation; should Scotland remain part of the UK, or become an independent state? Currently the Scottish Parliament has devolved powers that allow them to make decisions in several areas that affect the Scottish people, including health and education, and importantly Scotland has its own legal system. Notwithstanding the different jurisdiction, recent years have seen a growing trend for English and Welsh firms to cross the border into Scotland, or indeed vice versa, creating multinational practices. These firms are already versed in complying with regulation on both sides of the border, but independence would bring a new raft of factors to consider for any business, such as tax, company law and employment regulations. Scotland is a busy hub for legal financial services, including of course insurance companies. Currently regulated by the FCA, if Scotland votes yes in September, it would be required to establish its own financial regulator. Insurers and brokers carrying out business in both states would need to be compliant with both regulators, which as well as being costly, may result in disparity between products and customer experience. Some may decide the smaller population in Scotland wouldn’t warrant the investment that such changes would require, while others may see the opportunity to help tailor a new system. With a matter of weeks to go until the referendum there remains a great deal of uncertainty around precisely what changes independence would bring for the legal industry and our partners in business. If a “Yes” vote prevails on September 18th, it will be time to roll up our sleeves and work together to bring clarity for our clients and customers and the greater public we serve. Katherine Howells-Price, Project Manager, Lyons Davidson Scotland

management within the company • open in culture, able to review and discuss issues, mentor and develop junior staff • willing to utilise law firms and representation Senior members of staff with the above credentials are best placed to eradicate the threats faced by insurance companies, they tick the right boxes, minimise risk and instil a culture of success. Helen Grimberg, Partner, BLM. Vanessa Latham, Partner, BLM.

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The Features

BUSINESS FIRST Emma Waddingham, Modern Claims, joined delegates at this year’s headline Association of Personal Injury Lawyers (APIL) Annual Conference, at the Celtic Manor, South Wales, to hear how, despite the pressure to remain ethical and client-focused, the use of technology, a strong brand and a bold vision are key to future-proofing PI practices.

his year’s Association of Personal Injury Lawyers (APIL) Annual Conference kicked off, as ever, with a change of guard. The incoming President, John Spencer, Spencers Solicitors in Chesterfield, will now lead APIL’s 4,000-strong membership for the next 12 months. On taking on the leadership role, he said: “I’m passionate about the rights of injured people and I believe everyone should have access to the highest standards of professional excellence to support them, during what can be a very difficult and distressing time. For this reason, I am genuinely proud and delighted to step into the role of president.” Spencer’s Presidential Speech also asked members to ‘take stock’ of the reasons why they are in business – not to get too embroiled in the business of law. “Sometimes it is easy to forget why we do this – why we did all those years of study and training, why we specialised. It’s easy to be sucked into the business of the law, especially when our businesses are threatened. It almost happened to me. “I’m pleased to say that now I am now trying to do that, and doing it, not by focusing just on the rules and the daily practice of the law, but by pouring energy into what is truly professional, what is ethical and what is right. After all, we all know instinctively what is right, don’t we? Politicians, doctors, lawyers, insurers – we all know what is right. What often appears to be difficult or challenging is doing what is right rather than what is expedient,” he stressed. Spencer is right, to a degree. The ability to define personal injury practices by ethics, professional standards and a focus on clients is essential in the increasingly competitive landscape. Yet as Andrew Grech, Chief Executive of Slater & Gordon, attested later in the day – branding is everything and the ability to define your brand comes down to ethics and a committed client culture. It was interesting for the incoming President to argue that the business of law isn’t always something to be ‘too embroiled’ in. When APIL’s members face an unprecedented time of change structurally, on business process and on fees, Spencer’s speech could have called for a balanced approach, rather than asking members to perhaps refocus.

“We’re not proud or arrogant; that’s why we have aligned ourselves with the best firms in the UK to enter in…By creating a large base, we’re able to do things as a firm – using resources and scale of competencies that some smaller firms can’t provide” Andrew Grech, Slater & Gordon The number of delegates this year said a great deal about the state of the Personal Injury (PI) sector. A drop in numbers but a core delegate list comprising of decision makers didn’t faze the sponsors too much (who admitted, they expected a decline in numbers). The composition of the delegate list also highlighted the impact consolidation and suggested not all practices could afford the resources to come to the event this year. It’s a considerable call on training budgets as well as practitioner time so while Spencer called for a shift back to legal causes, the sector is undeniably thinking ‘business-first’ – and who can blame it? However, the conference still provides members with the opportunity to share war wounds, catch up on industry gossip and find out who is prepared to support their business in the next 12 months. Gone is the proliferation of ATE providers, step in the technology companies (perhaps of no surprise to Richard Susskind, more of whom to come later), consultants, outsourced experts and service providers who were the main supporters of this year’s event. What is also always good to see at APIL is the quality of keynote speakers who are given the opportunity to showcase best practice experience and demystify progress. One of those to take what is currently a frequent place in the spotlight, was Grech, who set out to nail the firm’s colours to the mast in front of his peers. Documenting the rise of the brand in Australia, Grech ran a show reel of the culture, ethical focus and landmark group actions that gave rise to the firm becoming a household name overseas. Big push For Grech, the main challenges of entering into its new UK marketplace are the ‘same as for everyone’ but he believes his firm has the edge. “Coming from a multi-jurisdictional environment in Australia (we have over 52 regulatory bodies to deal with there already…) we are already aware of the regulatory challenges and different markets. “We’re not proud or arrogant; that’s why we have aligned ourselves with the best firms in the UK to enter in. We’re working with likeminded people who already share our

MC // July 2014

The Features

values, culture and vision. By creating a large base, we’re able to do things as a firm – using resources and scale of competencies that some smaller firms can’t provide. “I don’t predict the end of the small practice at all but there will be consolidation, whatever the niche of work,” he explained, adding: “Slater & Gordon celebrates its 75th anniversary in Australia this year and our expansion into the UK market means we can add a new dimension to our heritage here and hopefully in other parts of the world.” Big Brand When I asked Grech if it was indeed possible for a law firm to become a household name in the UK (one of his oft-stated visions), he replied: “Yes, absolutely. We already have a 90% brand recognition rate in Australia, a response we survey regularly. How do you do it? Grech believes it’s threefold: “Offering clients consistently high service standards; ensuring they’re looked after by people doing excellent work and marketing.” Determined, Grech pushed on: “We want the same substantial [brand] impact here that we have made in Australia. It could take one, two or 20 years - I don’t mind how long it takes so long as we get there! Our single-mindedness is our greatest asset to achieve that bold goal.” Only time will tell… High-tech lawyers Richard Susskind is another key note speaker known for his candid yet always perceptive view of how legal services will utilise process and technology today and tomorrow. It has been argued many times before that the legal sector is slow to adapt, slow to embrace new technology and perhaps a little cynical of how it will benefit them – mainly due to implementation, cost and ‘change’ factors. By far one of the most dynamic speakers of the event (mainly due to his fast-paced and highly perceptive approach to public speaking), Susskind grilled down into the impact of new technology on the personal injury sector. “Unless a practice is about to fall off a cliff,” he said, adding: “most legal practices will continue as normal.” Yet as ‘incentives to change’ are now in place within the PI market, his vision of ‘tomorrow’s lawyers’ – those who work with new technologies and adopt them as if ‘they had always been there,’ is here today.

MC // July 2014

He explained the use of technology need not simply be an internal investment. The move to outsourcing services has also expanded in the months after liberalisation as firms need to keep a tighter control of costs. “There is a need now to do more for less, for firms to adopt a manufacturing mentality to process, for many firms, that requires process analysis. “We are seeing a seismic shift towards outsourcing or off-shoring tasks once the sole premise of a lawyer, to external experts, devoted to that one task,” Susskind explained. Susskind called for delegates not to pass off some new entrant to market as a one-hit wonder, warning: “There is a new appetite and hunger in this market that is exciting yet threatening for traditional lawyers. If you’re a mainstream provider now, you can be sure that any competition coming around the corner won’t even look like you – they will start to eat up the lower volume work, using effective processes, outsourcing and utlising technology. Then, as they succeed, they will move up. Please don’t mistake some of these brands as being ‘Mickey Mouse’ just because they are new and different.” Susskind admitted he finds it difficult to deal with the sector’s (general) reaction to new technology - what he calls ‘irrational rejectionism’. “Take Twitter for example. There are half a billion users now, a serious chunk of humanity – how many more do you need to feel validated in using it? Are you still thinking ‘when will it take off?!’ Twitter provides direct access to personalised information and the opinion of some of the finest minds in the world. We have never been more informed about the world around us, about what people think and do. If you don’t take this information on board, your competitors will,” he said. Susskind admits that some innovations, such as Google Glass take a long time to become the ‘norm’. However, he adds: “the technology we will use in 2020 hasn’t even been invented yet”. Google is never far from the minds of PI professionals. As most PI leads are now originated online, investment into Google Ad words (just ask Andrew Twambley why he has invested a suggested £8m into Google for InjuryLawyers4U), SEO rankings, websites and social media amounts to the largest marketing spend in

“We have never been more informed about the world around us, about what people think and do. If you don’t take this information on board, your competitors will” Richard Susskind this sector. “Google stores the kind of information about a population that you would pay vast sums of money for. Take Google Flu Trends for instance – highlighting the spread of an illness across a demographic in seconds. This information can be leveraged by a law firm to spot trends and react accordingly. “I’ve laid out the buffet but what you choose, is up to you,” he concluded – a fitting tribute to some of the options and examples presented to delegates at APIL this year for them to use or lose in the race for success. Emma Waddingham is Director of Emma Waddingham Consulting and Consultant Editor for Modern Claims Magazine

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The Features

EXTRAORDINARY CIRCUMSTANCES...

he legislation states what should happen when flights are delayed. After 2-4 hours (depending on the distance of the flight) of delay at the outgoing airport, passengers are entitled to care and assistance and this includes phone calls, drink, food and hotel accommodation if delayed overnight. If the flight is delayed by 3 hours or more (the delay is calculated by time of arrival), passengers are entitled to an amount of compensation for that delay and the amount is a tariff depending on the extent of the delay and the distance of the flight. The airlines can and do defend these cases and there is a statutory defence of ‘extraordinary circumstances’, which typically include air traffic control strikes, political instability and freak weather. The Regulation applies to all flights leaving EU airports and all EU airlines coming into EU airports. So Qantas Singapore to London is outside of scope but the British Airways flight on the same route is caught by the regulation. The tariff is not massive but does apply to each passenger (adult or child) and applies no matter the cost of the flight. The tariffs are as follows: Flight Distance

Delay Length

Compensation

Up to 1,500km

3 hours+

€250

1,500km-3,500 km or intra EU flight

3 hours+

€400

3,500km+

3-4 hours

€300

3,500km+

4+ hours

€600

The true definition The reason why this legislation has been in the news recently is because Bott & Co took on and won 2 cases at the Court of Appeal with regards to these claims. The first, Huzar v Jet2.com Ltd was about the definition of extraordinary circumstances. The airline sought to argue that a technical problem is extraordinary simply because it is unexpected and unforeseeable and therefore beyond their control. Bott & Co argued that this cannot be the case, as it is crucial to show that the event was ‘extraordinary’ or ‘out of the ordinary’ and not just beyond the control of the airline. The three Lord Justices of Appeal were unanimous in finding that the airline’s interpretation was incorrect, as it was crucial to

‘One of the grounds for asking leave to appeal is a lack of clarity in the Judgement. Bott and Company see no lack of clarity in 2 unanimous decisions that follow previous EU and CJEU case law’ establish first of all that the situation was out of the ordinary. As Elias LJ put it, if the airline was correct then it would make an event extraordinary when in common sense terms it is perfectly ordinary. The second case, Dawson v Thomson Airways Ltd, was about the applicable limitation period. Bott & Co argued that domestic limitations applied (6 years in England and Wales) and the airline argued that the Montreal Convention applied to all claims arising out of travel by air (2 years). Again three Lord Justices of Appeal were unanimous in finding that the domestic limitation period applied and this was in line with CJEU thinking on this point. Winning the 2 cases led to a blaze of publicity and on the day of the Huzar Appeal decision the case was featured on the BBC North West News at 6:30pm, The One Show at 7pm and Watchdog at 8pm; a BBC ‘holy trinity’. Clarity of judgement The publicity centred on passenger rights and Bott & Co’s estimation that although the amount of delays over 3 hours was less than 1% of all flights in and out of England and Wales it still accounted for millions of passengers and potentially billions of pounds of compensation for delay. In both decisions the Court of Appeal refused permission for leave to Appeal. However, in both cases the airlines have made an application for leave to appeal directly to the Supreme Court. We anticipate that we will hear if leave is granted after October 2014. Ironically, one of the grounds for asking leave to appeal is a lack of clarity in the Judgement. Bott & Co see no lack of clarity in 2 unanimous decisions that follow previous EU and CJEU case law. But with such high numbers at stake it is disappointing but not unexpected that the applications for leave to appeal were made. Further irony is found in the fact that the applications for leave to appeal will lead to a delay in payment of the Regulation 261 compensation to numerous passengers and these are the self same passengers who are only claiming because they were delayed by the airlines in the first place. David Bott is Senior Partner at Bott & Co.

MC // July 2014

The Features

SECTOR SUCCESS

Modern Claims spoke to some industry movers and shakers to find out how they are making the most of changes in the sector. Laird Assessors Laird Assessors was originally established in 2000 as an Independent Motor Vehicle Assessors firm. We have grown steadily, now employing over 60 staff and inspecting over 3500 vehicles a month across the whole of the UK. We have established an excellent reputation within the industry for speed and efficiency, as well as outstanding customer service. It is our effective service that has allowed us to develop extremely strong relationships with our loyal customer base. It is these client relationships and reputation together with the recent challenges of operating in the legal sector post-Jackson that have allowed us to evolve, advancing the speed and ease of use for Solicitors, together with bringing professionalism and organisational skills to an expanding range of expert witness services. Our automotive offerings are now complimented by Photography (Locus and PI Photography Reports) and Language (Interpretation and Translation) services. Engrained in all corners of the PI legal sector, we have listened to our client’s needs and frustrations to evolve our support and expert witness offerings to the highest levels. We’re not resting either; the next year will see us continue to develop our existing services and introduce some amazing, effective new products for the legal industry. Doing it differently, managing risk and still making money - proportionately. Problem: A property insurance multi track claim, which did not settle at a joint settlement meeting, was headed for trial. Liability heavily disputed. Total costs estimates very significant. Court concerned about proportionality. Innovative Solution: An Expedite Resolution fixed fee telephone mediation. The claimant attended his solicitor’s office. The insurer, defendant’s solicitor, defendant and mediator were scattered around the country. Each individual undertook to be available for incoming calls. The mediator focused on time limited negotiation using a combination of phone, mobile, text messages, conference calls and e mail. Result: The impasse arising from the joint settlement meeting was resolved, a draft Tomlin Order was prepared and the mediation ended with the parties agreeing to do some work on one outstanding issue. (That issue was not resolved on the day but very probably will be within days.) Almost certainly the risk that the trial posed to both parties, and the lawyers on CFAs, has been avoided. Telephone Mediation cost: £1,000 + VAT, all in, for a mediation that lasted most of the day. The lawyers did not leave their desks. Tim Wallis, Mediator and Solicitor with Expedite Resolution, Trust Mediation and others. Change Management For Personal Injury Firms, facing regulatory and legislative change, the past 2 years have been challenging. For Colemans-ctts, change management has taken the form of re-engineering our business. Based on a belief that both the mind and skill set required to manage injury cases outside of a fixed fee environment is very different from the skills required to process fixed fee portal work, we took a bold decision to create a new start up business placing all post Jackson work within a dedicated processing centre. Our non legal management team come with process outsourcing experience. Our staff are paralegals eager to learn and deliver to a high standard, working with new workflows and interactive technology designed to minimise transactional cost and maximise both profit and customer satisfaction. Launched as a “Northshoring” outsourced model in our Manchester office in July 2013 for RTA and General PI portal processing, we have completed a 12 month poof of concept for RTA claims. We are delighted that tough targets, measured with an abundance of supporting MI, have been met. So, where to next? An increase in volume to fully leverage the scalable model at a competitive price, delivering a superior onshore customer journey at a cost to rival offshore competitors Janet Tilley, Managing Partner, Colemans CTTS Solicitors The Road to Claims Success The road to claims success now involves much more than traditional claims handling. From an industry perspective, we’ve seen a change from a very reactive process, effectively waiting for claims to arise, to a more modern approach of constantly assessing and educating clients in an attempt to mitigate their loss. Technology has developed, albeit slowly in the insurance industry, and to this end there is now more sophisticated Management Information (MI) for key issues such as turnaround times geared to a company’s regulatory obligations. The missing link for many companies now is in the measurement of quality; clients are looking for a much better understanding of the threats they currently face or may be exposed to in the future and as a result, companies are increasingly demanding modern claims management services and solutions as well as new tools, advice and expertise to help them interpret and diagnose risks. The road to claims success must involve brokers becoming actively involved in the risk management of their clients’ claims. Feeding back information in relation to root causes of claims in their sector and the implementation of procedures is vital to avoid claims arising. A broker’s ability to capture pertinentclaims information on a sector wide level is an essential to providing a modern claims management service. Whilst many brokers have yet to adopt these analytical disciplines, those that invest the necessary time and resources have the opportunity to supply tremendous value to their clients. Glenda West, Executive Director, Claims Team, FINEX Global, Willis

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The Features

HOW LOW CAN YOU GO? Patrick McGuire explains why insurers need to recognise a balance between the costs a claimant is entitled to recover and the cost of securing legal representation.

“S

ome of you may have noticed that I like to lapse into the vernacular”. You may know this Billy Connolly quote. He used it the first time I ever saw him as a teenage boy. It was Billy’s way of saying that he likes to swear a bit. My pals and I used that phrase for years to justify the use of more choice language.

As a Scot, I can say that swearing probably does form part of our vernacular but Scottish slang is also, quite rightly in my opinion, famous for giving us some funny, yet laser sharp, insights into people and situations. There are hundreds of examples, among which my favourites include “a face like a well skelped erse” and “bolt, ya rocket”. I won’t translate these but there will be a prize for the first person who emails me with the correct translations for both.

‘Insurers want a compulsory pre-action protocol; and I think that everyone would agree that there are benefits to be had there but it cuts both ways’ Recent attempts by the insurance industry to influence the costs regime up here, through the court reform process, press-releases and general political lobbying, has called to my mind several other well-known Scottish phrases – “pull the other one, it’s got bells on”, “do you think I am

buttoned up the back” and “do you think I came up the Clyde on a banana boat”. They all mean the same thing, of course – do you think I am stupid! False confidence Unfortunately, the sweeping legislative reforms introduced in your jurisdiction by the Westminster parliament appear to have given the insurers the false confidence that they can get whatever they want these days. I am afraid to the bearer of bad news for those in the insurance industry but there is one phrase that simply will not translate into the Scottish political idiom. I am talking about “proportionate costs”. It is a snazzy sound bite for sure but it defies any logical interrogation against the reality of the way the personal injury claims process works. Insurers want a compulsory pre-action protocol; and I think that everyone would agree that there are benefits to be had there but it cuts both ways. If there is a preaction protocol, then the way that insurers control their exposure to legal costs is by settling the claims that should be settled as quickly as possible; and not repudiating good cases, making no offers or offers that are too low, irrespective of whatever the “computer says”. The key component If it is necessary for a victim of an injury to raise a court action where an insurer ought to have settled it; then surely the insurer has no right to say that the legal costs that the victim is entitled to recover should be less than the cost necessary to secure access to representation, which we all know is a key component of access to justice. There is simply, in litigated cases, a level below which legal costs cannot go below. That is a point that will not be lost on a canny Scot, whether they are on the street or sitting in the Scottish Parliament. Patrick McGuire is a Partner at Thompsons Solicitors.

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The Features

WAS JACKSON WRONG? In his Review of Civil Litigation Costs, Lord Jackson proposed the introduction of one way costs shifting for personal injury claims, he expected that this would spell the end of ATE insurance but, as Jon Gouldsmith reports, this is far from the case.

ndeed, this was at least in part his plan as he argued that recoverable ATE premiums was just an expensive one way costs shifting system in itself. Lord Jackson referred to another one way costs shifting regime that had been in place for 60 years, namely Legal Aid, which he suggested was a proven system for providing legal services without financial risk that could be mirrored. Although this would mean some loss in costs recovery for defendants, this would be far outweighed by savings in payment of success fees and ATE premiums. The sensible choice Legal Aid however was of course no longer available in PI claims and there are two important risks that continue to have great relevance to all PI claims that CFAs cannot protect against on their own, namely disbursements and Part 36 offers which defendant insurers insisted should continue to have cost consequences. Immediately after the 1st April 2013 (J-Day) it may have seemed that Lord Jackson had been correct because the sale of ATE insurance policies fell sharply, but this was to be expected. Claimant solicitors worked hard to sign CFAs and arrange ATE by the 31st March 2013 deadline. It was widely reported at the time that numbers of new PI claims and ATE sales were at record highs in the lead up to J-day (provoking criticism from some defendant representatives), but economically it was the only sensible choice for claimants. Arrange cover or face the consequences ATE sales were further increased because the recoverability of an ATE premium was not based on the date the CFA was signed, as every other Jackson change was, but on the date the policy was incepted. This meant solicitors had to arrange ATE cover for all cases with a pre 1st April 2013 CFA before the J-day deadline or risk facing a claim for negligence if they had to insure the case at a later date and deduct the premium from their client’s damages.

Squeezing profits To begin with, the war on personal injury litigation did not end for defendant insurers with the introduction of the Jackson reforms. The current government, after what seems to be ongoing and successful lobbying by insurer representatives, is continuing to review costs in PI claims. Since the 1st April 2013, the MOJ portal has been extended to non-motor claims and fixed costs have been extended for cases which drop out the portal, dramatically squeezing claimant solicitors’ profits. With a firm’s profitability reducing, there is less money available for them to bear the burden of disbursement write-offs in lost claims, therefore a policy that can be relied upon to pay out disbursements in unsuccessful cases is now seen more and more as a necessity. No guarantees For claimants themselves, the biggest advantage is the cover offered for the risk of failing to beat a Part 36 offer. Without cover, a claimant is in a far weaker bargaining position once any offer is received. On being advised that an offer is low and should be rejected but with a warning that there is no guarantee that the offer will be beaten (so they could lose some or all of their damages), most claimants would take the money rather than risk losing it all. With ATE premiums starting from £80, a claimant does not need to negotiate much of an increase in their damages before a policy starts to pay for itself. Chapter 1 of the SRA Code of Conduct 2011 requires that fee arrangements are suitable for clients and in their best interests - evidenced by solicitors discussing with their clients such risks as paying adverse costs and whether those adverse costs might be paid by someone else, e.g. an ATE insurer. It seems that a firm must at least have offered to arrange an ATE insurance policy or risk having a conduct complaint at the end of the claim if adverse costs become payable. And failing to beat a Part 36 offer is by no means the only risk of having to pay adverse costs (credit hire/repair costs, etc), no matter what Lord Jackson’s original hopes might have been. Jon Gouldsmith is Head of Legal Support at Box Legal.

So come the 1st April 2013 there was apparently almost nothing left to insure. Solicitor’s instructions suffered a similar drop for similar reasons. But we, as legal expense insurance brokers, are receiving more and more enquiries regarding our after the event products and sales are rising. So what can this be put down to and why was Lord Jackson’s assumption wrong?

MC // July 2014

“Any serviceman or woman who suffers life changing injuries deserves the very best support for life and maximum compensation” Hilary Meredith, CEO of Hilary Meredith Solicitors Limited

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The Features

THE FOG OF LAW Hilary Meredith explores why reintroducing Crown Immunity would be a catastrophic injustice for military claimants and their families.

ou may have seen in the papers lately that the MOD is complaining bitterly about lawyers on the battlefield and that the legal process interferes with effective military operations. What a load of baloney I say!

The fact that MOD are embarrassed by their ineptitude being made public is a different matter and there are numerous examples of this in ineffective or inappropriate equipment sent to theatres of conflict, that costs lives. The MOD are playing on the vast confusion caused in bringing military claims and few people including politicians, lawyers and the public understand this complex area. If, like me, you have been practicing in this area for the whole of your legal career the complexities are unraveled, the fog is lifted. I have tried to educate MPs and it particularly the press but the reality doesn’t make for dramatic headlines. Since 1987, Crown immunity to prosecution and legal action was removed allowing members of the armed forces and their families to bring a legal claim if they were injured or killed in action. The removal of crown immunity was made in a time of relative piece apart from the Northern Ireland conflict which was coming to an end, but then we had the Bosnia conflict and Gulf War 1. I brought many legal actions during this period, mainly for faulty equipment even the failure to pump tyres to the correct level on sand in the gulf as opposed to the tough mountain terrain in Bosnia, (I notified the MOD of incorrect tyre pressure and a DCI was sent round to check tyre pressures resulting in fewer accidents.) The heat of the battle... One case of significance in Gulf 1 raised liability for negligence when firing at the enemy, the case of Mulcahey v MOD. Mulcahey was tasked with swabbing out a gun whilst firing into occupied Kuwait, the Captain in charge ordered the gun to be fired whilst poor Mulcahey was still at the front end of the gun, he was not killed but rendered seriously deaf. The courts decided that in the heat of battle when decision making skills are impaired there can be no negligence and as a result combat immunity was born.

‘Crown immunity cannot come back into force, family’s need to know what happens to their loved ones and need closure, to make the Crown immune from public scrutiny will allow many mistakes to go unchecked and dangerous practices and systems unnoticed’ resulting in a loss of career and medical discharge. The MOD would currently like combat immunity to not only be in the heat of battle but also when preparing for battle or procuring the wrong equipment back in Whitehall with no proverbial ‘gun to the head’ and no impairment of decision making skills. Failing that argument, they want Parliament to enshrine combat immunity in statue as, although the courts are doing a great job in interpreting this on a case by case basis, it is not in the MODs favour and they don’t like it. Returning to the dark ages Lastly if they cannot stamp their feet and make MPs listen to them on the combat immunity issue they would like Crown Immunity reintroduced so they can return to the dark ages and are no longer accountable publicly for their actions despite the fact they are wholly funded by tax payers money. So, don’t be hood winked, combat immunity as it is interpreted by the courts works well on a case by case basis. Crown immunity cannot come back into force, family’s need to know what happens to their loved ones and need closure, to make the Crown immune from public scrutiny will allow many mistakes to go unchecked and dangerous practices and systems unnoticed. Whilst writing this, we have just one a small victory against the MOD where they appealed a decision to have all military hearing loss cases made into a GLO and combat immune despite a whole host of different reasons for deafness - not necessarily in combat - with the only commonality being the defendant, the MOD! Hilary Meredith is CEO of Hilary Meredith Solicitors.

Combat immunity though could be circumvented if there was a failure to procure the right or effective equipment or there were training issues that went back to the UK and not made in the heat of battle. For example the decision to take the snatch land rovers to Iraq which were proven to be wholly unsuitable and endangered lives or the ear defenders that do not work and cause severe deafness

MC // July 2014

carpenters

The Features

MOVING ON

he drive for reducing cost of repair as a means of balancing the combined ratio is now in the phase of diminishing returns. So the future looks bleak in terms of further efficiency gains and cost reduction in physical damage repair.

Many companies operating along the industry Value Chain have attempted to use technology to increase efficiency by reducing administrative costs. Unfortunately there are many examples where this has resulted in moving the burden somewhere else along the Chain. A reluctance to move on To date the use of technology and software has been used selectively and predominantly to streamline fairly archaic work processes reduction of double keying etc. There has been a reluctance to abandon legacy systems, preference being given to ‘add ons’ and stretching platforms and programs. There are few fully integrated processes that are used co-operatively along the Chain for common gain. Many current processes are far from seamless and are at best ‘clunky’! In future the industry will and must embrace new ways of working if it is to retain and enhance profitability and the catalyst for this is likely to include the use of social media. Company and brand reputations will be enhanced or reduced based on current customer experiences shared in open environments. Look at the use of Trip Advisor and the impact it has had on the Travel Industry. The reality is that for a long time there has been little direct connection between the revenue generating and cost expending sides of the insurance company, yet these are inextricably linked. The use of UBI or telematics has

the power to change the way insurance companies and brokers manage risk, to develop on-going relationships with customers other than the annual renewal letter, so reducing churn rates, increasing customer satisfaction and increasing brand values. Always a winner? Moreover, the wealth of data produced by telematics means premiums can be adjusted monthly so rewarding good driving practice and maintaining a balance between risk and premium charged. This has to be better than an arbitrary annual review. Similarly in the event of a claim the process can be triggered from the roadside by the motorist seconds after the accident occurs, so compressing cycle times and warding off potentially increased charges through credit hire, recovery and third party costs. Technology does not respect current market status and it does not follow that the winners in today’s motor insurance market will remain so in future – particularly if they fail to embrace technology and software changes, and especially those that include a direct customer relationship. As an example, the telematics product my company produces puts as much emphasis on what the product can do for the motorist and driver as it does the data collection and claims handling processes. Change for the better I think the recent activity of the Competition & Markets Authority (formerly the Competition Commission) affords the industry a period of introspection and to explore new ways of working together, in a genuine attempt to change practices and processes for the better. Technology and software developments are available to enable this. The UK is recognised as being the most mature motor insurance and accident repair country market in the world. That doesn’t make it the best and we can learn from other parts of the world about better practices, especially in areas such as procurement, repairer relationships, and enhancing the motorists experience for what has traditionally been a distress purchase – a necessary evil. I sincerely hope the various players in the UK will welcome this, time will tell. Graham Bosson is the Commercial Director at Auto3P UK Ltd.

‘The UK is recognised as being the most mature motor insurance and accident repair country market in the world. That doesn’t make it the best and we can learn from other parts of the world about better practices’ MC // July 2014

5 minutes with... David Simon

5 MINUTES WITH... Q

Has the industry changed drastically since you started working in it? Given the nature of my business, I see myself as involved with two industries rather than one, namely the insurance sector and the legal sector. Both have, of course changed dramatically over the last 40 years, although both are just about recognisable from that dim and distant past. Two factors have driven the changes in both sectors: regulatory changes and technology. The regulatory changes have had the most demonstrable impact on the legal sector, with the arrival of ABSs and the concept of external ownership. Technology has transformed the insurance sector. It has always been data-heavy but systems now enable the information to be captured and analysed in a way that, in theory at least, makes underwriting a less hazardous enterprise.

David Simon, Triton Global

Q A

What has been the key positive or negative impact of change in your area of the market? The handling of claims has become much more “professional”. Thanks to technology and greater emphasis on Management Information, it has become less of an art and more of a science. This, in the legal arena, has, in turn encouraged a commendable move towards the earlier resolution of claims Who inspires you and why?

Q A

Rather than single out any particular individual, I would rather say that I am inspired by entrepreneurs. There have been many in all sectors who have had an idea for re-ordering things (described by commentators at the time as “innovative”/”groundbreaking”/“shocking” or “just plain bonkers”) but who have had the determination to carry on with it and prove the doubters wrong. Have you had/got a mentor? If so, what was the most valuable piece of advice they gave you?

No, not a mentor as such, but I have had the good fortune at Triton Global to be surrounded by a team of driven, enthusiastic people who inspire me with their dedication and commitment to the business ideals we share but who also keep me grounded as to what we can or cannot realistically achieve. If you were not in your current position, what would you be doing? That is a difficult one. Had I not taken the plunge a few years ago and created Robin Simon LLP and then Triton Global Limited, I would probably now be a happily retired former solicitor, tending my garden in Derbyshire!

Q A

David Simon is the Chairman of Triton Global Limited, a multi-disciplinary practice providing outsourced claims, adjusting and legal services to the insurance sector.

LANCE MASON SOLICITORS EXPERIENCES 2,500% GROWTH Regional practice enjoys rapid expansion utilising Proclaim Practice Management.

egional law firm, Lance Mason Solicitors, has announced a 2,500% growth in headcount since implementing the Darren Gower Proclaim Practice Management Software solution from Eclipse Legal Systems. The Lancashire-based practice now employs approximately 80 members of staff, having started off as a niche, 3-person firm. Lance Mason provides a broad range of services to commercial clients and specialises in accident and injury claims. As a small firm back in 2011, Lance Mason made the decision to implement Eclipse’s Proclaim Practice Management solution as a platform for ambitious growth plans.

MC // July 2014

Proclaim is utilised by all Lance Mason staff, providing a core centralised Matter Management solution for a broad range of practice areas. The firm also utilises Proclaim as its practice accounting and reporting toolset, providing full integration with fee earner activity. The Proclaim Compliance solution provides full ‘endto-end’ risk management throughout the lifecycle of a matter - fully integrated within the overall Practice Management system. For client service, Lance Mason utilises Eclipse’s FileView tool to provide secure, live, online access to matter data. Mark Fallon, CEO at Lance Mason, comments: “Our ethos has always been to provide the very best level of service, in the most technologically efficient

environment. We chose Proclaim due to its inherent scalability and flexibility - and this decision has proven to be a good one as we have enjoyed headcount growth of 2,500%. By making sure we use Proclaim’s automation features we can build in a structured client ‘journey’ which makes our services extremely transparent. To survive and thrive, service levels are becoming key - and that’s where we can really stand out from the crowd.” For further information, please contact Darren Gower, Marketing Director at Eclipse Legal Systems via: darren.gower@eclipselegal.co.uk or call 01274 704100.

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