The potentially disastrous course the Government is embarking on is littered with dangers and potential pitfalls Donna Scully, Carpenters
Sustainability: Forging the future of claims
Sustainability Supplement 2016
www.carpenters-law.co.uk | 0844 249 3844 | @CarpentersLawuk
Providing the best possible customer experience has been the cornerstone of our business for almost 60 years. Our partnership with Carpenters ensures that our customers are put at the centre of the process, and receive claims and legal services of the highest quality.
Steve Chelton Head of Claims and Insurer Fraud Protection, Swinton Group Limited
MODERN CLAIMS
WELCOME elcome to the Modern Claims Magazine Sustainability Supplement, which was devised in the brief period between two major announcements from the Ministry of Justice: that the reforms proposed in the 2015 Autumn Statement had been postponed, and, shortly after this, that the MoJ were launching a consultation seeking to introduce many of those same reforms. While there is now a clearer picture of what changes might befall the claims sector in 2017 and beyond, their precise details, and the scale of their effects, are still very uncertain. It is therefore important to examine the sustainability of the claims sector going forward. Parties from across the industry have put forward their views on the current state and the future of claims in these pages, including Donna Scully of Carpenters Solicitors, who have proudly sponsored the supplement. We also interviewed Rob Cummings from the ABI and Rob Smale at Ageas, who both analyse the role of insurers in improving the claims process for customers. Martin Milliner, LV=, believes one way of achieving this is ending the bad behaviour of claims management companies, and in his feature he discusses the existence of a compensation industry. Contributions from MASS, BIBA and FOIL all provide valuable insights into the next steps for their members, and they continue to be a strong voice for their members. The proposals are partly aimed at tackling fraud, as were the recommendations earlier this year from the Insurance Fraud
W
Taskforce. David Hertzell, Chair of the Taskforce, explains how these recommendations might help lower the volume of fraud. Martin Coyne, Ralli, who is also the Chairman of Access to Justice, further discusses the implications for claimant solicitors in Modern Claims Magazine, where the proposals are also a key focus. Each contributor to this supplement brings a unique perspective on the current claims climate to help suggest how the sustainability of the industry can be maintained. But another theme recurs in these pages: collaboration. It’s a word I have heard frequently at conferences, roundtables and in each issue of the magazine during my short time at Modern Claims. While it is easy to simply suggest all parties ensure continued collaboration to ultimately improve services for genuine claimants, it is much more difficult to actually make practical movement towards this. However, we hope this supplement is a small step in the right direction, because, despite the transformation the industry is undergoing, the one thing that is consistent among all who work within it is the focus on doing what’s right for the claimant.
Brendan Gurrie Editorial Assistant, Modern Claims Magazine. 01765 600909 | @ModernBrendan | brendan@charltongrant.co.uk
CONTENTS INTERVIEWS
FEATURES
06 Donna Scully
22 An Alternative Approach
10 Rob Cummings
24 Putting fraud to the sword
Following the announcement of the whiplash consultation from the Ministry of Justice, Modern Claims spoke to Donna Scully about the potential unintended consequences of the proposed measures on the claims industry and its genuine claimants.
Rob Cummings spoke to Modern Claims about how the ABI is working to get the best deal for the industry and its customers, and what effects the proposed reforms will have on this.
14 Rob Smale
Modern Claims talked to Rob Smale about the significant changes to the insurance industry currently taking place, and how all parties in the sector must keep the customer at the forefront of what they do.
18 Nigel Teasdale
November 2016
Project Manager Rachael Pearson
Martin Milliner discusses the regional nature of claims and CMCs, and his belief in a Compensation Industry.
28 Fighting Fraud in the Future
David Hertzell examines the current climate of insurance fraud, and how this has helped develop the recommendations made by the Insurance Fraud Taskforce earlier this year.
30 Case Study: Carpenters
Group Editor Charlotte Parkinson
Rogue law firms and claims management companies encourage fraud, says Andy Thornley. Andy discusses the cost of fraud for the industry and consumers, and how the measures proposed by the government and the Insurance Fraud Taskforce can help lower premiums for policyholders.
26 Working for the Honest Motorist
Modern Claims spoke to Nigel Teasdale about the impact of the Osborne reforms on lawyers and insurers, and how both fraud and emerging technologies will shape the future of the claims sector.
Susan Brown explains why the Ministry of Justice must adjust proposed reforms to the claims sector to ensure stopping the dishonest minority doesn’t restrict access to justice for the honest majority.
Litigants in person - a level playing field?
Editorial Assistant Brendan Gurrie
Events Sales Kate McKittrick
Sustainability Supplement 03
HAVE YOU SEEN OUR SISTER PUBLICATION?
OF THE BUSINESS
ISSUE 25 August 2016 ISSN 2050-5744
LAW
THE BUSINESS OF
LAW
ISSUE 26 October 2016 ISSN 2050-5744
NEIL SMITH
t. We are flying the the capital marke more direct peers within our business and and lts resu “We don’t have any our we report al investors” flag in terms of how get our message across to extern we importantly, how Sponsored by
MIRANDA BRAW N “Ensuring fair and equal access to bus iness is important, economy and soc for our iety, and for com panies and individ uals.”
Supported by
Supported by
Sponsored by
To arrange your free subscription please email liam@charltongrant.co.uk
www.modernlawmagazine.co.uk
A productive collaboration can only be achieved through calm, professional and, to be blunt, grown-up discussions that build trust
INTERVIEW
Donna Scully Following the announcement of the whiplash consultation from the Ministry of Justice, Brendan Gurrie, Modern Claims, spoke to Donna Scully about the potential unintended consequences of the proposed measures on the claims industry and its genuine claimants.
Q A
What do you feel was the cause for the postponement in the Osborne reforms?
We’ll probably never find out why the reforms have been so delayed, but it is likely that there were several reasons. I know for certain that the MoJ was finding it tough going back to the spring to get hold of reliable and meaningful data for the impact assessment that must accompany any consultation paper. That data-gathering exercise then got caught up in the pre-EU referendum purdah period and general stagnation that was felt across government. As to why the consultation paper didn’t appear in October, I’m with Lord (Charlie) Falconer on this and his observations at the ABI motor conference a few weeks ago – with the 23 June vote in favour of Brexit, government has much bigger priorities and issues to contend with. The resulting change of government and an entirely new MoJ ministerial team must have contributed as well. Given the scale of the reforms and the sheer volume of the 186 pages that make up the consultation paper and impact assessment, it’s pretty clear that it was being prepared for quite some time. What are the main problems with the proposed reforms, and which, if any, of them could be beneficial to the claims sector? Unfortunately, the MoJ have yet to be convinced to change from the potentially disastrous course the Government is embarking on, littered with dangers and potential pitfalls. We have consistently pointed out the ‘unintended consequences’ since the reforms were announced in 2015. They will do very little to reduce the number of claims, prevent fraud or address the bad behaviour of CMCs. Instead they will drive bad behaviour at the expense of the customer. The proposed reforms are short-sighted, unfair and may have the opposite effect. Previous reforms such as LASPO, have demonstrated that ill-considered and predominantly one-sided agendas do not achieve their objectives. This spurious questioning of the legitimacy to pursue justice and compensation for one injury only is deeply troubling. It condemns legitimate and reasonable claims challenges, one of the basic foundations of our centuries-old legal system and of our system of restorative insurance cover. Although we’re not representative of the whole sector, nearly 30% of Carpenters’ clients do not pursue injury claims, but have sustained financial loss. The reforms would leave these customers without assistance and bearing the loss themselves, which shows the absurdity of the proposals. On the positive side, if you exclude the recommendations around
Q A
November 2016
whiplash, the Insurance Fraud Taskforce came up with many sensible suggestions. Also, the ban on pre-medical offers is a positive step to defer fraudsters, but in isolation it will simply encourage CMCs to arrange a medical report and rehab through a ‘friendly’ agency – with all that entails in terms of the value of the claim and the need for and cost of treatment. What should be the focus of claimant lawyers in the wake of the reforms? Claimant lawyers must continue to fight these ugly and unfair proposals. Every lawyer I know entered personal injury to seek justice for innocent accident victims. These reforms threaten this basic principle and we must fight them with all our strength.
Q A
Three of the four main proposals require primary legislation so there will likely be a Bill in the next parliamentary session. I hope that the proposals come under intense scrutiny in Parliament and that the worst elements are addressed. But the legal sector must also do more than protest and shout from the side-lines. Most lawyers and legal firms are honest, but there are clearly some who are prepared to take on claims with few checks about their honesty and validity. We will all potentially suffer because of a few rotten apples. I know that the Solicitors Regulation Authority has said it will improve, but its past record in identifying and pursuing the miscreants has been woeful, and so it must improve. There should be a zero tolerance to bad behaviour from any part of our industry.
If these reforms do go ahead, the FCA will need to invest heavily in CMC regulation, but I fear that it will get lost amongst their many responsibilities
Sustainability Supplement 07
INTERVIEW
Unfortunately, the MoJ have yet to be convinced to change from the potentially disastrous course the Government is embarking on, littered with dangers and potential pitfalls
Q A
What effect would the reforms have on fraud?
I really wish that we were facing a reform package that would combat fraud in a thoughtful and practical way. Fraud should be the focus of the reforms, but they’ve moved away from that to tackling supposedly excessive costs in the system. The announced reforms will do little, and may even increase fraudulent behaviour, encouraging a rebound in the growth of the CMC sector and moving towards a more US-style system.
Everyone familiar with the problem knows that combating fraud is complex. It must be approached simultaneously from multiple angles. Action always leads to a reaction. Unless you are very careful, taking time to consider the unintended consequences, some of which can be predicted, you can close one potential loophole and another appears. This so-called displacement will lead to an increase in a rise of other types of claim. The Insurance Fraud Taskforce did have some strong recommendations on fraud prevention, but claimant lawyers need to be more involved and engaged in bringing forward some practical measures to both discourage and identify fraudulent activity. The Government needs to get a grip of whatever the legacy vehicle is going to be to ensure that the recommendations of the IFT are delivered and soon. Will the proposed reforms have an impact on cold calling and claims management companies? I’ve said it before and I’ll say it again: The proposed reforms will have a very real and damaging impact, fueling cold calling and boosting CMCs. The revenue of CMCs in the PI sector is still over £200 million. We know that CMC generated claims are more likely to be cases older than 12 months, and we know that these cases are more likely to be fraudulent or exaggerated. Complaints about automated cold calls and SMS’s may have fallen, but PI still vies for the top slot for the sector, generating hundreds of thousands of unwanted communications. If the reforms proceed as planned, we could end up with precisely the opposite of what is supposedly intended. The bad CMCs will do all they can to ensure that ‘minor’ injury claims exceed the cap and become ‘tariff’ claims, and push the value of other claims above the new
Q A
There are characteristics and bad behaviour across the sector that make it difficult sometimes for claimants, and we must work together to tackle these
08 Sustainability Supplement
SCL - increasing the cost to the insurer and increasing the CMC’s share of the policyholder’s damages. CMCs are already talking publicly about adapting and changing their business models to get around the reforms. They are rubbing their hands in glee at the prospect of solicitors being forced out of the claimant sector. There should be a complete ban on cold calls and CMCs must be properly regulated. I’m pleased that the claims regulator is going to get additional powers to deal with individual directors rather than companies, which can disappear and be re-formed virtually overnight. There is a huge danger that with the process of transferring responsibility to the FCA taking so long, probably not happening until 2018, claims regulation will continue to be underresourced in the interim. If these reforms do go ahead, the FCA will need to invest heavily in CMC regulation, but I fear that it will get lost amongst their many responsibilities. What changes should the Government make to the claims sector to improve access to justice? We need to make the system work better for the genuinely injured and non-injured motor accident victim, reducing the negative impact of CMCs, improving the quality and speed of medical reports through an improved MedCo and getting them the right support quickly and as efficiently as possible. There are characteristics and bad behaviour across the sector that make it difficult sometimes for claimants, and we must work together to tackle these.
Q A
Looking at the bigger picture, the general shift to the delivery of online legal services will probably be beneficial to the majority, but great care must be taken not to leave the most vulnerable behind. Ofcom figures show that across all demographics, 12% of the population are still ‘non-users’ of the internet, including 30% of 6574 year olds, 67% of the over 75s and 25% amongst the social grade DE. It must not just be assumed by the professional classes that everyone can access and use the internet, because they clearly can’t or don’t know how to. This problem is not going to just disappear soon but will need addressing for many years to come. How do you feel insurers can work to lower premiums for their customers? The reality is that several factors have contributed to the current levels of motor insurance premiums. Blaming high motor insurance premiums on accident victims, whether fraudulent or not, is plain dishonest. Premiums have crept up again because of the recent increases in IPT and the cyclical nature of returns from motor insurance. Whilst there are clearly some costs associated with fraud, I think it is highly suspect that the reforms will deliver the sort of scale of savings that insurers are after. The costs of the new world after the reforms, when insurers will effectively have to deal with claimants directly and possibly face an increase, not decrease, in claims, will be pretty much negated. There are undoubtedly excessive costs throughout the system that need to be addressed, such as inflated costs in repair, credit hire and rehabilitation. I’m glad to see that the MoJ’s consultation asks for opinions about these areas as well, although they unfortunately make clear that they’re not planning any immediate action.
Q A
November 2016
INTERVIEW
Blaming high motor insurance premiums on accident victims, whether fraudulent or not, is plain dishonest
Q A
How can collaboration be improved across the sector?
Having been closely involved in the discussions that led to the introduction of askCUE, the key lessons I learnt are that a productive collaboration can only be achieved through calm, professional and, to be blunt, grown-up discussions that build trust. Some of the exchanges from both sides over the last few months have been woeful and downright childish point scoring. The track record of previous reforms, such as LASPO and MedCo, shows how ill-considered and predominantly one-sided agendas that fail to actively engage with all sides either do not achieve their objectives or have needed substantial revision. For instance, LASPO is still not being properly enforced to stop referrals by another name from CMCs to some law firms. The reality is that there is a lot more agreement within the sector than might at first be apparent. We need to sit down and talk, focusing on what we can jointly achieve and respectfully disagreeing where we have alternative views. There does appear to be an appetite for both sides of the debate to explore how a fair and workable system can function for genuine people and I strongly welcome any progress that can be made. What’s next on the horizon for Carpenters?
Q A
Our aim has always been to assist clients in their time of need. We will continue to work closely with our broker and insurance partners to ensure their customers receive the support and customer journey they deserve and rightly expect. We will continue to actively fight fraud and work in a professional and transparent way. Our on-going focus on investment in our team and systems will ensure the continued enhancement of the customer’s journey. Clearly there will be challenges to do this in a changing environment with future reforms and technological developments, but our aim throughout the discussions relating to the reforms has always been to ensure the rights of the genuine customer to proper representation.
We need to sit down and talk, focusing on what we can jointly achieve and respectfully disagreeing where we have alternative views
November 2016
Donna Scully Donna is a Partner at Carpenters, a market-leading provider of claims services to the insurance industry and their customers, with a reputation for an ethical approach to personal injury claims. Moving to the UK from Ireland, she worked for various law firms before joining Carpenters in 1997, where she set up its specialist Personal Injury department. A member of the Motor Accident Solicitors Society’s management committee since 2004, she became Vice-Chairman of MASS in November 2008 and was elected as MASS Chairman for a two-year term in 2010. She is also a long-standing member of the Association of Personal Injury Lawyers (APIL). She has held a seat on the Insurance Times’ Fraud Charter since its launch in 2010, is a member of the editorial board for Modern Claims Magazine and has been a member of the ILoveClaims Motor Advisory Board since its inception in January 2011. She received the Outstanding Achievement award at the 2014 Personal Injury Awards.
Sustainability Supplement 09
One of the key priorities for the new Government has to be getting the best possible deal for the insurance industry in the UK’s EU negotiations, and ensuring the UK retains its status as a worldleader in insurance
INTERVIEW
Rob Cummings Rob Cummings spoke to Modern Claims about how the ABI is working to get the best deal for the industry and its customers, and what effects the proposed reforms will have on this.
Q
What should be the main focus for insurers following the announcement of the Ministry of Justice’s (MoJ’s) whiplash consultation?
A
The immediate focus is going to be ensuring the industry can provide a well-articulated evidence-based response to the consultation. Beyond that, the focus of insurers is what it has always been, and that is working to ensure our customers get the best possible insurance product at a competitive price. That is why we have been working with the Government for a number of years to help take unnecessary costs out of the system and reduce the cost of motor insurance for honest motorists. By delivering the personal injury reforms announced in the consultation, the Government has the potential to deliver over £1 billion of savings directly into the pockets of honest motorists. The Government saw how motor insurers lived up to their commitment to pass on savings following the LASPO reforms, with over £1.1 billion in savings being passed on in lower premiums, and they remain committed to helping to reduce costs further.
Q
Do you believe the measures proposed in the consultation will sufficiently address the current challenges in the insurance industry?
A
Honest motorists will be pleased to see that the Government has come out with a thorough and wide ranging consultation. We have seen with previous reforms, both in the form of LASPO and MedCo, how easy it has been for many in the claimant community to circumvent the rules for financial gain. This consultation is a sign that the Government is sick and tired of this behaviour from claimant lawyers and those looking to abuse the system, and they want to tackle this abuse once and for all. It’s good to see that the consultation goes beyond just the issue of frivolous and exaggerated soft tissue injury claims and addresses areas of growing concern such as psychological injury, rehab and credit hire. Obviously there is much work to be done before the reforms are implemented, but if they are implemented in full, the reform should not only help to tackle the compensation culture, but also deliver the cost savings that the Government is after, so they can be passed onto motorists through lower premiums.
Q A
the UK’s EU negotiations, and ensuring the UK retains its status as a world-leader in insurance. There is clearly much uncertainty at the moment about what the nature of Brexit will ultimately look like, and the Government will need to carefully navigate the many challenges that lie ahead. Brexit aside, Theresa May’s Government is rightly focused on the creation of a new industrial strategy that would benefit regions across the UK. The insurance industry is a driver of growth and can play a crucial role in this; as an employer, tax contributor, and bloodline for new and existing businesses. When people think about financial services, they understandably think of the City. However, this overlooks the fact that the insurance industry employs hundreds of thousands of people across the UK. The Government is committed to supporting people who are just managing and struggling to make ends meet. They should aim to keep costs as low as possible for households and premiums by freezing the insurance premium tax (which affects over 50 million policies across the UK), and by delivering on their promises to work with the industry to cut the cost of motor insurance, where the unnecessary costs that insurers face remain too high.
The industry is actively working with stakeholders and Government to explore what further developments in automated driving technology could mean for motor insurance
Which other issues should the newly reshuffled government focus on in the future in regards to insurance? One of the key priorities for the new Government has to be getting the best possible deal for the insurance industry in
November 2016
Sustainability Supplement 11
INTERVIEW
it is important that there are no further rises in IPT, as this increases the cost of providing insurance and tends to hit those that can least afford it the hardest, such as young drivers and old drivers
Q A
How do you see cold calling and the practice of claims management companies changing in the coming years?
Cold calling is a complex issue, as it is clear that many, if not all, of the nuisance calls consumers face are already illegal. We know the Government is continuing to look for better enforcement measures, such as their recent announcement that firms won’t be able to declare bankruptcy in order to avoid paying fines for nuisance calling anymore. Ultimately, however, the only way to stop nuisance calls will be to address the activities these calls advertise. The insurance industry strongly welcomed the Government’s acceptance of the recommendations of the Carol Brady review. We hope that when the FCA takes the regulation of CMCs on, they will focus on understanding the business models of individual firms and ensure that those CMCs that are reliant on illegal marketing practices (either directly or indirectly), those that bring frivolous and exaggerated claims and those that are not being honest with their customers are prevented from operating. In particular, the reauthorisation of all CMCs and the shift to personal accountability for individual CMC employees should be a strong incentive for CMCs to improve their behaviour. The big question remains where CMC activity will move to next? Following the LASPO reforms, the industry experienced a big shift to NIHL claims, where the majority of claims do not have fixed recoverable costs. As reforms are brought in to tackle this issue, and CMC activity within both PPI and Motor claims comes under greater scrutiny, we will see increased activity in areas such as holiday sickness and flight delays.
Q A
What impact will the MoJ’s measures have on fraud?
Many from the claimant lobby have tried to play down the size of the insurance fraud problem faced by insurers in order to justify opposing action to tackle the problem. However, the Government has made clear that the personal injury reforms go much wider than tackling insurance fraud. This is a societal debate about the levels of compensation for minor soft tissue injuries versus levels of insurance premiums motorists pay.
Despite some of the significant differences between the two sides in relation to the Autumn Statement reforms, there is a good history of both sides working together
While the reforms, once fully implemented, will clearly have a positive impact on fraud, the industry cannot afford to be complacent in the ongoing battle against fraud. The industry continues to invest over £200 million annually in the fight against fraud, and we are currently working with wider stakeholders to implement the outcomes of the final report from the Government’s Insurance Fraud Taskforce, which makes a number of helpful recommendations across the piece.
Q A
Will the introduction of Graduated Driving Licensing help improve driver safety and lower premiums?
The international evidence from countries that have already implemented GDL, such as United States, Canada, Australia and New Zealand, is overwhelming, with evidence showing it typically reduces the number of accidents involving a young driver by approximately 20-25%. By focusing on the most risky driving situations for young drivers (driving at night and with passengers), GDL can reduce the number of catastrophic accidents. Road accidents cause 15% of all deaths of people aged 15-25; this alone is a good reason for the Government to take this forward. It is also worth noting that nearly half of the victims of accidents involving a young driver are other road users, pedestrians and cyclists. TRL’s research, commissioned by the Department for Transport, estimated that in the UK, GDL would prevent 4,471 casualties a year. In a competitive market, such a significant reduction in claims costs would be expected to be reflected in the cost of motor insurance.
Q A
What else can insurers do to lower premiums for their customers?
Firstly, it is important that there are no further rises in IPT, as this increases the cost of providing insurance and tends to hit those that can least afford it the hardest, such as young drivers and old drivers. However, the motor insurance market remains highly competitive, and we are confident that consumers who shop around will get the cover they need at a competitive price. There are already a number of steps that consumers can take, such as always shopping around, agreeing a higher voluntary excess, driving a lower powered car, or considering a telematics (or ‘pay how you drive’) policy. In addition to further reforms to tackle the compensation culture, there are a number of steps that could be taken to reduce the costs insurers face. This includes implementing the recommendations of the Insurance Fraud Taskforce in full, which the ABI is already actively taking forward where the recommendations fall on insurers. Insurers are also very supportive of new driver assistance technology. Cars that come with Autonomous Emergency Breaking (AEB) technology as standard are already placed in a cheaper insurance group rating. The industry is actively working with stakeholders and Government to explore what further developments in automated driving technology could mean for motor insurance.
Q
What steps can be taken to ensure collaboration between all sides of the industry – will the government’s decision reopen the divide amongst the industry?
A
Collaboration has an important role to play in tackling some of the issues the industry faces. Despite some of the significant differences between the two sides in relation to
12 Sustainability Supplement
November 2016
INTERVIEW
While the reforms, once fully implemented, will clearly have a positive impact on fraud, the industry cannot afford to be complacent in the ongoing battle against fraud the Autumn Statement reforms, there is a good history of both sides working together. Most recently we have seen this with establishing access to CUE PI data for claimant lawyers, and then the relaunch of the Rehab Code towards the end of last year. We have also seen it with MedCo. However, I think we all recognise that has had its issues, and is a good example of the limits of collaboration. Despite the three main claimant lawyer bodies being represented on the MedCo board in the form of MASS, APIL, and the Law Society, along with the Association of Medical Reporting Organisations (AMRO), we have seen significant gaming of the system from both MROs and claimant lawyers. As such, going forward, collaboration will be important, particularly when working through some of the safeguards and changes that will be required to ensure the system is still effective when the Small Claims Track limit is increased. However, the limits of this collaboration need to be recognised, particularly when some in the claimant community only act in their own financial interest.
Q A
What challenges does the insurance industry face heading into 2017?
One of the big challenges facing the industry is the twin issues of the digital revolution and the ‘internet of things’. Those insurers that don’t embrace these challenges and adapt appropriately face being left behind. On a similar note is the use of data, both big and small, and how insurers can maximise the use of data for the benefit of the consumer. The industry will also need to continue to develop its relationship with the new Government and the regulators to ensure that its understands how the sector works and the benefit that insurance brings to wider society.
Q A
What are some of the ABI’s next projects?
Obviously, pushing for reform to tackle the UK compensation culture remains a top priority for the ABI, but we aren’t all about whiplash! Our big focus over the coming months and years has been, and will be, engaging with Government and wider stakeholders to ensure the best outcome for the UK insurance sector from the Brexit negotiations. We continue to have a strong focus on improving and enhancing the industry’s reputation. On the general insurance side, this has involved initiatives such as publishing claims acceptance rates for motor, home and travel insurances, helping to improve transparency, and ensuring that customers get the most from, and have confidence in, insurance.
Rob Cummings Rob is Assistant Director, Head of Motor and Liability, at the Association of British Insurers. He is responsible for leading the UK insurance industry’s policy development in a number of key general insurance areas, including civil justice, personal injury reform, liability, motor and credit hire. This includes leading the ABI’s work on the current reforms to the whiplash claims system, Noise Induced Hearing Loss, and the industry response to the development of autonomous vehicles. He was previously Manager of General Insurance at the ABI, focusing on young driver road safety, personal injury, MedCo and the ABI’s work in Northern Ireland. Rob sits on both the board of directors at Thatcham Research and the Civil Justice Council. He joined the ABI in 2011 from the Confederation of British Industry (CBI), where he was a Senior Policy Adviser. Rob holds an MSc in Public Policy and Management from the London School of Economics (LSE), and an MSc in European Policy and Business Management from Birkbeck University.
Increased digitalisation and the rise in ‘Big Data’ offers opportunities and challenges for the industry. We will have an increasing role to play in highlighting how insurer access to increasing amounts of personal data can help encourage more tailored insurance solutions, which will help customers, while balancing against the need to ensure data protection and avoid the creation of any uninsurable underclass.
November 2016
Sustainability Supplement 13
Now the reform plans are in place, the ultimate goal of removing companies that look to exploit victims will have a huge impact on the compensation culture
INTERVIEW
Rob Smale Modern Claims talked to Rob Smale about the significant changes to the insurance industry currently taking place, and how all parties in the sector must keep the customer at the forefront of what they do.
Q A
What should be the focus of insurers following the Ministry of Justice’s announcement of the whiplash consultation?
We welcome the whiplash reform plans announced by the Ministry of Justice. The key focus for insurers is now to monitor the outcomes of the consultation and work with the Government to implement the reforms. It is also unedifying to see the almost daily exchange of barbs and insults between the insurance industry and the claimant lawyers. This is something that now needs to stop as it can be doing little to inspire the Government or public confidence. Insurers must focus on helping customers with genuine claims going forward.
Q A
What benefits might the MoJ’s proposals bring to the claims industry?
Any proposals which set out to protect genuine customers and claimants’ interests will be well received. We will closely monitor the outcomes of the consultation. The insurance industry has always said that if the reforms can remove bad behaviour and unintended consequences by unscrupulous claims management companies, lawyers, and others who make money from exploiting accident victims, then this will be a huge benefit. Should these reforms crystallise and look to deliver savings, we would look to pass these savings on to motorists who have been bearing the brunt of this compensation culture, and we will be committed to helping those people who have genuine injuries and claims.
Q A
Q A
How will the volume of fraud change in the coming years?
We put considerable work into tackling fraud both as an individual company and in conjunction with the wider insurance industry. We do this through initiatives such as the Insurance Fraud Register and the Insurance Fraud Bureau. We will continue to work hard to prevent fraud, and if it is detected, to use all the powers available to pursue the perpetrators. It is difficult to predict how and if the level of fraud will change in the next few years. What we do know is that we need to see a real commitment from the Government to tackle the issue of fraud and the compensation culture in this country. The Insurance Fraud Taskforce and Carol Brady’s review of CMCs were welcome; we support their proposals and want to see them implemented. But we also want to see more done to stop unscrupulous claims management companies and claimant lawyers encouraging people to make a claim for an injury they didn’t have or are exaggerating.
What effect will the proposals have on compensation culture?
The key thing here has always been how insurers, lawyers and others work together to improve matters throughout the industry. Now the reform plans are in place, the ultimate goal of removing companies that look to exploit victims will have a huge impact on the compensation culture. What we would like to see as the consultation commences, is discussion around limiting the time for whiplash claims to be reported to insurers to one year, and further regulation of Claims Management Companies and Medical Reporting Organisations to eradicate bad practices.
Q A
out more than we collect in premiums. We know that increasing motor insurance costs are a cause of customer distrust in the industry, so the plans are definitely a step in the right direction when it comes to lowering premiums. As the consultation continues, insurers will be dedicated to transferring any cost savings onto their customers.
Will the proposed measures help ultimately lower premiums for customers?
We know that increasing motor insurance costs are a cause of customer distrust in the industry, so the plans are definitely a step in the right direction when it comes to lowering premiums
Insurance is a relatively simple concept, but unfortunately the simplicity of this concept seems to have been lost somewhere. Collect a small amount from the many, to be able to pay larger amounts to the few. As an industry we cannot pay
November 2016
Sustainability Supplement 15
INTERVIEW
We are confident that industry bodies will study the proposals carefully and ensure that the correct steps are taken to ensure a fairer compensation system for genuine claimants
Q A
Are there practices that can be adapted from countries with fewer claims to improve the high volume of claims in the UK?
It is an often-repeated and perhaps unhelpful comment that the “UK is the whiplash capital of Europe.” We certainly have higher levels of whiplash claims than other comparable countries – ones with similar roads and driving patterns to us. I’m not going to say whether the UK or others have got this right, but we should certainly look at what happens in other countries and have a debate about what system of compensation we want in the UK. If the debate decides that whiplash costs too much then that will dictate the direction of travel. In those circumstances one could suggest that there is a threshold speed for whiplash claims, medical treatment and assessment of minor injuries, or a reduction in the benefits whiplash claims give to all players. Again, that is why it is so important that the Government and the industry, or even just the industry, put out thoughts for consultation and allow all those involved in the claims process and beyond to debate this matter. If however, the debate lands on the conclusion that the level of whiplash is appropriate for the loss suffered by accident victims then it is incumbent on us all to bring efficiencies to bear, and together weed out fraud and other costs that divert money from genuine claimants. This process might involve an uncomfortable look at the business models of insurers and lawyers alike.
Q A
What are the biggest challenges facing insurers as we enter 2017?
Firstly, the reputation of the insurance industry with the public remains a massive mountain to climb. The fact that over 98% of claims are paid and that claims satisfaction surveys show that over 90% of customers declare themselves to be satisfied with the claim seems to get lost in the noise. Secondly, the war of words between the insurance industry and the claimant side on whiplash claims is draining the energy and life out of a business that, at its heart, is there to care for and help people who have suffered hurt and/ or loss.
Q A
Are there steps insurers can take to improve their perception by the public?
Industry reputation continues to be a topic that is widely debated. We all need to work together to improve the public’s perception of the sector. I can think of many ways how we could
The Insurance Fraud Taskforce and Carol Brady’s review of CMCs were welcome; we support their proposals and want to see them implemented
16 Sustainability Supplement
do that. We need to prove to our customers that insurance is there for them to protect what matters to them when the unexpected happens. The claims service plays a key role in achieving this. The compensation culture that has taken hold of the industry significantly impacts motor insurance premiums as a result. Whilst the issues with the insurance industry are much more than just those of compensation culture, this particular issue needs to be tackled if we are to be seen as an industry capable of tackling poor behaviours - an industry that defends the interests of honest customers who have been involved in crashes, and is aware of the need to provide its services in a low cost way. Implementing The Ageas Way within our claims teams is an example of Ageas working towards improving the industry’s reputation. This means that we trust our people to make the right judgment calls when dealing with claims, and to make brave decisions. They are always encouraged to find the right outcome for each individual customer using predicament management, and identify factors that create a better customer journey. We believe that this is the first and most fundamental step to improve the public’s perception of the industry.
Q
How can the claims industry keep up progress in collaboration following the announcement of the MoJ’s whiplash consultation?
A
It is all about how insurers and other players in the industry can work together to ensure the smooth transition of the consultation. At Ageas, we have demonstrated our willingness to collaborate with others in the claims industry to get better outcomes for consumers. In the award-winning project we undertook with Aviva, we have enabled Validus to get the Verify subrogation portal up and running. It has dramatically reduced the amount of time it takes to settle claims between each other, meaning our customers get their claims sorted out quicker and at a lower cost. We are always looking to see if we can make similar agreements in the future and are open to any collaboration that helps our customers.
Q A
Which new and emerging technologies can the sector utilise to improve service for customers in the coming years?
Before we look at any existing and emerging technologies, at Ageas our customer feedback comes first. We believe in understanding how insurance fits in our lives and how they can be better served with new technologies and smart solutions. The question here should be about solutions that would really make our lives easier and add value to our current lifestyles. The biggest trap that insurers may fall into at this stage is focusing on developing technology-based solutions rather than ones that focus on the customer. Whether it’s a connected home solution, telematics in our cars, or driver assistance solutions such as parking sensors or Autonomous Emergency Braking, they all help to prove that the value they add to our everyday lives comes before the technology. But from the industry perspective, new technologies will hopefully help reduce the severity of claims, the impact they have on our lives, and the cost of putting situations back to the pre-claim state.
Q
Which new and emerging risks might the claims industry face in the near future?
November 2016
INTERVIEW
At the end of the day, we all should have the customer at the heart of everything we do, so as long as this remains a priority, the industry will no doubt come to a mutual solution
A
The list of emerging risks that could affect our industry is getting longer every day. Apart from tackling the trends we are currently seeing from claims, in order to protect our customers and save them the hassle of having to make a claim in the first place where it could have been prevented, we are all watching the new ones and assessing how they might impact what we do on a daily basis. At Ageas, we look at most new and emerging risks as opportunities. It is important to look at them with the creative hat on, and ask how we could use this trend to help us serve our customers better. To put this in context, connected homes, sharing economy, blockchain and autonomous technology all offer some exciting opportunities that could change how the industry operates, the nature of claims we are likely to receive in the future and at what cost, and the skills our employees need to efficiently manage them. The only real risk we face at the moment is falling behind in our understating of how we serve our customers.
Q A
In your opinion, what should the focus of claimant solicitors be following the announcement of the consultation?
What the insurance industry needs, regardless of whether the whiplash reforms announced by George Osborne last year have been postponed or abandoned, is a transparent and openminded debate between all parties involved. At the end of the day, we all should have the customer at the heart of everything we do, so as long as this remains a priority, the industry will no doubt come to a mutual solution.
Q
Do the proposed measures go far enough to improve the claims industry, and are there other areas of insurance that the government needs to focus on?
A
Whilst the proposed measures are a big step in the right direction there are a lot of other factors to consider, particularly because 2016 has been such a significant year for the UK. The talks and reforms around Brexit are likely to take up considerable time and resources for both ministers and their officials. However, we are confident that industry bodies will study the proposals carefully and ensure that the correct steps are taken to ensure a fairer compensation system for genuine claimants.
Q A
What’s next for Ageas?
Ageas will continue to review options, seek change where appropriate, and in the meantime make sure our systems are robust in the face of the dysfunctional nature of the motor market. We are also keen to listen to people, on both insurer and claimant sides, who are willing to make headway in stemming some of the less desirable behaviours without resorting to legislation. A winwin solution for both sides is attainable with commitment from all to make it happen. The inflammatory rhetoric between the two sides needs to stop. Indeed, we need to work collaboratively as an industry for our customers.
November 2016
Rob Smale Rob Smale entered the insurance industry in 1996 from a mining engineering role. In 2003, Rob joined Ageas where, as Claims Director, he is helping to differentiate Ageas to its partners and customers alike. In his time with Ageas Rob has implemented the awardwinning ‘Ageas Way in Claims’. This distinctive approach to claims and operational management encourages focus on high levels of customer satisfaction linked to an efficient and low cost process. It challenges many of the norms of operations leadership such as KPIs and targets. The Ageas Way is core to the relationship with claims suppliers and Ageas is unapologetically different in the way it has assembled its claims supply chain in recent years. Responsible for 1,200 employees across three UK sites, Rob’s team provides a 24/7/365 service to customers claiming on their Ageas personal and commercial insurance policies. Rob’s team has grown with the success of Ageas in the partnerships area as it also deals with the claims resulting from major partners including Tesco Bank, Virgin Money, VW, John Lewis, GM and Toyota, where the Ageas Way was integral to these partners choosing to work with Ageas. In the last two years the Institute of Customer Service declared the motor, household and travel claims teams in Ageas “world class.” In turn, this service ethos has resulted in class leading expense ratios. Since 2004 the Ageas Claims Team has won over 30 industry awards, three so far in 2016. Rob plays an active role in industry groups such as I Love Claims. He is a regular presenter at market conferences in the UK and beyond. In February 2012 he was appointed to the Supervisory Board of the Insurance Fraud Bureau (IFB).
Sustainability Supplement 17
INTERVIEW
Nigel Teasdale Brendan Gurrie, Modern Claims, spoke to Nigel Teasdale about the impact of the Osborne reforms on lawyers and insurers, and how both fraud and emerging technologies will shape the future of the claims sector1.
Q A
What implications does the postponement of the Osborne reforms have on insurance lawyers?
With the consultation on the autumn statement reforms first expected in March this year, the likely timetable for reform had already been extended before the recent announcement that the MOJ is not proceeding with the reforms at the moment, but is instead working on fresh proposals. The immediate impact of the postponement is that reform is now unlikely to be achieved in 2017, as previously hoped. Longer term, the implications for insurers and lawyers will depend upon the proposals that are ultimately put forward by the Government. It has been made clear that the current delay is only a postponement, and that reform proposals will be brought forward. We await the paper setting out the detail. In addition to reform of personal injury claims, shortly after the autumn statement announcement, FOIL put forward proposals to the MOJ to reform credit hire, calling for a new pre-action protocol for credit hire claims, a reduced limitation period and fixed costs. I hope the pause will allow for these to be included in the plans, to transform an area badly in need of reform.
Q A
What should be the main focus of insurance lawyers in the wake of the Osborne reforms?
The detailed scrutiny of the practical impact of the autumn statement reforms has made it clear that reform is not as straightforward as just raising the Small Claims Track limit, and introducing a threshold for the recovery of general damages. If the reforms are to deliver on the objectives of reducing costs and discouraging fraud, it is important to develop a new claims process, making use of the best parts of the system that exists currently, whilst looking to take advantage of new ideas and future developments such as the work being done to introduce the online court. FOIL has been working on detailed proposals over the past year, working closely with the ABI. The proposals will need to be considered afresh once the Government’s plans become clear to ensure that a workable system is developed, avoiding as far as possible ‘unforeseen consequences’ and opportunities to game the system.
Q A
How should insurance and legal professionals prepare for leaving the EU in the coming years?
Insurers and lawyers are in the same position as the rest of the country on Brexit – it is not yet clear what the UK’s future relationship with the EU will look like or, in the light of the recent litigation, what the final timetable for leaving the EU will be. Obviously, passporting rights are a major issue, with insurance companies already reacting to the possibility that they will be affected by the UK leaving the single market. From a corporate point of view, Solvency II and data protection provisions are important areas that may be affected. From a claims viewpoint,
18 Sustainability Supplement
If a new claims regime is introduced, we are likely to see the usual spike in claims as claimant representatives take advantage of the old system with no certainty at the moment on future effect of the directives on UK law, insurance professionals and lawyers need to have a full understanding of the areas likely to be affected, and be ready to ensure that Government understands the implications of change and reacts accordingly. In an environment where the UK is free to adopt or discard legislation arising from the EU, there will be the opportunity for a fresh look at some issues - the difficulties arising from Vnuk being one example.
Q
What challenges might new and emerging technologies bring to the legal and insurance markets, and what opportunities will they present?
A
Telematics are already with us, impacting particularly on motor insurance for young drivers and influencing the Government’s thinking on driving restrictions and GDLs. Whilst fully automated vehicles are still several years off, Advanced Driver Assist Systems (ADAS) are already being used and are developing quickly, presenting enormous opportunities to make motoring safer and reduce accidents and claims. It is encouraging that the Government recognises the need for the insurance and regulatory framework to keep pace with technology, and the recent DfT
November 2016
INTERVIEW
Press reports will always focus on confrontation within the sector, but behind the scenes, claimant representatives and insurers can, and do, work together consultation gave an opportunity to insurers and lawyers to influence Government thinking and to ensure future insurance arrangements and RTA law work effectively, both in providing compensation and identifying responsibility appropriately when accidents occur. Cyber cover is still relatively new, with the market likely to increase as the number of reported incidents increases. The challenge for insurers is in understanding the risks and developing effective policy wording.
Q A
How do you predict the type and volume of claims to change in 2017?
Motor claims are likely to continue to marginally reduce whilst remaining high: if a new claims regime is introduced, we are likely to see the usual spike in claims as claimant representatives take advantage of the old system. It does seem as if the volume of late claims is decreasing, which I hope will continue to be a trend into 2017. Deafness claims also seem to be finally tailing off, with hopes that a new process arising from the current work of the CJC will further reduce the volume of unjustified claims being brought. Almost inevitably, reform in one area increases claims in another: travel claims and disease claims outside of deafness, such as repetitive strain injury, are likely to be growth areas.
Q A
How will the type and volume of fraud change in response to changes in the claims sector?
Considerable efforts have been made to tackle fraud over recent years, but whatever the changes, I can’t see it disappearing from motor claims. Part of the challenge in developing detailed reform proposals is ensuring that opportunities for fraud are not opened up: for example, carrying out appropriate checks on litigants in person will need to be addressed. Fraudsters are notoriously nimble, and as one area is closed down, they will seek to find areas in which they can still operate. EL, PL and property claims will continue to be at risk, and we may see an increase in credit hire fraud as the personal injury sector is tightened.
Q A
Is enough being done to promote collaboration between insurers and claimant solicitors?
Press reports will always focus on confrontation within the sector, but behind the scenes, claimant representatives and insurers can, and do, work together. The Serious Injury Guide is an example of the ways in which collaborative processes have been developed. It has improved the handling of higher value claims - we can do more to promote it, and other similar initiatives, to encourage buy-in. APIL, FOIL and MASS have worked together to develop a register of personal injury mediators who meet commonly agreed standards, to improve the ADR process, which will be launched over coming months. We may not always agree, but we need to keep talking.
Q A
What should be the focus of the Government to improve the claims sector and service for customers?
support the work Lord Justice Jackson is undertaking to develop Government policy on extending fixed costs, and look forward to further developments on that next year. The Government has accepted the recommendations of the Insurance Fraud Taskforce, and it is important that they are implemented. I’m pleased to see that work is continuing to review progress. We are also awaiting the introduction of the reforms to CMCs recommended by Carol Brady – hopefully we will see legislation shortly to move CMC regulation to the FCA Tougher regulation is needed to prevent abuse.
Q
Do you see any of the postponed reforms being implemented in the future, and how might they differ from those originally proposed?
A
I think the Government will put forward proposals for reform and I’d like that to be sooner rather than later – we have a significant problem with the frequency and cost of whiplash claims and that needs to be tackled. Although there has been delay, and Brexit has distracted Government attention and diverted resources, I believe the MOJ accepts the need for reform and is also aware that a new process will be needed rather than just headline changes to the Small Claims Track limit and entitlement to general damages. I hope the paper, when it comes, will be the start of the detailed work needed to develop that new claims regime. Away from whiplash, the consultation fixed costs in clinical negligence claims is also overdue, but it’s been good to see recent progress on fixed costs generally.
Q A
What are FOIL’s aims for 2017?
Clearly, we’ll be involved in reforming the claims system both through process reform and in Lord Justice Jackson’s work on an extended fixed costs regime, which has been a long-term priority for FOIL. Very significant changes in the civil justice system are also underway in Scotland and Northern Ireland, and we’ll be involved there. Away from claims, we want to increase our work on issues of significance to the London Market. In the area of training and professional standards, there has been a great deal of interest in the FOIL Statement of Competence since it was launched in July this year, and I would like to see ‘working to the FOIL standard’ become the normal expectation for law firms. Aside from that, we’ll be responding to whatever arises, from the courts, new legislation, consultations, or in the market - I’m expecting a busy Presidential year!
1 The Ministry of Justice announced its whiplash consultation after this interview. Nigel Teasdale commented: “There is a great opportunity now for significant reform. We need to focus on getting the detail right to deliver a workable, effective new process. “Several other consultations are in train or pending and this offers a real opportunity for a joined-up approach by the MOJ and other interested parties to achieve comprehensive, cohesive reform. “FOIL has already undertaken detailed work on various reform proposals and will be keenly involved with this latest consultation.”
Nigel Teasdale is President of the Forum of Insurance Lawyers (FOIL) and Partner at DWF.
The priority must be to publish proposals for whiplash reform, but there are other issues that also need attention. We
November 2016
Sustainability Supplement 19
27th April 2017 New Dock Hall, Leeds
N O M I N AT I O N S N O w O P E N Sponsorship Enquiries: Kate McKittrick | kate@charltongrant.co.uk | 01765 600909 Event Enquiries: Ellie Campbell | ellie.campbell@charltongrant.co.uk | 01765 600909
www.modernclaimsawards.co.uk kindly sponsored by
FEATURES
An Alternative Approach Susan Brown explains why the Ministry of Justice must adjust proposed reforms to the claims sector to ensure stopping the dishonest minority doesn’t restrict access to justice for the honest majority. he claimant community was braced for bad news whenever the Government’s “whiplash” claims process consultation was to be published. Regrettably, it didn’t disappoint. Removing compensation, raising the small claims limit and now a set tariff of compensation are all proposed at the expense of evidence, justice and plain common sense. The potential impact of these ugly proposals would only be slightly offset by the welcome ban on pre-medical offers by insurers. LASPO and the introduction of MedCo suffered from not actively taking on board the advice from the claimant sector, and for being rushed through and flawed in their delivery. This Government is about to make all the same mistakes. It is an agenda being pursued without adequate research or scrutiny of the possible consequences. It risks treating everyone who makes a claim as either fraudulent, frivolous or an unnecessary expense, regardless of the circumstances of the claim, irrespective of fault or no-fault, injury or non-injury. Legislative vandalism The relentless narrative of the last few years from the insurers and media, of the ‘compensation culture’, ‘cash-for-crash’ and ‘ambulancechasing lawyers’ has undoubtedly left a deep impression. It is more than possible that such headlines have themselves contributed to a culture where otherwise law-abiding citizens have been tempted to make a claim for an injury they did not receive, or exaggerate the impact of an accident they were involved in. We all agree that fraud has blighted the sector for too long and must be tackled with all our energies. Action to target fraud must not, however, affect how an accident victim is treated and their basic right to seek recompense for injuries sustained through no fault of their own. Abolishing the right to damages caused by someone else’s negligence to save costs for the insurance sector would run contrary to any meaningful definition of justice. Potentially, a pedestrian struck by a motor vehicle would be entitled to claim compensation for soft tissue injuries, but a driver of a vehicle struck from behind by somebody recklessly exceeding the speed limit would not. A system that refuses to compensate for some types of legitimate claims, but not others, threatens the very principles of our insurance and justice systems. To effectively outlaw the majority of claims, however legitimate they are, is nothing short of legislative vandalism that rides roughshod over centuries of legal tradition.
T
Cold calling consequences
The whole claims sector - insurers, defendant or claimant
22 Sustainability Supplement
Introducing a regulatory regime where the just majority are penalised for the actions of the unjust minority is surely not the right way to tackle the problem solicitors - surely wants the same thing. It wants to look after the interests of the majority who are legitimately seeking justice after misfortune has struck through no fault of their own. A majority who have, by the way, paid their high compulsory motor insurance in the expectation that they will be recompensed and looked after. Introducing a regulatory regime where the just majority are penalised for the actions of the unjust minority is surely not the right way to tackle the problem. The government and insurers say that they wish to further reduce the number of claims and the associated costs. If anything, the proposed regime could lead to an increase in costs, with claims values rising to mitigate contingency arrangements. The number of claims may increase as well, together with the levels of fraud. We could all suffer from more cold-calling and other unwanted marketing communications. CMCs will adapt and potentially flourish under the proposed system, exploiting loopholes whilst stepping over the debris of a crippled legal sector. Indeed, there have already been public hints that this is precisely what will occur. Potentially opening the claims process to allow Litigants in Person to use it and, struggling with the complexities of representing themselves, many will likely fall prey to CMCs to direct claimants how to use it, taking an even larger slice of damages away from the accident victim. Have we learned nothing from how the PPI market operated? Tragically, but inevitably, some accident victims will likely not seek compensation for their injuries at all, but the costs will be borne by us all through the NHS. A dysfunctional market benefits no-one in the sector.
What the statistics say
The facts do not provide the evidence for the proposed actions. Motor PI and whiplash claims have fallen by 70,000 claims a year since their peak in 2011-12, having progressively fallen for four years in a row. The number of claims per year was falling even before LASPO was implemented in April 2013. Serious road traffic accidents reported to the police have fallen in recent years, but the Department of Transport still estimates that there
November 2016
FEATURES
To effectively outlaw the majority of claims, however legitimate they are, is nothing short of legislative vandalism that rides roughshod over centuries of legal tradition were in the region of 630,000 “slightly injured” in 2015, of which 519,000 casualties were unreported. The ABI’s own unpublished figures reveal that claims costs have fallen 29% since 2010 with the amount paid out annually by motor insurers falling from £8.3 billion in 2010 to £5.89 billion in 2014 – a decrease and saving to insurers of £2.41 billion. Damages have not increased proportionally as fast as the proposed new small claims limit; damages awarded today may be the same as or less than awards made in the early 1990s. No-one, claimant or insurer, has produced a figure for fraud higher than 11%, and solicitors contend that the level of fraud is unlikely to exceed 1-3%. Whatever the true level, there is clearly unanimous agreement that the vast majority of claims are legitimate. Insurer fraud figures combine both proven and what it calls “suspected” fraud, based on a number of highly questionable criteria. When the figures are separated, the incidence of proven fraud drops dramatically. It is undeniable that there is a problem with fraud, but this does not justify the attack upon the fundamental legal rights of accident victims. Even if insurers did reduce motor premiums for a short period after LASPO, there is little doubt that premiums have risen dramatically in recent years as the insurance cycle turns and insurers pass on the recent Insurance Premium Tax increases. With the latest 2% increase in IPT from June 2017 and some predictions that it will continue to rise until it reaches alignment with the 20% VAT rate, motor insurance premiums look likely to increase for the foreseeable future as it is passed onto consumers. This will be particularly difficult for the so-called JAMs. Blaming rising legal costs, when all the evidence points to the contrary, will not wash, and suggests that there will always be a new excuse for maintaining or raising motor insurance premiums to protect insurers profits. With no mechanism by which the Government will monitor this, let alone force insurers to pass on the supposed savings from reduced motor insurance premiums to consumers, public promises should at best be treated with skepticism. It should be remembered that only two of the ABI’s 209 members, albeit large members, have publicly committed to passing on the full savings of any reform package to customers. Interestingly the consultation’s own Impact Assessment anticipates that only 85% of “savings” will be returned to consumers. Not too late It is still not too late to develop an alternative approach. One that tackles some of the many problems that exist in the sector, without the known and unknown unintended consequences that would follow if the current government proposals were implemented. There are many good ideas recommended by the Insurance Fraud Taskforce, although the Government needs to take a more
November 2016
proactive role in driving through their delivery by formalising the legacy vehicle. The industry can only do so much and still needs the Ministry of Justice to encourage, drive and if necessary cajole the sector into action. The recent structural changes to the MedCo system need time to bed in, but will hopefully weed out those MROs who short-sightedly have attempted to game the system. There are discussions to be had around the notification of claims and the input of information around the source of claims. Insurers need to take a robust position on claims they believe to be fraudulent, rather than settling because it is cheaper than fighting them in the courts. We can explore opportunities to extend data sharing, building on the early successes of askCUEPI. We can certainly strengthen the regulatory regime for CMCs. If the government can ban pensions cold calling, there is no reason why they can’t ban cold calling in personal injury. There is a genuine debate to be had about what level the small claims limit should be set at in relation to the current market and what would be proportionate to the growth in damages since it was introduced. It has been a hard and bumpy journey, but we have already come a long way in reforming the claims market in the last few years: the MoJ Portal and fixed costs, further reduced fixed costs through LASPO including a ban on referral fees, the end of recovery of ATE Premiums and success fees, askCUEPI and MedCo. Solicitors have not always agreed with every measure, and particularly the way in which they have been implemented, but we generally have a more efficient and streamlined claims process now as a result. Far from building upon this progress, the Government’s proposals would re-open the market to abuse and ultimately let down the accident victims that most need the system to work effectively for them. When the dust has settled on the current debate, the reality is that there will still be hundreds of thousands of claims for the simple reason that there will continue to be hundreds of thousands of motor vehicle accidents in the UK. If the proponents of the reforms win the day, the market will adapt to pursue these claims. It just may not be independent, legal professionals that provide accident victims with guidance on how they can pursue justice and that will undoubtedly be detrimental to the accident victim and sector at large. Past cross-industry initiatives have demonstrated that so much more can be achieved by an open dialogue to find real solutions rather than conflict and entrenched positions. Insurers and solicitors will not agree on some things, and it would require our collective energies to shape the claims landscape in a way that is fair, legitimate and affordable. Whether we deal with victims, claimants or customers, we owe it to them to try. Susan Brown is the Immediate Past Chair of the Motor Accident Solicitors Society (MASS).
Sustainability Supplement 23
FEATURES
Putting fraud to the sword Rogue law firms and claims management companies encourage fraud, says Andy Thornley. Andy discusses the cost of fraud for the industry and consumers, and how the measures proposed by the government and the Insurance Fraud Taskforce can help lower premiums for policyholders.
“I
t’s really frustrating to know that someone is lying about how badly they were hurt and there’s nothing you can do about it!”
Working in the insurance industry, you become the go-to person whenever friends or family need a bit of help when it comes to their cover. A family friend had been involved in a low-speed bump with another car and now all four occupants were complaining of whiplash, so the friend called me to see how I could help. “I know they’re only doing it for the money. You see the adverts and text messages all the time promising cash for whiplash claims, but how can I prove they’re not telling the truth?” I responded that as it can be very hard to diagnose genuine whiplash injuries, this makes them a target for fraudsters and a whole host of others, such as rogue law firms and Claims Management Companies, to exploit. Ultimately, I shared her frustration. Insurance fraud isn’t new, it’s been around for some time. In fact, in 1966, a film called The Fortune Cookie had a central plot revolving around a man making a fraudulent personal injury claim. It even featured a character called ‘Whiplash Willie’. Yet half a century on from that film, we still haven’t been able to satisfactorily tackle this widespread problem. Last year, then Chancellor of the Exchequer, Rt Hon George Osborne, announced a raft of measures that were aimed at cracking down on this illegal and anti-social behaviour. Fraudulent whiplash claims cost honest policyholders around £50 each, making it far from a victimless crime. One measure announced was an independent review into Claims Management Companies. Chaired by Carol Brady, board Chair of the Chartered Trading Standard Institutes, the review consulted with key stakeholders about what more could be done to reduce insurance fraud. BIBA fully acknowledges the need to crack down on insurance fraud and actively engaged with the review. After seeking member views we responded in a balanced way, pushing for change yet aiming to protect those that are genuinely hurt in road traffic accidents. One of the arguments BIBA presented to Brady
24 Sustainability Supplement
Combatting fraud and its participants requires a multifaceted approach, and this is why the Government’s long awaited whiplash consultation is an important step in tackling it was on regulation where we felt we had a compelling case that demonstrated an un-level playing field with regards to its weight and intrusiveness. We showed visually the many hundreds of pages of insurance broking rules compared to the handful of sheets of relatively few rules that CMCs have to abide by. Brady took this on board, commenting that she had “considered a level playing field between different CMCs, but not between other players in the customers’ insurance journey”. We also highlighted the way rogue CMCs were able to dodge enforcement activity by declaring themselves bankrupt and starting up so called ‘phoenix companies’ shortly after, with the same directors. Not only does this perpetuate the drivers of fraud, but the activity impacts the reputation of those professional services that do help true victims to get appropriate compensation. Osborne subsequently announced that Claims Management Companies would come under the supervision of the Financial Conduct Authority, something BIBA had been persistent in lobbying on, and we were pleased when the Chancellor said Government would be accepting all of Brady’s recommendations. But this is no panacea, no silver bullet. Combatting fraud and its participants requires a multi-faceted approach, and this is why the Government’s long awaited whiplash consultation is an important step in tackling it. The consultation document proposes raising the small claims track from £1,000 to £5,000, meaning low-value claims could
November 2016
FEATURES
Some insures might look to settle a claim as early as possible to avoid the involvement of rogue CMCs that might inflate the costs Andy Thornley Andy Thornley is Head of Corporate Affairs for the British Insurance Brokers’ Association (BIBA). Andy started his career in the public sector, working in the NHS and two separate Executive Agencies of the Department for Health. He began working in the insurance industry with the Motor Insurers’ Bureau, responsible for the communications on industry databases as well as media handling of wider uninsured driving issues, before moving to the British Insurance Brokers’ Association in 2013. Andy works on the public affairs side of the organisation, helping to develop policy and representing brokers and their interests to the media, regulator, officials and Parliamentarians.
no longer be pursued by rogue lawyers or claims management companies. It also bans pre-medical report offers, something that has proliferated, thus making fraud easier. Some insures might look to settle a claim as early as possible to avoid the involvement of rogue CMCs that might inflate the costs. The proposed changes will mean that a settlement can be made on the merits of the case rather than the economics of settling quicker. The consultation also proposes a cap of £425 on the amount of special damages that can be awarded for pure ‘pain and suffering’. This would operate on the principle that taking the money out of the system removes the incentive for fraudsters to pursue actions. The evidence that we are in the midst of a whiplash epidemic is overwhelming: 80% of our personal injury claims feature whiplash, compared to just 3% in French personal injury claims. A whole industry of telemarketing and bombarding people whose information has been sold on, has grown around this with plenty of actors wanting to take their slice of the pie. And who pays in the end? It’s the honest policyholder. Postcode zones where fraud is common or that feature high numbers of dubious whiplash claims also tend to attract higher costs of insurance because of the increased risk profile, blighting the area. I recently had a conversation with one Bradford MP, who cited just such a problem for his constituents. It’s a real phenomenon that affects many people’s lives. Let’s be clear, the reforms should, all other things being equal, lead to lower premiums for honest motorists; the figure being used by Government is, on average, £40 per policyholder. However, these savings are likely to never be fully realised as a result of the last three increases in IPT adding some £25 or more to the cost of motor insurance.
on savings from the last reforms delivered in the Jackson Review. The publication failed to mention however, that Government had already hiked IPT and that rogue operators had found a way to ensure their business models weren’t affected by the banning of referral fees payable in respect of after the event insurance and conditional fee agreements. The more complicated actuality didn’t fit with the snappy headline and narrative that the insurance industry are the bad guys however. BIBA’s near 2,000 members are brokers, who under agency law represent the interests of their client above any other interest, and we are concerned about the effect that this whiplash culture has had on premiums and millions of honest policyholders. Moreover, with rhetoric like ‘it’s the industry that does not pass on the saving’, we need to work hard and coherently to explain the true position. Soft tissue injury has been an easy target for fraudsters. BIBA welcomes the consultation and is gathering the views of members to create a formal response which we hope will go some way to protecting innocent policyholders and make like more difficult for all the other ‘Whiplash Willies’ out there.
The proposed changes will mean that a settlement can be made on the merits of the case rather than the economics of settling quicker
We need an effective way of communicating this practice of ‘robbing Peter to pay Paul’ in terms of motor premium benefits, as many people, politicians included, are expecting to see cheaper motor insurance. A recent article in The Times criticised insurers for not passing
November 2016
Sustainability Supplement 25
FEATURES
Working for the Honest Motorist Martin Milliner discusses the regional nature of claims and CMCs, and his belief in a Compensation Industry. onest customers are currently paying far too much for their motor insurance, and the challenge for insurers and claimant lawyers alike is working out how to provide them with the lower premiums that they deserve.
H
How would you feel if there was a common pool that you, your family and friends put money into year after year that you rarely touched, whereas a couple of your family members were putting their hands in the till, and worse still letting ‘outsiders’ take that money too? You wouldn’t like it, and you would want to do something about it, wouldn’t you? Both sides of the argument have been at loggerheads over this issue since the turn of the century, and there has been a lot of debate, government intervention and some significant changes, both regulatory and legislatively. Whilst we have seen the rules of the game change, the behaviours have not, and therefore the outcomes remain much the same. Each side will often support their arguments with statistics that are used to grab headlines or to force home a point, or resort to playing out the debate with witty blows at each other over social media that I am sure must have the current crop of comedy scriptwriters quaking in their boots. Yet all these playground squabbles have only led to polarisation of the debate, publicity of the problem and a need for “parental” intervention, in the guise of HM Treasury, MOJ, CMR, ICO, SRA or FCA who have to come in to try to sort the problem out. Despite this, the problem hasn’t gone away, so nor will the interventions. As with most parents though, eventually patience will run out and therefore something will happen to end the argument. I think we are pretty much at this point now and yes, whilst Brexit may be pre-occupying for some, it will only be a temporary distraction. At the time of writing this piece, the much anticipated MOJ consultation on “Whiplash” hasn’t been issued. When it does, I think it will set out a sense of the government’s strategic direction of travel. Whilst it may be unclear as to what might be implemented and by when, I think that the mood music of government is that they quite rightly want not just to tackle this issue, but also try to start turning down the dial on some of the social behaviours that are reflected in unnecessary soft tissue injury claims.
What is extremely clear to all parties is that there is a Compensation Industry. Tackling this industry will help tackle social behaviour has bolted, but whether you choose to agree or not, what is extremely clear to all parties is that there is a Compensation Industry. Tackling this industry will help tackle social behaviour. The industry peppers day-time TV with cheap looking ads, is a plague on our email and SMS inboxes and incoming calls, and more often than not does so in a very overt way, making promises of compensation or incentives that encourage a “me too” attitude. The embedding of the Compensation Industry is in my opinion directly linked to social behaviour and therefore action at a local level is likely to see social change. The stark differences in what we experience by way of soft tissue claims in Scotland compared to England and Wales can be causally linked to the fact that, in the whole of Scotland, there are only four Claims Management Companies, and costs for solicitors in terms of success fees etc. have not been designed to encourage poor behaviour. Why do I say ‘stark’? I would argue that one of the fairest ways to understand the rise of soft tissue claims as a problem through time is to look at the ratio of the number of Personal Injury claims (PI) to Third Party Property Damage claims (TPPD – incl. of street furniture, houses and other non- vehicle damage). Whilst you may say this is somewhat ironic given my earlier comments, I will now trot out what I would call independent facts rather than stats. According to analysis of 2015 data from the Institute and Faculty of Actuaries, in Scotland we have by postcode the five lowest ratios of PI:TPPD in the UK. Inverness is 19.7%, Perth at 17.7%, Aberdeen has 16.7%, The Outer Hebrides and Lerwick are the lowest at 15% and 13.8% respectively.
So it looks like both sides have a clear choice to make: either wait to be told our fortunes or genuinely work together by deeds, and not just words, to create a compelling solution that will be far better than a blunt governmental alternative.
In England and Wales we have some pretty close comparisons too, with Exeter post codes coming in lowest of all at 20.5% - there are few CMCs present and aggressively active in the South West.
There is much debate about this, and the perception as to whether there is a compensation culture. In my view, that horse
Compare that to the North West where we have the highest incidence of PI:TPPD claims in the world. In Liverpool we see
26 Sustainability Supplement
November 2016
FEATURES
So it looks like both sides have a clear choice to make: either wait to be told our fortunes or genuinely work together by deeds, and not just words, to create a compelling solution that will be far better than a blunt governmental alternative 53.5%, Oldham at 48.8%, Manchester with 47.6% and Bolton postcodes at 45.8%. I would argue that this is a basic pricedriven, supply and demand outcome where lawyers hungry for work partner with CMCs that are prepared to supply them with the volumes they want, for a price the market can support due to the residual money that is still sloshing around the system. According to the Claims Management Regulator there are 26 CMCs in Liverpool, a further 26 in Oldham, a whopping 66 in Manchester, and Bolton have 32 CMCs. When you add in those in Warrington, Preston, Blackburn and Stockport, there are a total of 249 Claims Management Companies in the North West of England. Unsurprisingly, insurers see a lot of patterns in that activity and can demonstrate clear links between law firms, CMCs and fraudsters. Despite that, I am disappointed that the underresourced but capable CMR conducted only 1 formal investigation into PI CMCs in their last reporting year, and that the SRA have yet to write any headlines by way of taking offenders to task. What are the consequences of the above for honest motorists or those not lucky enough to have a non-fault accident with automatic entry into the whiplash lottery? Well it of course means that for those living in post codes that have a high incidence of soft tissue injuries, insurers have to charge hundreds of £’s more than the national average for comparative cover. Is that a fair deal for the consumer and for local small businesses? Wouldn’t they wish to swap the notional chance to be persuaded to make a PI claim for a solution that delivers lower premiums year after year? Taking this into account, what does the solution need to address to create better outcomes for society? We need to create a system that supports and protects the rights of genuine claimants, with meaningful injuries being represented by regulated responsible lawyers that source work at a price that is low enough to make the market unattractive for unscrupulous suppliers to operate in.
length of prognosis or diagnose enough psychological injuries. The recent suspension of the multiple legal entities deployed by Medical Reporting Organisations (MROs) is a step in the right direction of reintroducing randomization, but the power still sits with lawyers and MROs as to which experts can profit from highly lucrative medico-legal instructions. All the time that financial power exists with MROs, the experts cannot be seen to be independent as they will not bite the hands of the major players that feed them. What does success look like? 1. A reduction in the number of soft tissue injury claims to something like half the vehicle claims we have today – given that is where we were in the year 2000. 2. Improved quality of medical reports that only record genuine symptomology, call out cases where credibility of the claimant is in doubt or fraud is present. Together with: • Sensible levels of identification of psychological injuries. • Recommendation of treatment only where it is needed • Realistic prognosis periods 3. Improved regulation by SRA, CMR and the ICO, so that the good players in the market that abide by the rules can prosper on a level playing field, enabling them to provide access to justice for honest claimants. If the above can be accomplished, then we will be able to reward the honest motorist with the lower premiums that they deserve. If however, both sides fail to work together to secure such an outcome, I fear that parental patience will soon run out, leading to an intervention that will end the arguments once and for all. Martin Milliner is GI Claims Director at LV=.
To do that I believe we need to put in to place the 26 recommendations made by David Hertzell and the Insurance Fraud Task Force, which was made up of a cross bench of people that included regulators, government, insurers and claimant lawyer representatives. As yet there is no proper legacy vehicle to take these or the recommendations made by Carol Brady in her review of CMCs forward, but when this does happen, I am cautiously optimistic that many of the problems we are currently experiencing could be dealt with. In addition, we need to ensure that Medco works and that accredited experts properly deliver on their duty as experts to the court, and not fear de-selection if they fail to write the correct
November 2016
Sustainability Supplement 27
FEATURES
Fighting Fraud in the Future David Hertzell examines the current climate of insurance fraud, and how this has helped develop the recommendations made by the Insurance Fraud Taskforce earlier this year. raud may be as old as insurance itself. However, in the early days the discipline of mutuality and personal contact discouraged dishonesty. Now most insurance transactions are automated and depersonalised; it is much easier to steal from a computer than from a person.
F
In 2015 the ABI estimated the total amount of fraud at £3bn per anum. That is no more than an educated guess. Precise figures are hard to come by as the purpose of fraud is to obtain money by deception without detection. Nevertheless, whether the real figure is half of this or twice as much it is still a lot of money. Some associated costs such as benefit fraud, unnecessary NHS costs and court costs fall outside insurance and are paid for by the taxpayer. Other businesses such as utility companies and retailers have experienced similar patterns of fraud from road traffic claims and bear similar costs. All these costs are ultimately paid for by honest policyholders, customers and taxpayers.
Establishing the Taskforce
The Government established the Insurance Fraud Taskforce in January 2015 on the basis of three major concerns: the cost for honest policyholders, the erosion of social cohesion and trust if fraud becomes widespread and the diversion of the proceeds of fraud to other criminal activity. There may have been a fourth: it is difficult for insurers to deal with the problem alone as many of those involved in the wider picture such as telecom companies or professional regulators would not perceive insurance fraud as a particular issue for them. The core members of the Taskforce broadly balanced insurer and consumer interests. The Taskforce was assisted by a wider advisory group, with a membership including regulators, loss adjusters, lawyers, the police and academics, as well as insurers and brokers. The Taskforce established a personal injury working group whose members balanced claimant and defendant interests. Over the course of 2015 members of the Taskforce met a wide range of consultees and attended many meetings and conferences. The Taskforce final report in January 2016 contained 26 recommendations and a series of advisory comments. The Taskforce was able to identify some general themes. It noted that fraudsters normally fall into two broad categories; organised criminals and opportunistic chancers. There is also a grey area of negotiation, error and misunderstanding, which may not be fraudulent but shows many similar characteristics. The Taskforce recognised that different deterrents apply to the different types of fraudster and that fraud can occur either at the application or claims stage. Indeed there is often a link between the two. Given the time available, the Taskforce divided its work and recommendations into four broad topics: policyholder
28 Sustainability Supplement
Perhaps the most important recommendation made by the Taskforce is that a legacy body should be established to oversee progress and report to the government annually understanding and education, the use and reliability of data, the role of regulators and some specific personal injury issues.
Education and reputation
The Taskforce was aware that a lot of opportunistic fraud took place in a difficult climate for business and for financial services. Consumers are disenchanted with business following the financial crash and media stories about price obfuscation, executive excess and tax avoidance. Financial services generally are not highly regarded and there is a perception that insurers will “rely on the small print” to avoid paying claims. However unfair this might be, academic research shows that many opportunistic fraudsters were “getting their retaliation in first”. The problem is not helped by a generally poor understanding of insurance and policy terms. Research by the CII and the FOS reveals that a major cause of dispute with policyholders is that the consumer bought the wrong product or did not understand the terms of their policy. In addition, some opportunistic fraudsters thought they were unlikely to be caught or that if they were nothing much would happen. The Taskforce considered that improving consumer understanding of insurance will be a very long-term project. However, some useful initiatives are underway, such as the CII Made Simple project. Insurers have many incentives to improve documentation and the presentation of material. The Taskforce considered that this work should remain a priority in order to improve the reputation of insurance and counter the victim mentality that fuels some opportunistic fraud. Likewise, the Taskforce supported the IFB “Cheatline” as honest policyholders are aware that they subsidise the dishonest. In addition, the Taskforce was made aware of research which shows that the design and content of documents or online material incentivises or disincentivises policyholder honesty. Further research should be undertaken by the ABI and CII into that topic and behavioural economics and the results should be published and shared. As a matter of good practice, the taskforce considered that fraud should be a senior management or board issue in order to ensure that effort and resources are devoted to prevention over the longer term.
November 2016
FEATURES
As a matter of good practice, the taskforce considered that fraud should be a senior management or board issue in order to ensure that effort and resources are devoted to prevention over the longer term The role of data and regulators
Consultees believed that the effective use of data was key to combatting both application and claims fraud. However, although much data is of high quality, consultees were concerned that it was not used effectively and that some data was inaccurate. In addition, even where data is available, take up was sometimes low, and it was not always shared effectively, especially with those outside insurance such as the government or banks. The Taskforce made a number of recommendations to improve the take up and sharing of data. Take-up of critical schemes such as MyLicence or CUE should be increased and some thought should be given as to how that could be expanded beyond insurers, on what basis should access be given and how the cost should be funded. The Taskforce thought that the IFB could develop a role as a central data coordinator and that weak data sources such as that for arson should be improved. In order to facilitate data sharing the Taskforce considered the Information Commissioner’s Office (ICO) could issue some clear and tailored guidance on data sharing for the insurance sector. However, proper systems should be in place to check and appeal data given the public suspicion of “big data”. Several regulators across different sectors are relevant to insurance fraud even though this may be outside their core concerns. That ranges from telecom regulators and nuisance calls to professional regulators for solicitors and doctors, and commercial concerns such as claims management companies (CMCs). The Taskforce recommended better coordination amongst regulators and a greater emphasis on fraud prevention amongst professional regulators, with information and actions coordinated at a senior level by the IFB. In some cases, enhancement of the regulator’s powers may be required. Whilst the Taskforce appreciated that only a very small minority of professionals facilitated insurance fraud, nevertheless their capacity for widespread harm is considerable. Their involvement also caused significant reputational damage to the profession concerned. Much reported fraud in the UK involves personal injury, and in particular road traffic claims. The personal injury market in the UK is unlike that in other European countries, especially for high frequency low value claims. There is an evolved and developed privatised supplier market with specialist law firms, CMCs and medical experts. An accident, as one consultee described it, has gone from being a misfortune to a business opportunity. The Taskforce recognised the importance of ensuring access to justice and that in order to achieve this in the absence of legal aid, claimant organisations must earn a reasonable profit. Nonetheless, the Taskforce were made aware of difficulties in the regulation of law firms and CMCs, the problems of cold calling and claims farming.
November 2016
Conclusions
The Taskforce did not consider that its terms of reference, its members’ expertise or that of consultees, were appropriate to recommend changes to the English legal system, particularly as changes would affect honest and dishonest alike. Nevertheless, the Taskforce recognised that fraud, and in particular organised fraud, took place within the framework of the existing system and therefore commented on those areas the government may need to address. The Taskforce made a number of suggestions within the existing framework. It thought the ABI should discourage the use of inappropriate “pre-med” offers. Whilst a quick claims settlement might provide a short-term benefit, in the long run over use encourages the perception of “easy money” from insurers. The government should consider how to discourage late claims for minor injuries, as whilst such claims could be genuine, many seem to be the product of claims farming. The government should also consult on a mandatory statement of referral source on Claim Notification Forms and should consider how to implement an improved process for noise induced hearing loss claims where costs have risen steeply in relation to compensation recovered. The Taskforce was surprised to learn that some claims seem to be progressed without any proper authority from the alleged claimant to their representatives. The Taskforce recommended that a standard letter should be agreed by claimant and defendant organisations, allowing insurers to contact a represented claimant direct to confirm that instructions have actually been given to bring a claim. In order to ensure that positive activity is sustained, perhaps the most important recommendation made by the Taskforce is that a legacy body should be established to oversee progress and report to the government annually. The Treasury chaired the first meeting of such a body on 10 November. A report will be submitted to the relevant ministers and much encouraging progress has been made. However, government resources are very stretched and a significant degree of active involvement cannot be guaranteed in the future. Fraud can be effectively combatted but only if effort and resources continue to be devoted to it over the long term by all those identified in the Taskforce report. Effective coordination of this effort remains perhaps the biggest challenge. David Hertzell is Chair of the Insurance Fraud Taskforce, and a consultant to BLM Law.
Sustainability Supplement 29
CASE STUDY
Case Study Litigants in person a level playing field? he Pre-Action Protocol for Personal Injury states Litigants in Person 1.7 If a party to the claim does not have a legal representative they should still, in so far as reasonably possible, fully comply with this Protocol.
T
It is difficult to know how a Litigant in Person ‘LiP’ would know and understand the Pre-Action Protocol, let alone what they should be doing and how to comply.
The Example
C, a 25 year old female working as customer support adviser. She was driving along a dual carriageway when the third party lorry pulled into her lane, causing a collision with her driver side door, causing damage to C’s car and injuring her. C had the foresight to take the third party driver’s name, registration number and phone number, and also took photographs of the vehicles. C thought the claim would be straightforward as she had obtained details, the driver admitted liability at the scene and the Police attended. The vehicle was a foreign registered vehicle. C contacted solicitors to make a claim. The solicitors knew that they needed to contact the MIB to establish the third party insurance details, and whether they had a UK nominated handling agents. Contact with the MIB was made within a day of instruction and chased two weeks later, with the MIB confirming that the registration was incorrect as it had the incorrect combination of letters and numbers. The solicitors quickly established that a 2 was in fact a Z, and with those details the third party insurer details and their UK handling agents were quickly established. A copy of the Letter of Claim was sent to the UK handling agents, and C was advised of the fact that foreign insurers have 42 days from the date of acknowledgement of that letter to respond to the initial letter and 6 months to investigate liability. These time limits are 21 days longer for the initial response and 3 months longer to investigate liability than if C had been involved with a UK registered vehicle. If C had been a LiP we have to question how she would have been aware of any of the above? C’s own insurers provided no advice about this, and she would no doubt have been reliant on the internet to try and ascertain how to proceed. The third party UK handling agents wrote disputing liability, stating that the C had encroached into the third party’s lane, whilst attempting to change lanes. As a LiP, C would now be faced with issuing proceedings. This is a challenging enough task to manage on your own, without adding in pleading, issuing and serving against a foreign driver.
30 Sustainability Supplement
Had this claimant been a LiP it is difficult to see how she would have overcome the hurdles presented to her After involvement in the road traffic accident the solicitors arranged for C to attend a medical appointment with an independent medical expert. The medical report confirmed that C sustained a severe sprain/strain to her neck and back, which was anticipated to resolve within a few months. However, the expert confirmed some of the symptoms experienced were as a result of a pre-existing back condition. The solicitors were able to provide advice on exactly what the medical report meant, and how that affected her claim. It is unlikely that a LiP could source a medical expert, be able to understand the terminology used, and be happy that the report correctly reflected their injuries. Given the liability dispute in this case, the third party insurers would have refused to assist and provide any medical examination. Once C had agreed the medical evidence, court proceedings were drafted. A tactical decision was made by issuing against the foreign driver, quoting the correct EU Directives in doing so. This is a complex area when drafting proceedings, which often solicitors get wrong, so it is very hard to see how a LiP would be able to correctly draft these pleadings. Proceedings are now continuing on this case, with solicitors representing the defendant and his insurers. Had this claimant been a LiP it is difficult to see how she would have overcome the hurdles presented to her: • A foreign registered vehicle with no insurance details obtained at the scene • A liability dispute • Obtaining medical evidence to support her injuries • Understanding the medical evidence • Issuing Court proceedings correctly and dealing with the Court Directions. In all likelihood, C would have given up at an early point. Even if she had continued, she would then have been faced with fully complying with the Pre-Action Protocol for Personal Injury. Alan Hayes is Legal Director at Carpenters. For more information, call 0844 249 3844.
November 2016
Give Yourself the Advantage
www.charltongrant.co.uk 01765 600909
Publishing | Events | Design | PR | Marketing
眀眀眀⸀挀愀爀瀀攀渀琀攀爀猀ⴀ氀愀眀⸀挀漀⸀甀欀 簀 㠀㐀㐀 ㈀㐀㤀 ㌀㠀㐀㐀
圀攀 愀爀攀 洀漀爀攀 琀栀愀渀 樀甀猀琀 愀 琀爀愀搀椀琀椀漀渀愀氀 氀愀眀 昀椀爀洀⸀ 圀攀 愀爀攀 愀 挀漀洀瀀氀攀琀攀 挀氀愀椀洀猀 愀渀搀 氀攀最愀氀 猀漀氀甀琀椀漀渀⸀