Modern Claims Magazine 9 by Charlton Grant

September 2014 | Issue 09 | ISSN 2051-6495 News: The Association of British Insurers (ABI’s) James Dalton outlines the body’s strategic approach, both past and present and explains his hopes for the claims industry moving forward. The Crystal Ball: Tovah Grosscurth explains the need to keep the customer front of mind during times of change in the UK Personal Lines market.

Modern Claims Magazine | September 2014 | Issue 09

“More and more, e-mail is replacing the good old fashioned ‘conversation’ and removing, bit by bit, what was such an important part of the insurance market – negotiation” Neil Sully, Triton Global

ASHWIN MISTRY “As the whole sector is united in being ‘distrusted’, I wanted to take the opportunity to get our act together as a separate sector and prove to whoever is prepared to listen that we are different, listening and can change accordingly” Supported by Charlton Grant

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Welcome to B

y the time this issue of Modern Claims lands on desks, the long summer nights and sunny days will be drawing to a close. As people return from holiday and the autumn months approach, the claims industry has a chance to reassess, take stock and move forward, towards the end of 2014. Despite the fact that this issue has been put together towards the back end of the summer months, when speaking to all our interviewee’s, feature writers and columnists, there seems no shortage of positivity, zeal and genuine desire to push on through the changes as the market reaches towards a period of greater stability for practitioners and consumers alike. I spoke to the new President of the Chartered Insurance Institute (CII), Ashwin Mistry, who appears highly enthusiastic about his new role at the Institute and also about the need for the claims industry to ‘take the bull by the horns’ and make the most of opportunity and change for the better (full coverage on pages 13-15). I also spoke to Neil Sully, the Global Head of Claims at Claims handling giant, Triton Global, about managing consumer expectation and emerging trends in the international claims sphere (pages 16-18). Richard Houseago, Partner at Greenwoods Solicitors explains the intricacies and complexities of policy wording and drafting, as well as the need for underwriters to adopt

Modern Claims Magazine

a rigorous approach to ensuring the intentions of insurance policies are clear from the outset (pages 50-51). The UK Personal Lines market continues to evolve and what was once a pure intermediated sector is now dominated by direct insurers and aggregators. Tovah Grosscurth, RSA Director of Home and Pet Claims, explains the need to keep the customer front of mind during times of change on pages 52-53. With this issue of Modern Claims we are also producing a special supplementary edition, with a legal focus on the personal injury side of the claims market. As with Modern Claims, the Supplement is jam-packed full of associations, practitioners and experts and I hope it offers an insight into the state of the PI market as it stands and moving forward. As ever, I’d like to thank all the contributors to this issue of Modern Claims and the Personal Injury Supplement. If you have any ideas or thoughts on this issue or a future publication, I’d love to hear from you. Drop me a line on 01765 600909 or e-mail me via: charlotte.parkinson@charltongrant.co.uk

Charlotte Charlotte Parkinson, Group Editor, Modern Claims Magazine

Issue 09 – September 2014 | ISSN 2051-6495

Project Director Kate McKittrick

Head of Sales Group Editor Charlotte Parkinson Rachael Pearson

Accounts Director Karl Mason

Events Director Julia Todd

Project Manager Kate Netherwood

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 // September 2014

CONTENTS 03-08 INTRO & THE NEWS 7 James Dalton talks news

The Head of Motor and Liability at the Association of British Insurers (ABI), outlines the bodies strategic approach, both past and present and explains his hopes for the claims industry moving forward.

11-20 THE INTERVIEWS 13 Interview with... Ashwin Mistry

Charlotte Parkinson, Modern Claims, caught up with the new President of the Chartered Insurers Institute (CII) about how the profession can learn from other sectors and the need to ‘take the bull by the horns’ in order to satisfy consumers moving forward.

16 Interview with... Neil Sully

Charlotte Parkinson, Modern Claims, spoke to the Global Head of Claims at Triton Claims (part of Triton Global), about what the UK insurance market can learn from its international counterparts, global trends and the need for flexible and bespoke Management Information in an evolving market.

21-44 THE OPINIONS 22 Sector Soapbox

Modern Claims spoke to the representative industry bodies, BIBA; FOIL; MASS and the ARC, to gauge their perception on the current state of play for the claims market.

25 Credibility issues...

David J Williams, AXA Insurance

25 The Changing Face of Claims

Claire Larbey, Parabis Law LLP

27 An antiquated theory?

Jonathan Hewett, Octo Telematics

27 A programme of improvement

Alistair Schuberth, Willis Group

29 The new ‘hot potato’...

Nicola Klimkowski, LAMP Services Limited

29 Invest, then intergrate...

Darren Gower, Eclipse Legal Systems.

31 A disaster waiting to happen?

Chris Marden, Keystone Legal

31 The travelling pendulum...

Tim Wallis, Expedite Resolution, Trust Mediation and others

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

Craig Budsworth Chairman, MASS & Director, Craig Budsworth Legal Services Ltd

Alistair Kinley Head of Policy BLM

Darren Gower Marketing Director Eclipse Legal Systems

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

David Johnson President FOIL

Andy Whatmough Managing Director S&G Response Chris Marden Director Keystone Legal Claire Larbey Partner and Compliance Officer for Legal Practice (COLP) Parabis Law LLP

MC // September 2014

David J Williams Managing Director, Underwriting AXA Insurance Derek Cooper Managing Director [Veracity] Claims Solutions Consultancy Dez Derry CEO Mmadigital

Don Clarke Partner, Director of Strategy Keoghs Donna Scully Partner Carpenters Gerry Lee Senior Partner P R Hanna Solicitors, Belfast Graeme Trudgill Executive Director BIBA Hilary Meredith CEO Hilary Meredith Solicitors James Dalton Head of Motor and Liability ABI Jonathan Hewett Group CMO Octo Telematics

Lara Mellor Claims and Operations Manager Claims Management & Adjusting Ltd

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

Lisa Beale Head Checkaprofessional.com

Tovah Grosscurth Director of Home and Pet Claims RSA Group

Nicola Klimkowski Head of Business Control and Development LAMP Services Limited

Zoe Holland Managing Director Zebra Legal Consulting

Paul Lawrence Managing Director Thompson & Bryan Richard Houseago Head of Property Risks and Coverage Greenwoods Solicitors Rob Smale Claims Director Ageas Insurance

35 The next generation...

Lara Mellor, Claims Management & Adjusting Ltd

55 A winning formula...

35 Why you should invest now...

Dez Derry, mmadigital

37 Fit for purpose?

Paul Lawrence, Thompson & Bryan

37 To outsource or insource? That is the question.

Derek Cooper, Veracity Claims Solutions

39 Pause for thought...

S&G Response celebrated its 5th birthday on 11th August 2014. In that time it has grown at 100% per annum from a standing start to now employing 45 people and a turnover target of £19M in 2014/2015. Charlotte Parkinson, Modern Claims, spoke to the management team, about why they chose to integrate so closely with Bott and Company Solicitors Limited.

56 Legal Opinion

Zoe Holland, Zebra Legal Consulting

Modern Claims’ panel of legal experts discuss the most pertinent issues facing the claims sector at the moment.

39 The Ageas Way

58 5 minutes with...

41 The traditional path?

58 Superior service...

Rob Smale, Ageas Insurance Andy Whatmough, S&G Response

41 Time for action...

Hilary Meredith, Hilary Meredith Solicitors

43 An informed choice...

Don Clarke, Keoghs

Heavyweight Yorkshire practice, Chadwick Lawrence, has implemented the Proclaim Practice Management Software solution from Eclipse Legal Systems.

Lisa Beale, Checkaprofessional.com

43 Legislative certainty: gone forever?

Gerry Lee, P R Hanna Solicitors

45 – 59 THE FEATURES 47 Risk and Compliance: Seatbelt or Straight Jacket?

Risk management done badly can choke creativity and stunt a firm’s growth; Michelle Garlick and Joanne Smith consider how risk management and its bedfellow compliance can, when done well, be a seatbelt and not a straight jacket.

50 Pushing the boundaries

Richard Houseago outlines why underwriters must adopt a rigorous approach to policy drafting and why understanding the meaning of words within policies, is key.

52 Gazing into the crystal ball

The UK Personal Lines market continues to evolve and what was once a pure intermediated sector is now dominated by direct insurers and aggregators. Tovah Grosscurth explains the need to keep the customer front of mind during times of change.

57 MC // September 2014

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James Dalton talks news

JAMES DALTON TALKS NEWS... The Head of Motor and Liability at the Association of British Insurers (ABI), outlines the bodies strategic approach, both past and present and explains his hopes for the claims industry moving forward.

eform of the broken civil litigation system for low value personal injury claims remains a key strategic priority for insurers and our customers. The whiplash reform programme was first introduced at a Downing Street summit hosted by Prime Minister David Cameron in February 2012. Since then, insurers have been delivering on their commitment to pass on to consumers, through lower car insurance premiums, the cost savings resulting from reform. These savings have been delivered firstly by reducing fixed fees for claimant solicitors - which removed the unnecessary fat from the system – and the changes introduced by LASPO. Since the Prime Minister’s insurance summit, the average car insurance premium has reduced by 14%. That’s extra money in the pockets of honest motorists. The reform programme is certainly going in the right direction and must continue. Change for the better? This year has seen the government decide to reform the law on “gross exaggeration” in personal injury claims following the Supreme Court’s decision in Summers v Fairclough Homes. There is currently no clear disincentive to prevent claimants from bringing exaggerated claims; even where a genuine claim has been deliberately exaggerated, the courts would still order that the defendant to pay the genuine part of the claim anyway. In essence, this is a no lose situation where the claimant will enjoy a pay day regardless. This is simply not acceptable and we are pleased to see this being addressed through the Criminal Justice and Courts Bill currently before Parliament. Similarly, we are pleased that the distasteful practice of solicitors offering inducements like cash or I-pads to claimants to make personal injury claims is to be banned. This practice only serves to reinforce to unscrupulous claimants that there is a compensation culture to exploit. And it is positive that most claimant lawyers have supported this change. In fact, it seems that the Solicitors Regulation Authority is almost alone in thinking that continuing to allow solicitors to offer inducements is a good idea. So it’s positive that the Ministry of Justice has decided to overrule their decision.

What’s on the horizon? The latest phase of the government’s plans to address the whiplash epidemic was announced at the beginning of August. The Ministry of Justice announced a two stage process for reform of the medico-legal reporting process. In stage one of the reforms, which follow a public consultation in May, the Government will: • introduce a fixed fee of £180 for a first medical report with fixed fees for any subsequent reports commissioned; • amend the RTA Protocol to define “soft tissue injury” (as opposed to just whiplash) which extends to vehicle occupants and will include minor psychological injury; • ban treating medical experts from preparing medical reports except in exceptional circumstances; • allow for the defendant to provide their version of an accident’s circumstances if medical causation is in dispute; • restrict the use of pre-medical settlement offers given that a defendant’s offer to settle will carry no cost consequences until a fixed cost medical report has been received.

‘We are pleased that the distasteful practice of solicitors offering inducements like cash or I-pads to claimants to make personal injury claims is to be banned. This practice only serves to reinforce to unscrupulous claimants that there is a compensation culture to exploit’ MC // September 2014

James Dalton talks news

The new fixed costs regime is based largely on the existing cross industry Association of Medical Reporting Organisations (AMRO) agreement. But this is a voluntary arrangement between those medical reporting organisations and insurers that choose to abide by the Agreement’s rules. By fixing the fee for the initial medical report in the Civil Procedure Rules, this will remove the incentives to game the system and provide increased cost certainty to all parties. The new rules will not simply address the issue of cost though. Secondary reports may only be commissioned where it is specifically recommended by the expert who prepared the initial report. This should prevent claimant representatives from routinely and unnecessarily instructing reports from orthopaedic surgeons and psychiatric consultants, the latter of which is a growing, but not yet widespread, issue and is isolated to the behaviour of a number of specific and easily identifiable claimant law firms. Importantly, the new rules provide sanctions for noncompliance by claimant representatives. Where an initial report is incorrectly obtained outside of the fixed cost scheme, the cost of that report will not be recoverable from the compensator and proceedings will not be able to commence until a compliant report is produced. The new rules have already been approved by the Civil Procedure Rules Committee (CPRC) and will come into force on 1 October. Collaborative thinking... But it’s not just the cost and type of medico-legal reports that are the problem. Insurers have long argued that the fundamental underpinnings of the medico-legal reporting process are not fit for purpose. When a medical expert is selected by someone with a financial interest in the outcome of the claim, that expert’s independent and credibility will always be in question. We need a system where the provider of a medical report needs to be financially independent from the party who has commissioned it. So we welcome the government’s decision to deliver exactly such a framework as the second stage of their reform programme. So much so in fact that the insurance industry is prepared to fund the set up costs of an IT platform and to get it up and running as soon as possible. We envisage a system where the claimant lawyer will be randomly allocated a medical expert who has no financial linkage to the claimant lawyer and is accredited to prepare medical reports. Making sure that the practitioners preparing medical reports are actually up to the job is also absolutely critical. So we are pleased to see that, hand-in-hand with delivering the independence of medical practitioners, they will also be required to become accredited. The process of accreditation is essential to ensure that those responsible for diagnosing whiplash are suitably experienced, skilled and qualified to do so. The government is committed to setting up a full process of accreditation of experts as soon as possible. Insurers look forward to working collaboratively with other stakeholders to develop an accreditation framework in which we can all have more confidence than we do now. The process will need to become self-funding over time and medical practitioners will need to choose whether they wish to become accredited and be part of the new framework.

MC // September 2014

As important as independence and accreditation are, it is important that some centralised analysis is undertaken of the medico-legal reports that are produced. It’s all very well knowing that a report has been produced at a fixed fee but we need to be able to analyse what that report actually says. Management information will be critical to understanding claim numbers and trends. And it will be essential to developing a robust peer review and audit programme of the reports that experts are preparing so that any outliers from the market norm are identified and explanations can be sought. The next stage... There should be little impact on the genuinely injured victim claiming compensation. Most are not especially concerned with who undertakes their medical assessment as long as it is undertaken by someone who knows what they are doing and it is done in a timely way. The changes also represent a positive development for the reputation of the claims industry – by which I mean all those involved in dealing with personal injury claims, not just insurers. If they looked at it, most members of the public would say that the current system is broken so fixing things is in the claims industry’s collective interest. The bandits will need to either change their ways or get out of the system. Honest motorists will see the benefits through premium reductions if the changes result in lower claims expenditure by insurers. The next stage of the reform programme has to be looking at the limitation period for low-value personal injury claims and increasing the small claims track (SCT) limit. If the claim is notified in a timely manner and the medical professional is able to examine the claimant while they are still injured or recovering, then there is the potential to produce a robust clinical finding. However, the current three year limitation period means that in some cases the medical examination takes place years after the accident when the claimant has fully recovered from any injury sustained. Therefore, the medical report provides absolutely no value as it simply reports the subjective view of the claimant that they were injured. And we have to increase the SCT limit from its 1991 levels. We believe the case for an increase has been made and it is now a question of timing. Insurers have long argued that it is important to introduce safeguards for claimants in a system with an increased SCT limit and the industry would welcome the opportunity to work with others to help ensure these are properly introduced. It is a missed opportunity for the Government not to combine its current work with a “back up plan” on how to increase the SCT limit with appropriate safeguards. If the changes currently being developed do not result in meaningful change then an increased SCT is the obvious next step to improving our civil litigation system. James Dalton, Head of Motor and Liability at the Association of British Insurers (ABI).

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The Interviews

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Interview with... Ashwin Mistry

Interview with... ASHWIN MISTRY Charlotte Parkinson, Modern Claims, caught up with the new President of the Chartered Insurers Institute (CII) about how the profession can learn from other sectors and the need to ‘take the bull by the horns’ in order to satisfy consumers moving forward.

Q A

What did it mean to you to be nominated as President of the CII?

I always thought the CII was London-centric so I was initially surprised that I was asked as I am not based in London. To be asked was a very pleasant surprise and I am extremely pleased and enthusiastic about taking on the role.

Q A

What are your key aims/hopes for your Presidency?

The big issue for me at the moment is the Consumer Agenda, it is very much in play and I have watched the Utilities and Banking sectors being battered by the media. Social media and other, direct means of communication, now means that the consumer dominates

Ashwin Mistry OBE ACII Chairman, Brokerbility Ashwin’s career began in 1978 at Guardian Royal Exchange as an A Level student, although immediately put on to the Graduate Professional New Entrant Scheme. In 1983, he joined Brett & Randall Insurance Brokers Ltd and after serving on the Insurance Institute of Leicester Council for a number of years, became President of the Institute in 1996. During his career he served on a number of public bodies including, Leicestershire Training & Enterprise Council, Leicestershire Careers & Guidance Service, Leicestershire Ambulance Trust and Leicester Chamber of Commerce. In 1997, he was invited by the Rt Hon. David Blunkett (the then Secretary of State for Education) to join the National Skills Task Force, becoming Chairman of Leicestershire Learning and Skills Council in 2001. In recognition for his work in Education & Careers he was awarded an OBE in the 2000 New Year’s Honours. In 2006 he was instrumental in establishing Brokerbility, a federation of staunch Independent Brokers and having lead a very successful MBO in 2009 his role, is now of Executive Chairman of the Group.

MC // September 2014

Interview with... Ashwin Mistry

‘As the whole sector is united in being ‘distrusted’, I wanted to take the opportunity to get our act together as a separate sector and prove to whoever is prepared to listen that we are different, listening and can change accordingly’ every form of life. I want to grab the initiative and, as the whole sector is united in being ‘distrusted’, I wanted to take the opportunity to get our act together as a separate sector and prove to whoever is prepared to listen that we are different, listening and can change accordingly. The moment is here to take the bull by the horns and progress and I have started this with the Once Voice Agenda. Currently, there are a number of organisations all purporting to retain sovereignty of what they discuss with the media. In many ways there are the same key issues affecting all the bodies within the sector, such as the British Insurance Brokers Association (BIBA), the Association of British Insurers (ABI) and the Chartered Institute of Loss Adjusters (CILA), amongst others. There are common themes across the piste and my goal would be to collaborate as organisations if there are objectives we agree on wanting to achieve. Being a Broker and having dealt with claims, I know that organisations do a great job but we seem to be lacking the ability or the vehicle to get the message out without sovereignty or without upsetting anybody.

Q A

What do you anticipate will be your biggest challenge(s) during your time as President?

The challenges to me are obvious; most past Presidents of the CII have been in the latter stages of their careers, whereas more recently there has been a younger contingency coming through. I have a day job and am trying to run and grow a business at the same time as taking on this hugely important role, which is a challenge. There is so much going on with the revised regulator and the volume of thematic reviews coming out and there is a real opportunity to grab because of this; some of us do have the ability to make a difference, so we should have a go. I want to look at those who are Senior Managers and professionals within our industry and ask them what legacy they want to leave behind. My one big regret would be if, in 5 or 10 years time, we looked back and thought; ‘We had

MC // September 2014

the opportunity, why didn’t we do anything?’. The insurance sector also needs to learn from other sectors which have not taken opportunities such as the ones we have and are still in disarray.

Q A

Do you think your Broking background will be beneficial in your role at the CII?

That is one of my key assets because I deal with real customers and this keeps my feet on the ground. I know about customer concerns, I understand risk management, still look after a book of clients and manage claims so I am very proactive in that sense. I can’t run away with theory, my thinking is practical.

Will you be making any drastic changes to the agenda and is there anything implemented by the immediate past-President, Tom Woolgrove, that you would like to amend or continue working on?

‘I know about customer concerns, I understand risk management, still look after a book of clients and manage claims so I am very proactive in that sense. I can’t run away with theory, my thinking is practical’

The CII has never had a huge shift in agenda and it was started in the public interest. The Professional Agenda will continue and will always remain, our aim is to continue raising the bar. I would like to continue and build on discussions which have already begun with wider industry stakeholders, which is desperately important. The backgrounds of the last half-dozen Presidents, Tom in particular, brings knowledge and

insight in the retail sector and this has created a nice balance given my knowledge of broking.

Q A

In light of changes to the claims sector, the consumer is now demanding more; how is the sector coping with this?

The industry needs to recognise what a great asset Claims Professionals are to the insurance industry. The human aspect of claims must not be forgotten. When a, usually life changing, event takes place, the first port of call is almost always the insurance intermediary. We need to recognise that the intermediaries do a phenomenal job and investment in talent here should not be neglected. Transparency is also key and the new Consumer Insurance Bill for General Insurance is going through at the moment, the Consumer Disclosure Act is also in play and these things are changing the dynamic of how policy holders are being treated; things are moving in the right direction. The whole customer journey needs to be understood and this is picked up in the Financial Conduct Authority’s (FCA’s) thematic review. This review highlighted the need to improve how we communicate claims up until a potential settlement. Methods of communication are so vast at the moment so it should not be difficult to keep policy holders in the loop; mitigating customer frustration in that sense is key. The UK market can also learn from international players, as to how they deal with customers and best practice, as they often adopt a much more proactive, rather than reactive approach to dealing with customers.

Q A

How is the CII working alongside other industry bodies, ultimately, in the interest of the consumer?

This is what I have started with my One Voice Agenda, I want to bring stakeholders round the table and engage them as to what is going on. We are all doing our little bit but a more coherent action plan if required. The entire claims process needs to be simplified for the consumer and this goes right down to factors such as policy wording and how to make a claim. Stakeholders engaging over common interests is fundamentally important and ego’s need to be set aside in order to accomplish this.

Interview with... Ashwin Mistry

‘The UK market can also learn from international players, as to how they deal with customers and best practice, as they often adopt a much more proactive, rather than reactive approach to dealing with customers’

The Insurance Broker Standards Council (IBSC) was launched earlier in the year; do you think this will benefit the profession/consumer or does an increase in the number of industry bodies create confusion for the profession/consumer in terms of coherency and feedback?

This is an interesting question and I have spoken to Paul Anscombe (Chair), as well as other members of the IBSC about its proposed role. There are a number of common threads with its mission and ours; the first one is to raise the bar in terms of communication and professionalism. We are all committed to the reputation of our sector and want to tackle key issues such as dual pricing. Our end game is exactly the same and if we get bogged down by the fact that there are ‘too many organisations’, we could become politically embroiled in a debate that I am not keen to undertake. The IBSC fill a gap in the market and as long as we agree on the eventual outcome, there is no problem.

What is the next big area of potential change, which insurance professionals should be aware of?

The big challenge for all insurance professionals, collectively, is the arrival of new capacity into the market. In times of political and economical uncertainty, we must be mindful, that if we start to over complicate the consumer agenda, someone else, who is extremely good at delivering what the consumer wants, will do it instead. Google, for example, has responded significantly to consumer demands and if they use the data they hold, it won’t be long before people change their buying habits and a new capacity provider comes into the market. There also some key risks such as cyber and pollution but we must get the Consumer Agenda right above everything else. Once again, our industries should be looking at other sectors, such as retail. Lidl and Aldi have taken market share over and above Marks and Spencer, Sainsbury’s and Waitrose because they have listened to the consumer and given them what they want.

‘Stakeholders engaging over common interests is fundamentally important and ego’s need to be set aside in order to accomplish this’

At the end of 2013, the CII laid out its plans to overhaul the corporate Chartered status for firms, in a drive to achieve greater trust among consumers and raise standards across the profession; have the objectives of this overhaul been achieved?

We are at the beginning of a journey and there is still some way to go. As an institute, we currently employ just over 300,000 people, ranging from insures, brokers, to other intermediaries. First and foremost, we must make sure everyone in the sector believes in our aims because if they don’t, the issues we are trying to tackle will fall on their knees. As a sector, we must believe in the fact that we add value to the economy and to the end consumer and that we are working in a genuine service sector. Once that is considered and dealt with, the issue of Chartered status is an easily trodden path. The Chartered status brand is all about recognising trust, that businesses are investing in genuine talent and putting something back into the industry; the status reflects Culture and a desire to raise the bar.

MC // September 2014

Interview with... Neil Sully

Interview with... NEIL SULLY Charlotte Parkinson, Modern Claims, spoke to the Global Head of Claims at Triton Claims (part of Triton Global), about what the UK insurance market can learn from its international counterparts, global trends and the need for flexible and bespoke Management Information in an evolving market.

‘More and more, e-mail is replacing the good old fashioned ‘conversation’ and removing, bit by bit, what was such an important part of the insurance market – negotiation’

Q A

Should collaboration between the insurance and legal professions be improved and if so, how?

We are slowly seeing more and more collaboration between the insurance and legal professions. For example, law firms offering claims handling services brings them closer to the insurer and helps them to understand the insurer’s business drivers and reserving philosophies. In addition, more and more law firms are willing to move away from the more traditional ‘hourly rate’ models in favour of fixed fee offerings. Where things become difficult is when defendant law firms have dual roles; acting for insurers and the policyholder can become difficult as interests are not always aligned. A number of insurers feel that lawyers are too closely linked with policyholders, rather than the insurers. This can create relationships such that, were the policyholder to move carriers at renewal, the insurer would lose the business but the law firm would not. Whilst that is the law firm’s prerogative, it makes for an uneasy relationship with insurers who do not see those firms as loyal to them.

Q A

How can/should the cost of managing a claim be reduced for the end consumer?

Keep the claim out of lawyers’ hands! Everyone knows that the legal role in any claim is the most expensive part. Whilst there is a time and a place

MC // September 2014

Interview with... Neil Sully

‘Flexible and bespoke Management Information is needed to ensure that insurers will no longer work off rigid, high-level rating data but instead can look at each risk and directly compare an individual loss ratio and claims experience against their default actuarial knowledge’ for such involvement, and clearly legal expertise can be very worthwhile on the right claims, all such costs eventually work their way back through to the consumer - via their claims experience, then back into insurers’ actuarial teams and then ultimately factored into premium rates going forward. The quantum of a claim very rarely goes down, and therefore the speed of assessment of liability and resolution is key. Accordingly, the more claims that can be resolved to the satisfaction of all parties, without the need for lawyers (on both sides) means a lower overall base cost for the handling and management of claims.

Q A

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

Insurers are far more tech-savvy now than in the past but flexible and bespoke Management Information is needed to ensure that insurers will no longer work off rigid, high-level rating data but instead can look at each risk and directly compare an individual loss ratio and claims experience against their default actuarial knowledge. This would give an insurer a competitive edge over its competitors by being able to rate risks individually rather than simply via a rating matrix.

Neil Sully Neil has over 20 years experience in the Lloyd’s and London insurance markets and has been with DCS since its inception in 1998. Neil started his career as a financial lines claims broker at C.T. Bowring (now Marsh) before joining DR Lowe Syndicate 657 as a Senior Claims Handler in 1994, originally sitting at the Syndicate’s box in Lloyd’s, before being appointed as London Claims Manager for the Syndicate’s regional underwriting agency in 1996. On joining DCS in 1998, Neil’s initial responsibilities were in relation to day-to-day UK claims services. As the business grew, Neil took on Operational responsibilities in the UK, before more recently taking over responsibility for the DCS international offices. Neil sits on the Triton Executive Leadership Team and is responsible for the claims management and audit elements of the business, both in the UK and internationally.

Q A

How is the Triton business model striving to innovate in a rapidly changing marketplace?

Our model is based upon 3 principles:

• A partnership working relationship – not Master and Servant. We don’t encourage our clients to think of us as an outsourced service provider and instead work with them to evolve services and solutions • The right compliment of appropriately qualified staff to handle both volume claims business, as well as complex losses (i.e. a mirror of any in-house claims department) • Cutting-edge claims and workflow systems that produce market-leading Management Information and reduce the cost of the claims process, which is also a saving that can be passed to the client. In a nutshell, we want insurers to think of us as an extension to their own claims department, just in another location. We strive to be fully embedded within their business, ensuring that there is no disconnect or inconsistency in our respective approaches. This also means that both the underwriting and claims teams still get the benefit of our experience, data capture and cost savings.

Q A

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

From a procurement perspective, Invitations To Tender (ITTS) and Requests For Proposals (RFPs) are more thorough than ever and the subsequent Service Level Agreements and Key Performance Indicators

‘Where things become difficult is when defendant law firms have dual roles; acting for insurers and the policyholder can become difficult as interests are not always aligned’ MC // September 2014

Interview with... Neil Sully

are becoming more and more sophisticated. Non-claim personnel (Compliance, IT etc) are also having a far greater say in which Third Party Administrators (TPAs) or experts should or should not be used. It is unusual now for insurers to follow rated individuals when they change businesses from a ‘panel’ firm to a ‘non-panel’ firm as the “Computer says ‘No’ ”. This means that often the best individual for a certain type of claim cannot be used, which not only means that the consumer isn’t getting the very best support that is available, but that the claim may not be resolved as well or as cheaply as it might otherwise have been.

Q A

What can the UK market learn from its counterparts in the international marketplace?

One observation I have from visiting all our international offices regularly is how the phone is used as a means of communication far more than in the UK. More and more, e-mail is replacing the good old fashioned ‘conversation’ and removing, bit by bit, what was such an important part of the insurance market – negotiation. This may be a by-product of predominantly working in the extraordinarily busy London market and echoes recent strides forward

There is no substitute for experienced claims handlers on the frontline and these services need to be paid for appropriately. As the old saying goes: if you pay peanuts you get monkeys! regarding electronic underwriting and claims files, which has almost seen the demise of the ‘traditional broker’. Whilst electronic communications bring greater efficiencies, evidence of action and improved turnaround times, the reduction of the conversation or ‘face-to-face’ meeting is not a welcome one. I am pleased that there is still a place for a more regular, personal form of communication in our other territories and I am pushing for more of this in the UK.

MC // September 2014

Q A

If you were a law firm, what strategy would you be approaching the market with?

I would change my business modelling to future-proof against the death of the hourly rate. I would then remind all staff to remember who their ultimate client is.

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?

I agree that it has become too price driven generally but that has actually been a positive for our business as our larger claims management competitors who lowball their price, or perhaps put forward a loss-leading claims management service as a conduit for legal instructions, are ultimately found out. There is no substitute for experienced claims handlers on the frontline and these services need to be paid for appropriately. As the old saying goes: if you pay peanuts you get monkeys!

Industrial Disease L e g a l M a r k e ti n g Atrium Legal Services was established in 2008 and since then has grown into the largest specialist Industrial Disease Legal Marketing Company in the UK. We work closely with our Panel Solicitors to ensure that every case is of the highest quality.

“

Matthew Horne, Managing Director For a long time I have believed that working closely with our law firms and business partners will enable us to become a cut above the rest. This award is a true testament to that!

” You expect quality....We deliver! “ ” “ ” Having worked with the team at Atrium Legal Services for almost 5 years, I can confidently say that their prime concern is the wellbeing of each potential client who contacts them. From a solicitor point of view, they offer a very slick service enabling me to fully assess the merits of a claim at the outset.

Steven Eldred, Partner Thomas Eggar A Legal 500 firm

The management at Atrium Legal Services demonstrate how to operate efficiently in a complex market, not just from a compliant perspective but ensuring the best interests of their clients are prioritised at all times.

Karen Jackson, Director Roberts Jackson Solicitors.

www.AtriumLegal.com

enquiries@AtriumLegal.com

The Opinions

21-44

THE OPINIONS

Sector Soapbox

Sector Soapbox How things have changed…

s we approach the third anniversary of the riots, BIBA is submitting its response to the consultation ‘Reform of the Riot Damages Act 1886’. So 128 years on, how does BIBA view the proposals?

In 1886 Karl Benz unveiled the Benz patent Motorwagen – widely regarded as the first car, although neither Prime Minister Gladstone or Salisbury saw any need to include this in the ACT at the time! So we were pleased to hear that motor cars are due to appear in the revised Act. However, this is not the progress we imagined. It is disappointing that the Home Office is proposing that insurers are NOT able to recover their losses for motor vehicles. Surely the same moral principle of police accountability for riot damage and how the police are intrinsically linked to preventing or quelling such disturbances should remain. We do not see why a policyholder should lose their NCB and excess, and the insurer foot the bill. The truth is only a small minority of third party only vehicles will benefit from this change.

What’s the point of SARAH?

ew activities in life are risk free and the ill-considered promotion of health and safety always has the potential inadvertently to prevent socially-desirable activities. The Health & Safety Executive (HSE) website pages on dispelling H&S myths provide some insight. They describe hundreds of examples of H&S being used as the excuse for many bizarre rules or bans, unjustly in the Executive’s view. Yet, the existence of those pages and the volume of reported scenarios (301 over 31 months), are testament to UK’s paranoia about being sued for breaches of H&S rules. Is this paranoia justified? Tomlinson v Congleton BC might suggest otherwise. The case concerned an individual severely injured after diving into a shallow artificial lake who had seen his claim fail because he ignored clear warning signs. Lord Hobhouse remarked: “The pursuit of an unrestrained culture of blame and compensation has many evil consequences and one is certainly the interference with the liberty of the citizen.” The case was appealed to the House of Lords before that outcome was accepted.

MC // September 2014

We are pleased with the proposals to recognise riot areas; this should make it easier for individual property owners to establish a claim. We also agree that longer deadlines for making claims, interim payments and compensation on a new for old basis is needed. We do not believe the decision on whether the activity is a ‘riot’ should lie with the Police and Crime Commissioner. It should instead rest with a panel of independent officials. This will prevent the problems experienced by victims in 2011 where police and politicians evaded the term ‘riot’ in public addresses to avoid triggering compensation. The introduction of a cap on the size of business that is eligible to claim (£2m turnover is being proposed) or the amount that insurance companies can reclaim is unacceptable. We cannot see a case for discriminating against the size of a business. The police responsibility to maintain peace remains and the need for compensation is no less; we are joining the ABI in lobbying against this. We disagree that riot claims should attract an excess. A non-fault motor accident victim is allowed legally to recover their excess from the negligent party. Therefore, we believe that riot victims should be allowed to recover their excess. Finally, BIBA is pleased that modern methods for submitting claims like email and phone submissions will finally be accepted. How things have changed since 1886! Graeme Trudgill, Executive Director, BIBA.

The day-to-day picture is of a judiciary ready to push the boundaries of what is considered negligent, in order to see an injured individual compensated. Wider implications such as the cost of public liability insurance, or the viability of continuing to provide socially beneficial services, are frequently ignored. So will the Social Action, Responsibility and Heroism Bill (SARAH) redress the balance? The Bill’s wording is a concern. When determining whether there has been a breach of duty/ negligence, the courts must ‘have regard to’ whether the defendant was acting ‘for the benefit of society or any of its members’, ‘demonstrating a generally responsible approach towards protecting the safety or interests of others’ and/or acting ‘heroically by intervening in an emergency’. Such an assembly of subjective terms does not bode well. Preserving judicial discretion is one thing but the Bill currently does not appear to move matters very far forward from Tomlinson and s.1 the Compensation Act 2006, which already requires the Courts to ‘have regard to’ whether requiring particular steps to be taken would prevent or discourage persons from taking part in ‘desirable activity’. As laudable as SARAH may be conceptually, one wonders whether ultimately it may not end up being a toothless tiger. David Johnson, President, Forum of Insurance Lawyers (FOIL).

Sector Soapbox

A level playing field? The Ministry of Justice has recently announced its plans to ban incentives in any form, how will this impact claims professionals and the wider market?

t is to be hoped that this can only be a good thing for the sector. It is some time now since CMC’s were banned from offering inducements for claims and it remains to be seen how far this has gone to help the image of CMC’s and the wider market. The impact of the ban for CMC’s was both lessened and worsened by the uptake from many law firms into the space and increasing their advertising campaigns as a result of the referral fee ban. It was lessened in that the positive impact this should have had on the CMC sector was reduced as the Daily Mail seemed unable to distinguish between CMC and law firm advertising, just lumping everyone in together. It was worsened in that the fact that lawyers have been doing this seems to also be the CMC’s fault in the first place, which is quite frankly ridiculous. It is also interesting that the behaviour of some firms in offering incentives actually lowered the image of those firms significantly. It is high time that the playing field was levelled. It was simply unfair that anybody could advertise for PI Claims, but that Solicitors could use a marketing incentive that simply wasn’t allowed to CMC’s anymore. Nevertheless, it seems that there is work still to be done. Unlike CMC’s who have taken the rule change on the chin, there is already significant talk along the lines of “What is an incentive?” or “I am offering an interim payment not an incentive”. This cannot be good for the image of the industry, in particular for Solicitors, who will just be seen by the ABI, government and the Daily Mail to be trying once again to get round legitimate and appropriate rule changes. Never mind though, surely it’s all those pesky CMC’s fault… Alan Nesbit Chairman of the Association of Regulated Claims Management Companies (ARC).

Pushing to the end...

hilst many people were holidaying in early August, the Ministry of Justice was busy announcing its latest package of measures to tackle insurance fraud around whiplash claims. For the claimant community the biggest disappointment was that the MoJ has withdrawn from directly banning pre-medical offers in whiplash claims from insurers. The MoJ says that it is still of the view that these should be prohibited, but that the Civil Procedure Rules Committee had advised that this would be a difficult issue to address and that a “new rule alone is not enough to address this particular problem”. Instead, the rules are being amended to “strongly discourage” the practice. This really is not good enough and smacks of capitulation to insurer lobbying. Claimants have been subject to hugely complex changes over the last couple of years through LASPO, a variety of connected rules and regulations and most recently the Criminal Justice and Courts Bill. But the same drafters cannot find a way to ban pre-medical offers! I don’t think I’ll be the only one who simply does not believe it is impossible. MASS will certainly not let this matter go and will continue to push for the end of this most noxious practice. The other matter addressed by the MoJ was the introduction of a fixed fee of £180 from October for the production of medical reports, but buried away in the detail was the suggestion that the new system of medical reporting will be introduced using a system of “random allocation” or a cab rank system. We have some real concerns about how this will work in practice and fear that it will result in further delays for claimants, more administration and ultimately more, not less, cost in the system. Presumably this would be organised around regions with cases being automatically assigned to “local” medical agencies. Such a scheme may lead to a backlog in densely populated areas and scarcity of available doctors in less populated areas. Even after a national accreditation scheme has been introduced, there could be big questions around quality and consistency of expertise. Who says that August is a quiet month? Once again this certainly isn’t the case for the claimant community with some big questions to be answered and concerns to be addressed. Craig Budsworth, Chairman, Motor Accident Solicitors Society (MASS).

MC // September 2014

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The Opinions

Credibility issues... Reports that noise induced hearing loss (NIHL) and clinical negligence claims will become the way of replacing lost income from fast-track RTA cases, are sweeping the sector; could this be the case or do these types of case present too high a level of indemnity risk?

ith heavy advertising: ‘Does your Partner think you miss parts of conversations’, beginning to rival the claims farming of Whiplash Claims at its peak, concerns are growing that we have a new compensation epidemic. Some Claimant Firms are making no secret of their plans in this area, with one large ‘consolidator’ predicting some quite eye watering income from this new stream of potential claimants. “Up to £10,000”; “Don’t Miss Out”; “Even if the Firm No Longer Exists”; good Success Fees, claims falling outside of the Portal; a perfect storm brewing maybe? I think (and hope) not. Whilst claim numbers are up 50%+ (some insurers suggesting doubling or tripling), fortunately, unlike whiplash, deafness can be accurately diagnosed, and market repudiation rates are 75%+, some suggesting 90% becoming the new norm. So whilst a silver tongued claims farmer might be able to persuade a gullible Joe Public that a little white lie is all that’s needed for easy money, this time claims are rightly being rebuffed, and that trend will continue as long as undeserving punters are wheeled into the compensation process. So what will be the impact on the legal services companies involved in this process? Well, I genuinely hope they are doing some considerable filtering before coughing up for these ‘Live Leads’ (many being sold and resold time after time). If not, with a 90% repudiation rate and a fair amount of work chasing round before finding the claim eventually thrown out, financial oblivion is surely inevitable. The Noise at Work Regulations have meant that, for some time now, employees have been protected from excessive levels, and in the main that has been the case. If an employer has been negligent then I fully expect them to have to compensate, but for the majority of us who maybe just miss parts of conversations because we are getting a bit older, the one thing we will hear clearly is our ‘claim’ being thrown out and the cries of law firms relying on this income teetering on the edge of collapse! Those firms that do struggle on with this approach however will have the reputation of submitting largely unjustified, ‘fraudulent’ claims, with that in itself leading to major credibility issues. So, ask yourself Law Firms; ‘Is it really worth it?’ David J Williams, Managing Director, Underwriting, AXA Insurance.

The changing Face of Compliance How is risk and regulation managed in an insurer-led ABS?

nsurers have shown increasing interest in the new market opportunities created by the Legal Services Act 2007, which allowed them to become directly involved in supplying legal advice to customers.

The seismic change came in 2012 with the granting of the first alternative business structure (ABS) licence. In tandem, and equally dramatic, was a change in the role of law firm compliance officers; the champions of risk management. Every firm must have one, including ABSs. One key change in a compliance officer’s role has been the introduction of a robust corporate governance structure, enabling strategic direction, accountability, the control and mitigation of risk and decisions to be made quickly to meet the ever-changing needs of the market and requirements of clients; providing a competitive advantage. The compliance officer sits at the centre of the corporate governance regime, playing a pivotal role in any decisionmaking and must be proactive, rather than re-active. Exposure to all tiers of the firm enables the compliance officer (together with the Compliance Officer for Legal Practice (COLP) and the Compliance Officer for Finance and Administration (COFA) where these posts exist additionally) to provide the foundations and platforms, through systems, training, monitoring, policies and procedures, to build a firm which has compliance and quality at its central core. The recording and monitoring of complaints, breaches and risk are paramount, which means compliance officers must be skilled at, for example, producing a comprehensive risk framework and matrix which is a fusion of the requirements of the Solicitors Regulation Authority (SRA) and corporate expectations. The use and reliance upon technology is growing, providing the tools for the collection of management information to demonstrate the effectiveness of systems and provide evidence that all employees are reading and following the firm’s policies and procedures; “firm-wide compliance”. Today’s compliance officer must have a detailed knowledge of the SRA Handbook, which sets out the standards and requirements of the regulator; applicable case law and legislation; the management of risk; tribunal decisions; corporate reporting and regulatory responsibilities placed upon their clients. There’s a high penalty to pay for getting it wrong as the banking sector can testify, which is why the compliance officer’s role is fundamental to the corporate health and wellbeing of all providers of legal services. Claire Larbey, Partner and Compliance Officer for Legal Practice (COLP), Parabis Law LLP.

MC // September 2014

The Opinions

An antiquated theory? How should/could insurance companies be looking to manage and reduce risk for themselves and consumers?

isk management is of course a broad and much discussed subject but I think there are three developing themes that can bring increased perspective to the debate, consumer segmentation, data analytics and technology. The first two competencies have been around for a number of years but full leverage comes with the application of technology. The ability of organisations to get to a “segment of one” and understand pricing and risk at this level sounds like nirvana but there are many examples in the credit risk arena that allow for a forensic level of pricing within a portfolio. Retailers including Tesco are also producing multiple variant customer offers through their Clubcard program. “One size fits all” is an antiquated theory in an increasingly bespoke world. So the challenge becomes how to develop this type of segmentation and understand the pricing and risk dynamics? Data Analytics is the key capability that organisations need to develop both in terms of systems and people, indeed, systems are easy to find but good data analysts are the new Rock Stars! Developing hypothesis and testing to find opportunities for competitive risk advantage is what the data teams should be doing. Technology is the platform that supports both segmentation and data analytics. It is a recurring theme of mine that we are not constrained by technology. Powerful systems exist to provide data analysts and scientists with the ability to create their segmentation and risk models. In addition the Telematics ecosystem can provide second by second contextualised driver data showing where and how a motorist is driving. This allows pricing adjustments but also a more dynamic approach to risk. “Educational” conversations either voice, SMS or e mail can help improve the driving of a regular speeder in an urban area, potentially stopping an accident before it even happens. In addition the risk of application and claim fraud can be dramatically reduced by telematics systems verifying mileage, address and parking data together with the triggering of FNOL processes in the event of a collision. Today’s world can appear a daunting place for the risk manager but harnessing the combined power of segmentation and data analytics powered by technology can provide a more reassuring lens.

A programme of improvement...

educing risk is beneficial to both insurers and companies. Reduced risk means less incidents and lower claims costs for insurers whilst a company with a good, or improving, claims history can benefit from lower insurance premiums. Both parties also benefit from time savings as dealing with incidents and claims takes time and resource away from other business activities. The most effective way to achieve the above is for companies to implement an effective risk management programme. The starting point when dealing with personal injury claims is to undertake a review of claims to understand why claims cannot be defended or where success is achieved.This should be followed by a review of a company’s policies, procedures, and documentation including documentation which may be required in order to defend claims. The information gathered and output can then be used to create a programme of improvement. The benefits of this approach for insurers include:i. Improving the quality of the evidence recorded following an accident leading to better prospects of successfully defending claims ii. Allowing insurers to gain an insight into how risk is currently being managed iii. Establishing a proactive and meaningful method of risk improvement iv. Identifying key priorities for action to ensure areas of weakness are addressed in a timely manner v. Ensuring that areas of concern both immediate and long term are highlighted for improvement. Insurers can help by ensuring feedback is given following the outcome of a claim. Also, providing information detailing what risk management assistance is available, offering advice and assistance from risk management experts and providing financial assistance to help undertake any work. Overall risk management and its subsequent risk improvement should lead to direct benefits to both parties. Alistair Schuberth, Associate Director, Claims Defensibility, Risk Management, Willis Group.

Jonathan Hewett, Group CMO, Octo Telematics.

MC // September 2014

The Opinions

The new ‘hot potato’...

Invest, then integrate...

How should/could insurance companies be looking to manage and reduce risk for themselves and consumers?

Has the investment/spend on technology in the claims sector matched the speed of growth for some firms, or are most still using legacy systems?

isk management processes and procedures will vary from one insurance company to another and in today’s commercial world, with noticeably more press coverage highlighting the awareness of risk management within the industry organisations must have proper risk management tools, processes and procedures in place to comply with their regulatory obligations. There are various risk categories that an organisation should consider, for example operational risk, underwriting risk, credit risk, market risk, legal risk, financial risk, reputational risk etc. this list could go on and on. Procedures should evolve over time and almost certainly as the portfolio of risk and size of the business grows and as the business model becomes more complex, understanding the pressure points and potential risk areas referred to above is critical. It is good practice to create a risk event log which details events which the business considers to be a risk, which may consist of those example risks listed above, which is linked to a specific event within the business. This is a living document and a risk management tool, used to assess the impact these events could have or would have on the business. For example all After the Event Insurers had to deal with the market risk of the introduction of LASPO, which has had a tsunami effect on this industry in terms of impacting on sales and revenue streams. Management of risks within an organisation is one side of the coin, as we also must identify and reduce risks to the consumer. Treating Customers Fairly (TCF) must be at the heart of every insurance company. Given the current tough financial economic climate, consumers must be protected to ensure they get a fair deal and consumers should expect products or financial services to meet there needs, from organisations they can trust. TCF should already be embedded into the culture of every insurance company, which really starts from the product development stage right through to marketing and then the point of sale of the product. We must make sure that product performs to meet the needs of the consumer and that the advice given is clear and suitable for their circumstances.

he claims sector is one where technology is utterly vital. Margins on higher-volume claims areas are often slim, not helped by legislation which constantly moves to push claimant success fees lower and lower.

So, technology has a big part to play here - not only in terms of improving processes and reducing costs but also in terms of enabling claimant firms to manage the changes put in place by legislation, such as the need to utilise Portals to manage claims (currently RTA and EL / PL). Of all the service sectors that Eclipse caters to, among the highest levels of investment we see are made in the claims sector. Investment in technology is a major driver of competitive advantage, and those firms that get it right get it very right! Legacy system replacement is commonplace - as client, customer and market demands develop, so the incumbent software systems often begin to show signs of weakness. Unless the systems in place are highly configurable and have a ‘rapid deployment’ nature then the demands of new market pressures dictate that a more suitable system needs to be found. Great examples here are the aforementioned RTA and EL / PL portals - for firms specialising in this type of work, integration between its case management technology and the relevant new portals was absolutely vital. Without the ability for the fee earner’s desktop systems to share information with the Portals, work would need to be duplicated and administrative overheads would skyrocket - not ideal in an already margin-squeezed sector. So for many firms the decision was a reasonably straightforward one - invest in technology that could provide this integration seamlessly and in a future-proof manner. Such changes will continue to affect the claims market, and it will invariably be a firm’s technology backbone that dictates whether or not it can take advantage of the opportunities ahead! Darren Gower, Marketing Director, Eclipse Legal Systems.

Risk management is now a seriously ‘hot potato’ and we cannot underestimate how much work there is to do to comply with our regulatory obligation and TCF verses running a successful and profitable business. Nicola Klimkowski, Head of Business Control and Development, LAMP Services Limited.

MC // September 2014

carpenters

The Opinions

A disaster waiting to happen? Are NIHL and Clinical Negligence claims the panacea for firms anxious to replace lost RTA business?

ong gone are the days of successfully pursuing many union backed NIHL claims against heavy engineering and mining conglomerates. Today, much of the NIHL market is dominated by CMC’s. Inevitably there are the good, the bad and the ugly and linking with ‘the ugly’ with their audiograms of questionable quality is a significant hurdle in itself to overcome. This issue is a matter of significant importance to ATE providers given the frequent occurrence of failed NIHL diagnosis once a second audiogram has been obtained correctly – now where were the prospects I wonder because it’s now clear that there has never been a case has there? There are also general limitation and causation issues and also the likelihood of multiple defendants and their insurers to track and contend with. From an ATE insurance perspective (or indeed the Firm’s if they decide to take the risk either from choice or because cover isn’t available at a premium that is ‘proportionate to damages’) it’s all a heady mix of disbursement exposure just to get the case off the ground in a scenario where the Client is going to have to pay the premium from a fairly modest award of damages. Clinical Negligence has always been for experienced hands only. Perversely, today it is easier to fund such cases, compared to NIHL cases, given the recoverability in part of ATE premium which at least allows insurers to rate accordingly in the initial stages. In the majority of Clinical Negligence cases the damages are significantly higher and client paid premiums are thus more proportionate. Causation as ever looms large and you will never remove the understandably high failure rate given the ‘test’ to bring about a successful claim but at least ATE cover will be available for the experienced firm – for the ‘newbies’ it’s not a place I’d recommend any ATE provider to go so immediately there will be funding issues and exposure risks for the firm setting off down this path. Ultimately, unless firms are prepared to invest significantly in appropriately qualified and ‘time served’ fee earners in either NIHL or Clinical Negligence and completely change their approach to claims handling, a disaster is waiting to happen - a perfect storm of potential problems lurking for the uninitiated. Chris Marden, Director, Keystone Legal.

The travelling pendulum… Mr Justice Ramsey said that to get to the heart of what Jackson wanted in his proposals an extension of QOCS would be required. Will the claims profession/ regulators take heed of this advice?

ackson LJ said in his Final Costs Report that QOCS should be available in personal injury, clinical negligence, judicial review and defamation claims. He added that “there will need to be further consultation on which categories of litigation should involve (QOCS)”. Lord McNally, Justice Minister told the House of Lords in 2012 that the government had no plans to extend QOCS to areas such as defamation or professional negligence. The Civil Justice Council’s (CJC) conference on the Impact of the ‘Jackson’ reforms in March 2014 considered 70 papers from users of the civil justice system. One recurring theme was the need for the extension of QOCS, particularly in the case of claims against the police. Subsequently, the CJC created a working group to consider issues arising from implementation of the reforms, including arguments for and against extending QOCS “to other categories of case characterised by an asymmetric relationship between the parties, such as actions against the police and solicitors’ professional negligence in injury claims.” Ramsey J, who was heavily involved in the implementation of “Jackson”, said at the Compass Costs conference in July that extending QOCS beyond the limits of personal injury and defamation holds the key to unlocking the “true Jackson”. The top priority, he said, were actions against the police. He added: “Under the true Jackson proposals, if you have a genuine case, you shouldn’t have to pay the defendant’s costs if you lose. That was the true Jackson.” Ramsey J concluded his address by considering how the reforms will be considered in a few years time and put forward this acid test: “The real question we will be asking ourselves is whether there will still be access to justice, though we brought in litigation at proportionate cost.” Many will be concerned that the likely answer to that question is “No” and that, in dealing with the problems associated with recoverability, the pendulum has travelled too far, thereby severely restricting access to justice. A progressive approach to the extension of QOCS is one way in which to reverse the pendulum somewhat. The claims industry needs to be very actively involved here because, although senior members of the judiciary may be “on side”, there is virtually no chance of the MoJ taking a proactive approach or embarking on the further consultation envisaged by Jackson LJ. If you have a view on this matter a first step to influencing policy would be to contact the CJC at cjc@judiciary.gsi.gov.uk (reference Jackson Working Group). Tim Wallis, Mediator and Solicitor with Expedite Resolution, Trust Mediation and others.

MC // September 2014

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NOMINATIONS Now

Open

The Modern Claims Awards have been launched to celebrate cross-industry talent and success, following the huge success of Modern Claims Magazine and the Modern Claims Conference.

www.modernclaimsawards.co.uk Head of Sponsorship Kate McKittrick T 01765 600 909 E- kate@charltongrant.co.uk

All Event Enquiries Ellie Campbell T 01765 600 909 E- ellie.campbell@charltongrant.co.uk

Award Categories Lawyer of the Year Broker of the Year Insurer of the Year Claims Management Company of the Year Legal Team of the Year Broker Team of the Year Insurer Team of the Year Claims Management Team of the Year Client Care Award Innovation of the Year Rising Star Award Technology Initiative of the Year Counter Fraud Initiative of the Year Marketing Campaign of the Year Service Provider of the Year Outstanding Commitment to Training Newcomer of the Year Outstanding Achievement of the Year Lifetime Achievement

Nominations Close: Friday 12th December

The Opinions

The next generation... What are the best training routes/qualification options for young people wanting to start a career in the claims sector?

here are a number of options for qualifications in the claims sector; the Institute of Legal Executives and Chartered Insurance Institute both provide qualifications in this area. The most important decision I think anyone looking to join the industry will make is which employer to entrust their future development to. Every new Apprentice at CMA has a dedicated mentor as well as support from our learning provider. Now the CII have opened up their qualification routes to Apprenticeships, we are excited to be able to invest in the next generation of claims professionals. We are lucky to have been able to recruit a diverse and experienced team from a wide range of claims and intelligence related roles. This ensures that we have every facet of the claims spectrum covered. From indemnity experts to liability, special investigation to compliance, our Apprentice scheme taps into every single team members knowledge to ensure we deliver a new wave of experts – committed to quality and technical excellence. In a time when the legal industry (in particular claims) appears to be employing greater numbers of non-qualified fee earners – and redundancies of qualified lawyers are never far from the press - there can’t be a better time for the claims sector to collaborate for change. Our industry needs to ensure that the next generation of claims professionals have access to the right resources and support to achieve their potential and deliver the promise of the right payment, for the right claim at the right time. I was an Apprentice myself in 1994 and am still in touch with my first employer, a sole practitioner law firm, who saw the potential in me and instilled a respect and love for the law - litigation in particular. I wish that I had the opportunity then to undergo the CII (Apprenticeship) route – as I never did see the logic in having to understand conveyancing to obtain an ILEX qualification when my love was always motor claims.

Why you should invest now... Are law firms really taking note of the importance of digital marketing or are many still playing ‘catch up’?

ecently we hosted a seminar with NatWest business to give law firms a brief snapshot into the lead generation opportunities that digital marketing can provide.

While these attendees are already tuned into the need to create better digital marketing for their firms, this isn’t always reflected in reality. We therefore analysed their websites prior to the seminar for two main areas that law firms need to invest in to capture clients: mobile optimisation, which means your website can be viewed on any sized mobile device, and video content. • 43% of attending firms had a mobile optimised site. This sounds encouraging but it’s still not high enough. Mobile optimisation is vitally important. The Office of National Statistics says 53% of UK internet users are now browsing via their mobile device, and Google say 35%, that’s over one in three, of all legal searches done in the UK are done from mobiles and tablets. Add this to further stats by the search engine giant that say 61% of website visitors will look elsewhere, if a mobile site does not load fast enough, and you can see mobile optimisation cannot be ignored. • Only 9% had video content on their homepage.Those in attendance came along to learn why tools like video are important and what they can do to capitalise on all it can offer, so they’re taking a step in the right direction. Even so, they do need to move quickly. With a billion people watching YouTube every month, and YouTube being the second largest search engine out there, (Google’s still number one) it’s easy to see why video content is needed to remain in front of the people you’re trying to reach.

CMA are soon to be featured as Apprentice makers organisation – one who is recognised for inspiring others to go on the journey. Our Academy launches this autumn and we can now support other organisations setting out on the Apprenticeship route with the benefit of our knowledge and understanding. A perfect way to celebrate our 20th anniversary and ensure our service delivery to our clients is supported by claims professionals – the CMA way. And with Government funding contributing to Apprenticeships supported by the CII, a little hard work and dedication and any business can be an Apprentice maker.

Times are changing and consumers have more choice now than ever before. This puts them in a powerful position to cherry pick where they spend their money. Law firms need to respond to this and ensure they’re able to put themselves in front of new clients at every turn, especially when they’re on the move. Of course digital marketing needs investment but if done correctly that investment has an excellent chance to bring great results. Not investing might save you money now but over time the loss to your business could be serious.

Lara Mellor, Claims and Operations Manager, Claims Management & Adjusting Ltd (CMA).

Dez Derry is CEO of mmadigital, online marketing for modern law firms.

MC // September 2014

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The Opinions

Fit for purpose? How can/should claims professionals ensure they maintain ethical practices when under financial pressure?

n first party claims (claims under policies rather than against third parties), the financial pressures are obvious: don’t pay too much. But with that justified instruction should come its converse: don’t pay too little; respect the principle of treating the customer fairly. The range between too much and too little is a wide one, capable of many degrees of interpretation. The problem with that, though, is that the parties, insurer and policyholder, do not negotiate from equally powerful positions. There are pressures on the policyholder to accept the insurer’s suppliers, even when they may not be the fittest for a particular purpose. There are arguments about causation, about the imposition of restrictive policy terms, about bases of valuation, all presented to the insured as matters of hard, non-negotiable, factual truth. Some may be, others may be unduly harsh or unfair, and yet others unsustainable errors of fact or interpretation. It would be tempting to create a conspiracy theory about insurers’ deliberate manipulation of their advantage to treat policyholders unfairly, and sometimes the evidence does seem to point to that. But it’s not a fair or sustainable generalisation. Those practitioners working as policyholder advocates have, in recent years, seen an increase in cases coming to them resulting from dissatisfaction with insurers’ behaviour. More often than not the cause is not conspiracy, but ignorance. The insurance claims environment is a complex one, involving deep background knowledge of insurance practice, law, technical points, policy interpretation and the psychology of claims. It is where the relationship between insurer and insured is at its most intense. Unhappily, the training given to front-line handlers is rarely that thorough. In volume personal and SME lines the script presented by the screen is not always flexible enough either to indicate where adaptability is needed, or how to exercise it. The answer has to be training. In addition to in-house programmes there are now available excellent qualifications from entry level up offered by both the CII and the Chartered Institute of Loss Adjusters, and these should, in the interests of fairness and insurers’ reputations, be part of all claims handlers’ professional development. Paul Lawrence, Managing Director, Thompson & Bryan.

To outsource or insource? That is the question.

or insurers one of the perennial questions and operational challenges is which part of the claims process to manage in house and which part to outsource. For some aspects of the claims service this is relatively straight forward – few insurers have the appetite, volume of business or skill base to have in-house repairs. Those that do are the largest insurers, but even they only manage a minority of straight forward repairs internally and still outsource the majority of repairs to a network. On the claims handling side, the picture is more complicated and dynamic. It is often based on the personal preference of a particular claims director or CEO and the strategy can change as quickly as a name plate on an office door! By the very fact that the philosophy changes on a regular basis it means that the company concerned is unlikely to ever reach the optimum solution as it is in a constant state of implementing new processes. There is no right or wrong answer to the insource/ outsource debate. The key is identifying a medium to long term strategy and then developing processes and a supply chain that can support that but can at the same time flex as the business grows and adapts. Many believe that an outsource partner for certain aspects of the claims management process does provide much needed flexibility and aids effective capacity management. For an insurer to manage all aspects of claims handling in-house, it requires a very flexible and adequately resourced workforce. No company can economically be staffed throughout the entire year to deal with peak or surge volumes levels. An outsource partner can also provide valuable free ‘consultancy’. Without breaching contractual agreements, a specialist outsource claims partner will have process innovation and systems expertise that they share and can feedback to their insurer clients which helps them achieve improved operating and claims expense ratios and ultimately delivers better customer service. Like it or not, if an insurer is serious about year round quality customer service and keeping ahead of the competition, there will always be a place for an outsourcing partner to provide that much needed support at difficult and busy times. Derek Cooper, Managing Director, Veracity Claims Solutions.

MC // September 2014

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The Opinions

Pause for thought…

ew noise-induced hearing loss (NIHL) departments within personal injury firms are cropping up around the country. In a similar vein to clinical negligence, firms are looking to NIHL work as a shiny new apple to replace lost income from fast-track RTA. It is not as easy to manage this specialist area of work as some might think. In fact, if not managed correctly, it can become a costly drain on cash flow and also quickly become an area of high indemnity risk. Indemnity risks As independent auditors, we see where limitation is often an area where inexperienced firms get out of their depth. On a recent due diligence process on a small department, 27% of the firm’s cases were at risk of negligence for a failure to properly consider limitation. Considering limitation at the outset is a key part of the case selection and screening process. Knowing the right questions to ask from the start comes with skill and experience. During the investigation stage, identifying the correct defendant to sue is critical. This can be fraught with challenges. Defendant(s) might no longer exist and identifying their insurer can be problematic. Our largest concern is where fee-earners fail to fully understand what action they need to take to maximise the claimant’s position/prospects of succeeding if the defendant has ceased to exist or is in receivership/liquidation or bankruptcy. In experienced departments, we see where adverse costs orders are on the increase. Evidence gathering, if poorly undertaken, can result in under-settling as well as poor risk assessment, meaning that low prospect cases are managed badly for too long. Risk trends Our audit data reveals trends within inexperienced firms. Our top list categories are: • Poor assessment of limitation; • Lack of knowledge and poor assessment of defendant issues; • Lack of understanding of apportionment; • Lack of understanding of the mechanism of the injury; • Poor witness statements; • Use of experts without the requisite skill and knowledge; • Lack of knowledge of divisible and non divisible injuries; and • An inability to assess the complexity scale of the work. The decision by firms to jump on the NIHL band wagon needs some pause for thought. We are increasingly asked by banks to assess this area in ‘new to bank’ and additional funding requests at an early stage in the department set-up. It is the heightening concern about indemnity risk that is very much on the agenda.

The Ageas Way How can/should claims professionals ensure they maintain ethical practices when under financial pressure?

believe that supporting and promoting ethical practice in claims comes down to placing people at the heart of what you do and making sure that any cost savings are in the back end processes and IT infrastructure, not in dealing with the customer. This allows teams on the front line the time to focus on what they do best – deliver a service that responds to the individual needs of each and every customer. This is certainly a philosophy we follow at Ageas – we call it The Ageas Way, centred around Predicament Management, Failure Demand and Manufacturing Solutions. Our approach is very much focused on using our resources as effectively as possible, supported by streamlined and intuitive processes. The customer journey begins with our claims professionals taking the time to fully understand the customer’s situation using their expertise to identify needs and handle the claim effectively. Time and money savings are not at front of mind for our experienced claims handlers. Our ethos is to allow them to take as much time as they need to discus and individual’s circumstances and we operate a no targets culture to reinforce this approach. This personal touch is backed up by robust and fit for purpose IT infrastructure and systems that enhance the claims journey through intuitive use and storage of data, easy access to information and the automation of routine tasks, all of which mean that our people can concentrate on what they do best – deal with customers. Every claims and insurance professional knows that the competitive market we operate in requires everyone at every level to be mindful of expenses. However, we feel very strongly that this should not impact the customer experience. We believe the Ageas Way has been a success because, whilst the approach leads to low back office costs, producing a market leading claims-handling expense ratio, it does put our customers at the centre of everything we do, driving our decision making and business reviews. By investing in our employees and the resources available to them we are confident we can espouse ethical practices in claims handling. Rob Smale, Claims Director, Ageas Insurance.

Zoe Holland, Managing Director, Zebra Legal Consulting.

MC // September 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 Opinions

The traditional path?

Time for action...

What are the best routes/qualifications options for young people wanting to start a career in the claims sector?

Should giving over £500,000 to 18 year olds, without assessing capacity, be considered negligent?

he problem with this question is that it implies that young people do actually want to start a career in the claims sector. Perhaps a better question would be “How does the claims sector begin to attract the calibre of people it needs for the future?”

Part of the problem arguably lies in “the system”, where there is no traditional path through higher education into shaping the leaders of a service economy. If you want to be a doctor, you study medicine or if you want to be a lawyer you study law. But if you want to work in insurance claims you should study... politics maybe?! The sad truth is that, from an outsiders perspective, claims work is often seen as unskilled call centre work and therefore a largely transitionary stage on the road to bigger and better things. Writing this, I’m currently sat on a claims floor where I’d guess the average age is 25-30 and about half have a university degree in one field or another. A quick straw poll of “what people wanted to do when they left school” reveals nobody planned to be sat here today (and I include myself in this – I wanted to be an investment banker). Yet our annual employee satisfaction survey tells us that they are happy in their jobs and once in, they stay. Is it reasonable to assume that the work must be thought provoking, varied and personally fulfilling?

Career

No of People

Physiotherapist

Unsure

Electrician

Armed Forces

Diplomat

Air Hostess

Sports Coach

Entrepreneur

Car Sales

Lawyer

Graphic Designer

Investment Banker

Fashion Designer

Hospitality Management

Actor

Mechanic

Pro Footballer

Tailor

Career Poll

The industry has a big PR and marketing exercise to do on itself if it wants to attract future talent (the constant feed of newspaper headlines, weighted towards the ABI’s (currently in vogue) view of the world doesn’t help matters).

f course it is if you are a solicitor, but evidently not if you are the government or the Ministry of Defence! I have been campaigning hard to bring this to the attention of the relevant authorities but no one seems to understand the real consequence of such actions. This situation has been ongoing since 2005 when the MOD decided to implement its own worker’s scheme for death or injury in service; the Armed Forces Compensation Scheme. The initial top payment was increased, after public outrage, to £570,000. What is outrageous is that this money is paid by the MOD direct into the soldier’s bank account where his salary is paid. No checks are made to ascertain if it’s a joint account where a partner or spouse may run off with the money (which has happened). There is no investigation whatsoever in to mental capacity and the ability to look after and manage large sums of money; this is even when the award is provided for a brain injury. Even if there is capacity, no offer is made of financial advice or planning even if it is refused. In addition, those receiving the top award are more than likely going to need state, means tested, benefits and the award is never ring fenced in to a trust; this can be done and would therefore mean the benefits would be protected, now or in the future. I have personally witnessed so many young men buying a Porsche or a Ferrari with their million pound ‘pools’ win; the local Ferrari garage even brings cars to the MOD rehabilitation centre for the injured to ‘have a bit of fun’. The cynic in me suggests that this is a naïve, captive audience with pots of money to spend! The MOD is not a NHS Trust, where protocol is in place to assess and deal with the Court of Protection and the vulnerable. It has a dual capacity as employer, health care provider and paymaster. As lawyers instructed on a case, we would be examining family dynamics, assessing capacity and obtaining financial support and advice, whilst ring fencing awards to protect benefits. I have met with the SPVA, MOD and MP’S nothing is happening to change this situation. It’s time for action and the launch of a campaign. Hilary Meredith, CEO, Hilary Meredith Solicitors.

The fact of the matter is that the service that is provided by this sector is specialist niche and valuable at the point of use. Yet outside the bubble that is the claims industry, nobody really knows about it. And perhaps the final irony is that this sector does have some of the most exceptionally bright and commercially talented people who would provide excellent business role models. Andy Whatmough, Director, S&G Response.

MC // September 2014

The Opinions

An informed choice... Do you think a hike in court fees could reduce the number of claims; will this be damaging for the consumers and the profession?

he BBC’s One Show recently reported on the growing number of people pretending to be Solicitors and Barristers in the UK. With this in mind, for prospective clients, getting the right information from the right people is paramount.

There have been many stories in the past, where people have not sought legal representation as they were unaware of whom they should contact, or they have been concerned about the barriers in the way. Now with the possibility of increased fees, this could be another confusing area and possibly push unsuspecting clients to seek advice from a rogue legal service provider. Many consumers are not frequent users of legal services and therefore can feel out of their comfort zone when having to seek advice in this sector. Showing transparency for prospective clients and a willingness to provide good customer service is important to those looking for help and at the very least a good minimum requirement. At present only a few in the legal services sector have a digital presence online, so how does a prospective client research to find the Legal Service provider they wish to engage the services of? National stats show that in Great Britain 21 million households had internet access at the end of 2013, of those 72% of all adults bought goods or services online. Information has to be clear and prospective clients have to be able to access information regarding a legal service provider before engaging their services. The best and most reassuring way to access this information is completely independently. With the reported increases in court fees ranging anywhere from 12% - 140% in some areas, a more informed choice will be crucial to the prospective client. Lisa Beale, Head of Checkaprofessional.com

Legislative certainty: gone forever?

s discussed in my last feature – ‘the devil is in the detail’, the disparities between the legal jurisdictions of Northern Ireland (NI) and England & Wales (E&W) are increasing; this is exemplified no more so than in the important sector of Employment law.

The now seemingly established trend within E&W to apparently reduce the number of claims being brought has very recently witnessed ‘inter alia’ the dramatic drop in the number of tribunal claims been brought due to the requirement for fee payments upfront. New research from Citizens Advice reveals that seven out of ten potentially successful cases that could have gone before the tribunal are not now proceeding. These statistics are not repeated in NI where the same upfront payment of fees has not been enacted and the implications for many of the equivalent stakeholders within the sector are troubling and of concern as the knock-on effects of strategic decisions taken in E&W are gradually felt. It is therefore appropriate now to highlight the Employment sector in more detail as an illustration of the absolute requirement for Solicitors, Insurers and such like to ensure that any matters arising within NI are immediately and effectively identified and to ensure that appropriate NI legal advice is provided. Examples are now plentiful: • NI retains a one year qualifying period for unfair dismissal rights • NI still has a 90 day collective consultation • NI has held on to the statutory dismissal procedures and adopted a new LRA ( Labour Relations Agency with ACAS as the equivalent in E&W) Code of Practice on Disciplinary and Grievance Procedures • the maximum compensatory award in NI is £76,600, regardless of the employee’s salary • and of course the upfront payment of fees has not been introduced in NI. Additionally and increasingly, seemingly once reasonable reliance on case law and media commentary arising from E&W and beyond must now be critically questioned from solely the NI view point. Most striking is probably the observation of how recent all of these differences have come to pass. Anyone guilty of taking a short career break from the Employment sector from 2010 will now find that the previous certainty of NI law taking a little while to ‘catch up’ with legislative changes in E&W is now gone and, looking forward, almost certainly gone forever. Gerry Lee, Senior Partner, P R Hanna Solicitors, Belfast.

MC // September 2014

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The Features

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THE FEATURES

you never write, you never call, it’s like you don’t think of me at all...

What have your Scottish solicitors done for you lately? Don’t let LASPO end your long-distance relationship We have a solution that’s risk-free, LASPO compliant and will ensure cash flow to you - irrespective of acceptance rates Give your newest columnist, Patrick McGuire a call on:

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The Features

RISK AND COMPLIANCE: SEATBELT OR STRAIGHT JACKET? Risk management done badly can choke creativity and stunt a firm’s growth; Michelle Garlick and Joanne Smith consider how risk management and its bedfellow compliance can, when done well, be a seatbelt and not a straight jacket. Principle 8 of the SRA Handbook places firms under a far-reaching obligation to: ‘run your business or carry out your role in the business effectively and in accordance with proper governance and sound financial and risk management principles’ and there can be no doubt that in drafting the principle the SRA has given itself a wide discretion to decide whether or not its expectations have been met.

Michelle Garlick

Joanne Smith

“T

he dangers of life are infinite, and among them is safety.” Johann Wolfgang von Gothe.

You may be wondering what the words of a 17th century German poet and statesman are doing at the start of an article about risk management, compliance and law firms in the 21st century. The answer is simple. One of the biggest challenges that modern risk management professionals must overcome is the presumption that they are in situ to make our lives harder, cue the jokes about in-house business prevention units. Do solicitors really need to know anything about risk and compliance? Whilst risk and compliance is nothing new to lawyers, there is no doubt that it got bumped up the list of priorities when the SRA launched outcomes-focused regulation in 2011, appointed itself as a risk management champion and introduced risk management expertise as a competency requirement for solicitors.

‘Never underestimate the effect that an embedded risk and compliance culture can have on the confidence and morale of your staff, as well as your ability to both attract and retain the right people’

Is our interest in risk and compliance simply because we fear reprisals if the SRA takes exception to how we manage our firms? The short answer is no , although people could be forgiven for feeling that way bearing in mind that lawyers in England and Wales are amongst some of the most regulated in the world and the changes that firms have had to implement to ensure compliance over the last couple of years! Hopefully, by the time you have finished reading this article you will have a greater appreciation of how it can assist you to respond to the economic, regulatory and industry-wide challenges we all face. But first of all we must put risk and compliance in context. De-mystifying risk and compliance The phrase ‘risk and compliance’ is such a common collocation that it is easy to mistake them for the same thing. So what is the difference? Risk management is a process where the firm’s management board pulls together relevant information so it can make considered judgments about its strategic direction e.g. whether or not to merge with another firm, expand into a new market or invest in a new practice management system. At its heart is identifying, assessing and prioritising the risks and working out whether or not they need to be prevented, tolerated, transferred or mitigated. This brings us back to our opening quote which was intended as a reminder to us all that if we want be successful we need to take calculated risks. Compliance on the other hand, in its traditional form, describes the strategy that the firm puts in place to deal with rules it needs to abide by in order to meet its various obligations be they legal, ethical or best practice. It naturally lends itself to policies, processes and procedures and a classic example for the profession is undertaking client due diligence as part of the client opening

MC // September 2014

The Features

procedure which assists with the discharge of the anticrime and anti-terrorism legislation. There are many schools of thought on how risk management and compliance should complement each other. My personal view, and one that in my experience seems to work for law firms is that compliance helps shape risk management strategy but it does not drive it or, worse still, replace it. Instead, try to look on non-compliance as a risk in its own right which can lead to negative outcomes such as damage to brand, intervention by the SRA, fines, imprisonment, business disruption and a whole host of other nasties which all need to be tackled as part of a wider strategy. What are the benefits? So how can having a robust risk and compliance culture within your firm help you to address today’s challenges? Professional Indemnity Insurance Premiums You may ask “what effect will all this have on professional indemnity insurance premiums?” Sadly, there is nothing anyone can do to make the renewal experience completely pain free and I have yet to meet a lawyer who can genuinely say that they expressed delight when its renewal quote lands. However the long term benefits of understanding your firms’ risk profile and taking steps to get to grips with claims, complaints and near misses cannot be understated. Firstly, fewer claims means that your excess takes less of a hammering. Let’s not forget that a large proportion of claims involve pay outs that never exceed the de minimis level set by your Insurer and the cost is met entirely from the firm’s purse. You need to take all necessary steps to avoid “that claim” or, if it has already happened, history repeating itself. It can take only one claim to leave you facing a significant loading on your premium for years to come.

‘No firm wants to get hit by successor practice liabilities or find that it has picked up a poisoned chalice’ Secondly, if Insurers have taken the view your firm is toxic and you are struggling to obtain favourable terms, then it could be that by submitting a risk management submission that shows that you have got to grips with the underlying issues encourages them to engage positively with you. This can be particularly beneficial if your poor history is attributable to a specific trigger e.g. a maverick fee earner who has now left the firm and you can show that you have taken the necessary action to ring-fence the problem. And if the LSB decides to approve the SRA’s proposal to reduce the minimum level of indemnity cover to £500,000, it will be down to the individual firms to assess their insurance needs and purchase appropriate cover. Client Panel Requirements Nowadays, any firm that wants to sit on an established panel is unlikely to get a toe in the door without the requisite quality standards and kite marks. Once on the panel you have to maintain it and, sad to say, time and time again I find myself rushing to the aid of a firm that has lost

MC // September 2014

one of these coveted marks and finds itself overnight (read the small print of your service level agreements) dropped which for some means losing the biggest part of their income stream. Talent Never underestimate the effect that an embedded risk and compliance culture can have on the confidence and morale of your staff, as well as your ability to both attract and retain the right people. Most lawyers have entrenched ethical core values that are broadly reflected in the SRA Principles and they accept that not only is a higher standard of conduct expected as a result of their occupying a position of trust, but that they are personally accountable for their actions. Why is this important? Well one of the top reasons given for workplace dissatisfaction is where an individual’s personal values are incompatible with those of the firm. Mergers and acquisitions/external investment It is no secret that we are seeing a growing number of mergers as firms look for ways to both manage costs and strengthen their position in the market place. Your practice is going to be much more attractive to either a buyer or firm looking to merge if you have an impressive risk and compliance pedigree. Why? Anyone who has participated in a due diligence exercise will confirm that a target firm that can demonstrate that it is on top of its game instils far more confidence than a firm with an office manual prepared in 1989 and a bunch of cobbled together policies and procedures and who tells you its “got it covered”. No firm wants to get hit by successor practice liabilities or find that it has picked up a poisoned chalice. So it is, also, if you are looking to become an ABS and seeking external investment. Branding Never underestimate the value that risk and compliance can have on your brand. If you doubt the validity of this statement cast your minds back to the debacle that Wonga and the Student Loans Company got drawn into as a result of misleading letters sent to debtors which suggested that they had instructed third party debt collection companies to recover arrears. Whilst this may seem an extreme example, it is worth noting that the SRA has expressed concern that the number of reports of solicitors getting drawn into money laundering (whether intentionally or otherwise) appears to be on the increase and the regulator has further confirmed that some firms are being investigated over alleged connections with the Russian Mafia. So seatbelt or straight jacket? It is much easier to appreciate the value of creating a risk and compliance culture within your firm when you start to experience tangible benefits. The skill is to keep it in its proper place and use it as a force for good when agreeing business strategy. Michelle Garlick is a Partner at Weightmans and heads up Compli which is a bespoke consultancy service. Joanne Smith is a Solicitor at Compli and Weightmans Consulting. Compli delivers a full-service, flexible package of tailored support to lawyers, including expert legal and best practice advice, as well as assistance on regulation, compliance, business management and structure.

Our projects to date total an assessment of WIP profile approaching £100 million in all areas of legal service, with industry recognised expertise in personal injury due diligence Zoe Holland, Managing Director, Zebra LC

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The Features

PUSHING THE BOUNDARIES Richard Houseago outlines why understanding the intricacies within the wording of an insurance policy, is key.

wo rather disparate literary allusions spring to mind in the context of the drafting of insurance policies. “Fifty Shades of Grey” might stretch the literary reference, but then there is the insistence in “Alice in Wonderland” that words can mean whatever one wants them to mean. Unfortunately the Courts do not accept “grey” and an underwriter will receive short thrift for having adopted Humpty Dumpty’s approach to contract construction; the Judge will impose an objective meaning, regardless of what was intended. It is remarkable that, when the policy itself is the bedrock of all that the insurer provides, so often and still, one encounters contracts of insurance the intent of which the underwriter cannot explain, other than “it has always been like that”, or which remain the product of a “cut and paste exercise” after trawling for the apparent best bits of other policies out there in the Market. Occasionally, there are glimpses of real learning in the process, exemplified by studies into financial loss wordings and defects exclusions, but such are by no means the rule. If the same effort were invested in getting policy wordings correct in the first place as in some other aspects of the business of insurance, then we would have far less disputed coverage claims in respect of which there are really no winners, since every insurer who succeeds in a coverage battle launches against itself the most negative of critics. The practicalities... So is there a practical and proportionate way to go about the process of drafting a new policy and then of ensuring its continued currency periodically? I would suggest the following and then offer some examples of what might be avoided by adopting this approach. Firstly, I always favour a tripartite approach, at least where the underwriting and claims processes at the insurer are separated; underwriter, claims manager and insurance coverage lawyer. It may sound trite but the underwriter understands what risks he wants to cover and how, the claims manager will have the collective experience of how the current policy may in practice be giving rise to problematic claims and the coverage lawyer is equipped to ensure that what the insurer wants to achieve by a new wording is actually delivered by a MC // September 2014

‘An underwriter really must adopt a rigorous approach of always testing out the meaning of words and the application least favourable to his interests’ policy that stands officious scrutiny and does so without any internal inconsistencies, reading the policy as a whole; as an example of the opposite I have even seen it stated in a wording that, “it is a condition precedent that it is warranted that...”. So step one must be thorough review of the existing products and a thorough debrief to remove any fuzzy thinking about objectives and to isolate exactly what the underwriter has in mind to achieve for his new wording and to check that against current claims experience. The old adage... At this stage it is important to consider and rationalise whether any critical protection is best sought at the stages of placement and renewal or only by virtue of the policy wording itself. It is a true adage that the best protection is found at the underwriting stage. So do review proposals, statements of fact and the underwriting process at the same time. For example, is some required state of affairs better dealt with as a matter of full disclosure rather than by policy warranty or condition. A key commercial consideration at the initial stage is to decide on the level of protection that is necessary within the policy terms, no doubt always keeping an eye as to the commerciality of the new policy in the Market. The underwriter will not be pleased to end up with the tightest policy wording in the Market if it is so out of step that noone wishes to take it. Some options are now limited in the case of consumer insurance. We are living in a protectionist culture and this has amongst other things watered down the status of true insurance warranties. By virtue of the Consumer Insurance Disclosure and Representations Act 2012, the all embracing duty of disclosure has given way to a duty to give a fair presentation of the risk in response to express questions and the “basis of the contract” clause has gone. Perfect harmony In the Commercial Market however, and even beyond the implementation of the pending Insurance Bill, the underwriter will largely have the same range of options to consider between enshrining policy protections as warranties, conditions precedents or bare conditions; although a generalised “basis of the contract” attempt to

The Features

‘It is remarkable that, when the policy itself is the bedrock of all that the insurer provides, so often and still, one encounters contracts of insurance the intent of which the underwriter cannot explain’ achieve the status of warranties will not be permitted and breach of warranty will not lead to automatic termination of the policy but will suspend cover. Of course, the final enactment of the Insurance Bill will be an inevitable trigger for the health checking of existing policies at that time. How are some of the pitfalls to be guarded against by the above exemplified in practice? A classic problem has always been to build in some internal inconsistency within the policy; for example declaring by a Due Observance clause that all requirements are to operate as conditions precedent, but then incorporating express reference to condition precedent status within some clauses but not others. The result being to confuse the status of those clauses without such an express reference. So ensure that the policy provisions do all harmonise. There is then always the pitfall of carrying concepts from one policy to another on a false premise. Commercial kitchen fires provide an instructive context. Quite often one comes across “Frying Range” warranties or conditions carried into the wording of a Hotel/Restaurant policy. When there is then a major fire from what is undoubtedly a big commercial deep fryer the provision is found not to bite because of the appliance falling short of the type of fish and chip shop built-in range contemplated by the adopted wording. So an underwriter really must adopt a rigorous approach of always testing out the meaning of words and the application least favourable to his interests. Richard Houseago is Head of Property Risks and Coverage at Greenwoods Solicitors

Richard Houseago Richard Houseago is a senior property and insurance partner with Greenwoods Solicitors. He has more than 25 years’ experience of advising on major property damage and insurance coverage litigation involving construction, engineering and technology-based issues. Richard deals with all classes of major Material Damage (MD) and Business Interruption (BI) losses as well as coverage disputes arising from fire or flood through to non-disclosure and fraud. He has developed a range of best practice guides for clients in relation to this work. Currently, Richard is handling property recovery claims with individual values up to £16m. In 2012 he led the landmark litigation on behalf of the UK electricity distribution industry culminating in the decision in Smith and Ors v UK Power Networks. Areas of particular interest in the recovery sector are M&E services fires, failure of engineered structures and major ground movements such as landslips. Richard leads a large loss commercial team at Greenwoods, where he has been a partner for the past 12 years. He is also a member of the firm’s Management Board. Clients describe Richard as “a prodigious worker who never lets the client down”; and an “absolutely formidable” lawyer who “commands the full confidence of the insurance market”. He is an accredited mediator. (Greenwoods Solicitors is part of the Parabis Group.)

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The Features

GAZING INTO THE CRYSTAL BALL The UK Personal Lines market continues to evolve and what was once a pure intermediated sector is now dominated by direct insurers and aggregators. Tovah Grosscurth explains the need to keep the customer front of mind during times of change.

he increased competition in the market has resulted in companies needing to constantly review the balance they strike between price and service plus the way their claims teams operate. The question is, how do insurers continue to put customers at the heart of their claims service?

We have to fit the way we operate around our customers’ busy lives, not expect them to be able to call us during standard working hours or sit at home all day waiting for suppliers. They want real-time conversations with their insurer, they want to use self-service for their claims or – best of all – avoid having to make a claim in the first place. As customer expectations keep rising, so does the importance of service standards and flexibility. This points to two main emerging trends in the home claims industry: the creation of quick, easy, self-service processes; and the transformation of insurance into a service rather than just a commodity, a policy which sits in a drawer. Insurers need to focus on four key areas: technology; legislation and regulation; improvements to repair methods; and their people and suppliers. Technology Technology is the greatest enabler of change for claims managers. Already, we are seeing the positive impact it can have on both businesses and customers. Many insurers, including RSA, now offer customers the choice to make claims online. This benefits customers and helps insurers as the pressure on call centres is eased, meaning trained employees can focus on more complicated claims or help those customers who are less comfortable with the online experience. When severe weather hit the UK earlier this year, 15 per cent of our claims were registered online.

Smartphones and tablets have also made it easier for customers to deal with their insurer. When making a claim, they can now share images of the damage to their property when they are on the phone to the claims handler. The same technology also means that insurers can send warnings to customers in the event of severe weather and provide advice and tips on action they can take, helping reduce the incidence, and likely overall cost, of any claims. It seems likely that insurers have only really started to scratch the surface of the ways these channels might be used and we can expect many more advances in the years ahead. Another technology which is likely to become mainstream is the idea of the ‘Connected Home’. Telematics in car insurance has existed for a number of years but it is only since Google’s purchase of the intelligent-thermostat company Nest that the idea of transferring this concept to the home has emerged. As more uses of telematics develop, the role of the insurer will fundamentally change. It is not hard to imagine a world where an insurer can alert the police about a break-in if the owner is away or detect that a pipe is about to burstfrom a long spell of cold weather or a washing machine leak and switch off the water supply. That is the point at which insurance ceases to become a commodity and instead becomes a service, intervening on behalf of our customers to prevent a claim rather than just processing one after problems have occurred. Legislation and regulation Regulation is also set to change how we manage claims. The recent thematic review of claims by the Financial Conduct Authority (FCA) is a good example of this. It found no evidence of attempts to deny valid claims or to squeeze settlement costs. That is testament to the work which has been done to treat customers fairly but it is likely the FCA will continue to review other areas of claims. Insurers would be prudent to look at their operations and supply chains and ensure they are being managed as effectively as possible to deliver the best outcome for customers. Repair enhancements Another emerging trend is the enhancements that are being made to repair methods. In an industry dominated by speed of settlement and cost, insurers need constantly

‘By setting a minimum standard on skills and knowledge, insurers can help ensure claims are being managed as efficiently as possible, both from a customer perspective and from that of indemnity spend’ MC // September 2014

The Features to strive to deploy the latest building-repair techniques in order to get customers back into their homes as quickly as possible and also reduce the effects of significant losses. Speed drying is a good example. This can dry a water damaged home in just a matter of days – rather than the weeks it would have taken in the past - taking away stress from the customer while at the same time dramatically reducing repair costs. People and suppliers Last but by no means least, investment in people and suppliers should now be a focus for claims professionals. When it comes to delivering great service, employees and the companies used to repair customers’ homes sit at the heart of this. At RSA, all our loss-adjusters must have the British Damage Management Association qualification and we encourage them also to attain Chartered Insurance Institute and Chartered Institute of Loss Adjusters qualifications. By setting a minimum standard on skills and knowledge, insurers can help ensure claims are being managed as efficiently as possible, both from a customer perspective and from that of indemnity spend. Managing your supply chain effectively is also important. Although suppliers do not carry the same name as that of the insurer, the two are indistinguishable from the point of view of the customer. That means insurers need to work closely with all their suppliers – and potentially any subcontractors - to make sure they understand the culture and values of the business. By doing this, the service will be consistent, customers will be happier and the partnership will be more rewarding and long-lasting. While we can consider emerging trends, one area of claims that is not as easy to prepare for is perils that are out of our control, such as floods and fires. While insurers such as RSA have hundreds of years of experience in dealing with these, that doesn’t mean we can predict their exact impact. That makes it vital that steps are taken to protect both the business and customers. With fires, unless you have sophisticated sprinkler systems – which few homes would do - reaction time is vital. The main priority should be to get claims professionals onsite within 48 hours so you can salvage more from the home and focus on restoration rather than complete repairs. For example, windows which were affected by smoke less than 48 hours before can often be restored. Any longer than this and it is a lot harder to achieve, prolonging the claim for the customer and increasing the cost to the insurer.

‘The creation of quick, easy, self-service processes and the transformation of insurance into a service rather than a commodity will be what will help customers most and prove our value in a changing world’ the weather and activated our emergency plan. Our loss adjusters called customers on Christmas Day and were out visiting them just a couple of days later. Our call centres opened outside of normal office hours on bank holidays and extra people were brought in to help customers. Between December 2013 and February 2014, RSA sent text messages to 200,000 customers providing tips and advice on how to protect their homes and the number to call to make a claim. Our emergency-response vehicle was also sent out to Boston in Lincolnshire and Staines-upon-Thames to work as a mobile claims office and support the local communities – including those who were not RSA customers. All this meant that our business, our suppliers and our customers were better prepared, helping put us in the best-possible position when it came to dealing with the thousands of claims we received. Regardless of whether it is keeping on top of trends or preparing as much as possible for unpredictable perils, the main priority for insurers both now and in the future is to do what is best for customers. The creation of quick, easy, self-service processes and the transformation of insurance into a service rather than a commodity will be what will help customers most and prove our value in a changing world. Providing insurers do not lose sight of this and continue to find ways of achieving it through both their claims divisions and other areas of the business, they will be well placed to be successful in the future. Tovah Grosscurth is RSA Director of Home and Pet Claims.

With floods or storms, it is vital to have an emergency plan and be ready to activate it. At RSA, we work closely with a company which monitors extreme weather and helps identify the potential exposure. As soon as we have sufficient clarity on the impact of the weather event or flood, we activate our plan. Once that has happened, a number of areas of the business ranging from claims, call centres and communications work together to initiate processes such as contacting customers, increasing the internal human resource available and contacting all suppliers to ensure everyone is well prepared. Planning into practice A good example of how emergency planning can work in practice is when the floods and storms hit the UK last winter. We were able quickly to establish the impact of

MC // September 2014

The Features

A WINNING FORMULA... S&G Response celebrated its 5th birthday on 11th August 2014. In that time it has grown at 100% per annum from a standing start to now employing 45 people and a turnover target of £19M in 2014/2015. Charlotte Parkinson, Modern Claims, spoke to the management team, about why they chose to integrate so closely with Bott and Company Solicitors Limited. Co exclusively for work supply, and then in November 2011 we moved into the same building. Over the last couple of years, we have worked to integrate systems and data exchange to deliver the best client experience, and then in 2013 the directors of Bott and Company Limited took an equity stake in the business. We are entirely separate as far as compliance is concerned but we do look at the bigger picture together.

Q A

What have been the benefits of the relationship with Bott & Co?

From left to right, Nick Stone, Andy Whatmough, and Nik Griffiths

Q A

What made you want to set up an accident management business?

As a team we have been in this sector for 14 years and so after our previous business was sold, we looked around and realised we did not know anything else. So, we thought we’d do it again! It was a lot tougher than we expected as all of our old customers and contacts were out of bounds and it really was a case of starting again from scratch. However, on the positive side, we also had a blank canvas allowing us to build a really scalable platform with no legacy issues to impede us. That ability, to build the business from the ground up, using the latest technology available has really paid operational and efficiency dividends in the last couple of years.

Due to ever–changing compliance and regulation struggles, alongside general market fluctuation, what have been the main challenges you have faced and how did you endeavor to overcome them?

We have always said that the hardest thing is getting the phone to ring in the first place. As we had (literally) nothing to trade with in the early days, we had to differentiate ourselves from the competition and set

out to be the highest quality provider of our services. We started out with a very narrow scope offering just non-fault FNOL and credit hire. As the engine started to rev over the years, we had a conscious plan to broaden that and now have the full insurance back-office including indemnified cost control and third party claims handling.

What is the relationship between S&G Response and Bott & Co and how did this coalition come to fruition?

We first met Bott & Co back in 2010 when they joined our solicitor panel. However, it quickly became apparent that we could do much more together strategically - we have a common view on how business should be transacted and this created immediate synergies; a) Ongoing capital investment into IT and productivity enhancing workflow solutions; b) Quality is not a variable; c) Staff performance and remuneration outcome aligned to the business’s expectations.

We could try and list the individual benefits but they are numerous. It’s probably best explained by just saying that things get done a lot quicker, and to a much higher standard, when you have a shared vision and complete trust in your partners. We’re able to respond more efficiently, innovate more effectively, and leverage central overheads. Between the two organisations, we’re forecasting a combined £30M turnover over the next 12 months so we’re getting some real momentum behind us.

Q A

What do you want to achieve in the next 5 years?

That’s a really difficult one to answer given how far the market has changed since 2009. We will continue with vertical development in what we already do and we have some really exciting things in the pipeline. We’re recruiting at all levels and expect to bring on another 20-25 people over the next year. We’re also on the lookout for industry experienced nonexec directors to join us as “you don’t know what you don’t know”. Andy Whatmough is Managing Director at S&G Response.

In 2011, we agreed to use Bott &

MC // September 2014

Legal Opinion

Legal Opinion Modern Claims’ resident legal experts discuss the latest news and updates for the claims sector. Donna Scully explores the potential implications of the Transport Select Committee’s (TSC’s) plans to ban incentives in any form and argues that there is no place for incentives in the modern claims arena. Reports that Noise Induced Hearing Loss (NIHL) and clinical negligence claims will begin to replace lost income from fast-track RTA cases have recently emerged but, as Alan Nesbit explains these new avenues may not be without their own problems and Alastair Kinley asks whether claims professionals will take heed of Justice Ramsey’s advice over an extension to QOCS.

Myth or reality? The Transport Select Committee has recently announced its plans to ban incentives in any form; how will this impact claims professionals and the wider market?

quick Google search this morning showed that if I had an injury claim I could receive an advance payment of £2000 from one firm of solicitors, a ”gift” of £250 in addition to my damages, or - if I like gadgets - I could have a “complimentary I-Pad”. Do these offers encourage the claimant to bring a claim they might not have otherwise? Some lawyers argue these offers are “marketing tools” that give them an edge over the competition. They determine which firm a claimant instructs, not whether the claim is brought. In contrast, insurers have long argued that these offers encourage the compensation culture, and generate fraudulent claims. Without doubt, in my view, their existence and the advertising of them, does nothing to ‘clean up’ our market and prove that the ‘compensation culture’ is in fact a myth.

MC // September 2014

The Claims Management Regulator last year banned CMCs from offering cash payments as inducements, leaving an inconsistent situation where incentives can be offered by law firms but not CMCs. Surely that cannot be right? Quite rightly, in view of this inconsistency and their view there is no place for ‘incentives’ in a professional arena, the Transport Select Committee has recommended that incentives from solicitors should also be banned. The Government agrees so they recently introduced an amendment to the Criminal justice and Courts Bill to ban inducements from October this year. The proposed amendment would make it a regulatory (but not criminal) breach for any regulated person to offer an inducement to bring a claim, or to seek advice from a regulated person about doing so. Note the proposed ban applies to all regulated persons, not just lawyers. While the ban will therefore apply equally to insurers, brokers and lawyers, in reality it is law firms that are responsible for this practice and they are the target of the new legislation. The change should help to reduce concerns about the “compensation

culture” and discourage fraudulent claims. The similar restriction introduced on CMCs, along with the referral fee ban and other Jackson reforms, has undoubtedly contributed to a fall in fraudulent claims. We have also seen the number of regulated CMCs reduce by 40% and motor premiums have come down too. Inducements encourage the wrong behaviour and send the wrong message to consumers about making claims. Lawyers should win work based on the quality of their legal service, not through gimmicks or by offering inducements. Claims should be brought because the claimant requires compensation for injury or financial loss, not because he will receive an additional bonus. The wider ban on inducements should be welcomed, and the practice stamped out. Donna Scully, Partner, Carpenters.

Legal Opinion

One-way traffic?

The end of the line?

Justice Ramsey said that to get to the heart of what Jackson wanted in his proposals an extension of QOCS would be required; will the claims profession/regulators take heed of this advice?

Reports that noise induced hearing loss (NIHL) and clinical negligence claims will become the way of replacing lost income from fast-track RTA cases, are sweeping the sector; could this be the case or do these types of case present too high a level of indemnity risk?

itigation in England and Wales operates on the “loser pays” principle, or two-way costs shifting. Before April 2013, claimants could protect themselves against the costs of losing their cases by taking out an ATE insurance policy, with the premium recoverable from the losing defendant. The Jackson reforms changed that from April 2013 – hardly surprising, perhaps, since Jackson’s final report described recoverable ATE as “the most bizarre and expensive system that it is possible to devise”. In its place, he recommended a regime of Qualified One-Way Costs Shifting for injury claims. The implementation of QOCS, in the April 2013 CPR update, should have advantages for both sides. First, unsuccessful claimants should not ordinarily face adverse costs (the shifting is one-way, in their favour) and second, liable defendants would no longer bear the cost of ATE premiums. The CPR provisions set out fairly clearly the ‘qualifications’: those circumstances in which unsuccessful claimants should pay the defendant’s costs. There are sound policy reasons for these, such as where the claim is struck out or is fundamentally dishonest. This overall approach to QOCS found favour with the Taylor review in Scotland, and it is expected to be introduced north of the border by primary legislation. There have been only two notable cases to date on QOCS. Gosling v Screwfix is a County Court decision in which BLM successfully argued for a qualification to apply because the claimant was fundamentally dishonest. The case is also noteworthy because the regime was applied to a claim already in progress at April 2013, which gives a hint that the transitional arrangements here are complicated (perhaps overly complicated). In Wagenaar v Weekend Travel this July, the Court of Appeal held that the QOCS rules were not beyond powers in the Civil Procedure Act 1997 and that QOCS should not apply as between defendants disputing contribution(s) to a settled injury claim. It noted that QOCS “will have far-reaching economic repercussions in many fields – medical negligence claims, road traffic claims and industrial accident claims to name but a few”. QOCS will most definitely have significant repercussions, but it need not be the charter for satellite litigation that some have already suggested. It is a regime aimed at ensuring access to justice for claimants and protecting them against potentially disastrous costs of losing. Equally, the defendant’s access to justice is catered for by the qualifications - the Qs of QOCS - which should deter speculative and dishonest claims. Any legal change brings a risk of hard cases and extreme results. We will definitely see some of those in QOCS, but

t is certainly clear that a reasonable number of law firms have taken to both NIHL and Clinical Negligence claims to help resolve future work source problems for their businesses. However, both of these work types come with all manner of different problems for the unsuspecting and new to the area law firm. First, it is important to understand that neither of these work types will resolve cashflow difficulties. They are not quick settling claims like many straight forward RTA cases. They are long tail, NIHL commonly lasting at least 18 months and up to 2-3 years and Clinical Negligence cases can last even longer depending on the requirement for the medical position to resolve before understanding the value of a claim. Second is of course is the obtaining of the work in the first place. There is a lot of “swag” NIHL work out there, lawyers need to be wary of falsified hearing tests, claims that are already with other lawyers or where people have made an unsuccessful claim but thought that as the CMC seemed so convincing that they should give it another go. Clinical Negligence cases are just difficult to come by, there is no huge wealth of availability for these cases. There are few CMC’s with the wherewithal to deal with what are by their very nature very sensitive cases. Next is having the staff who are comfortable and familiar with dealing with these specific specialist areas of personal injury law. Just converting your RTA staff will not cut the mustard. Some EL/PL fee-earners may have a better chance of converting, but only if under the guidance of specialist staff. The number of pitfalls and difficulties that will be met are significant and varied and it is all too easy to make costly mistakes. So whereas there is money to be made in these areas, it is only going to happen if the business requirements for dealing with these cases is properly thought out and carried out. The alternative is that going down this route may well otherwise spell the end of the line. Alan Nesbit, Managing Partner, Nesbit Law Group LLP.

they need not justify the pessimistic view that this balanced new regime is already broken. In fact, Mr Justice’s Ramsey’s recent remarks about its possible extension - say to claims against the police – would suggest it is workable and here to stay. Alistair Kinley is Head of Policy at BLM and chaired Civil Justice Council working groups which advised the MoJ on the implementation of QOCS.

MC // September 2014

5 minutes with

5 MINUTES WITH... Don Clarke

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

Yes, there have been dramatic changes in the industry. The main principles amongst these have been the changes introduced by Lord Woolf in April 1999 and then, of course, we have had the more recent Jackson/ LASPO reforms.

and a rise in the number of fraudulent claims being detected.

Q A

Who inspires you and why?

here are so many people in all areas of life who are inspiring, but Nelson Mandela and Aung San Suu Kyi stand out because they endured significant periods of imprisonment, which had a devastating impact on both them and their families, and yet they kept their focus at all times. Not on revenge, but on reconciliation and dialogue in order to achieve their ultimate goal, which in both cases was democracy.

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

The major change has been the liberalisation of the personal injury market and the very considerable increase in personal injury claims being presented. Together with the introduction of fixed fees, this has led to a move towards the commoditisation of volume claims

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

My legal mentor was one of our current Partners, David Tyson, who I was articled to (yes I am that old) at Keoghs in 1985. I learned two valuable lessons from David; what client care is really all about and its central importance to our work as

professionals, and attention to detail. I can still remember sitting in front of him when he went through my reports and dreading him asking,“ Have you read this?”, once he had spotted my grammatical or spelling errors, which were sadly not infrequent. In fact, things have come full circle as we now once again sit opposite each other, but I don’t let him read my reports.

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

I originally wanted to captain Bolton Wanderers to domestic and European dominance but, regrettably, a deficit of basic talent made that impossible. The other two possibilities would be farming or something in the political arena. Don Clarke is a Partner and Director of Strategy at Keoghs LLP.

SUPERIOR SERVICE... Heavyweight Yorkshire practice, Chadwick Lawrence, has implemented the Proclaim Practice Management Software solution from Eclipse Legal Systems.

ith 7 offices across the West Yorkshire region, Chadwick Lawrence employs 250 staff and provides a full Darren Gower range of legal services to both corporate and private clients. Founded in 1840, the practice has a rich history and has expanded both organically and through acquisition to position itself as the go-to firm in Yorkshire. To cement this position, and as part of a strategy to implement superior client service, Chadwick Lawrence is rolling out Proclaim for its personal injury and conveyancing teams.

information, the firm will be utilising the Proclaim Data Warehouse. The Data Warehouse tool enables Chadwick Lawrence to amalgamate Proclaim data with data from its other departmental software systems - to be manipulated and utilised as one core data repository.

A total of 70 staff will utilise Proclaim, including the practice’s financial accounting team. To provide practice-wide management

“In the current climate it is vital to build the very best levels of client service into our processes. At the same time, building automation and standardising

MC // September 2014

As part of the solution, the personal injury team at Chadwick Lawrence will be using Proclaim’s direct integration with both the EL / PL (Employer and Public Liability) and RTA (Road Traffic Accident) Portals. For client selfservice, the firm has rolled out Eclipse’s FileView online matter tracking solution. Dan Bell, IT Manager at Chadwick Lawrence, comments:

our matter management means that fee earners can really focus on valueadding work, without getting tied up in administration.” For further information, please contact Darren Gower (Marketing Director) at darren.gower@eclipselegal.co.uk, or call 01274 704100. Alternatively, visit www.eclipselegal.co.uk

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