Modern Claims Magazine - Issue 24

Featuring Client Interfacing

Issue 24 March 2017 ISSN 2051-6495

Linking the industry together

Neil Sugarman The proposals shouldn’t be focusing on any personal injury claims because they’re not necessary

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MODERN CLAIMS

Editorial Contributors Amanda Stevens Group Head of Legal Practice Hudgell Solicitors

Oliver Smith Marketing Manager slicedbread

David Williams Technical Director AXA Insurance

Phil Ost Director of Direct & Partnerships Zurich

Donna Scully Partner Carpenters

Sarah Roberts Marketing Executive Eclipse Legal Systems

James Roberts Business Development Director Europcar UK Group

Scott Whyte Marketing Manager Watermans

Jason Moseley Executive Director NBRA

Stephen Ward Managing Director Clerksroom

John Kushnick Managing Director Garvins (associated with the EDAM Group)

Tim Wallis Mediator Trust Mediation

Leigh Calton Head of Research and Development Ageas

WELCOME elcome to the latest issue of Modern Claims Magazine, after what have been a landmark couple of months for everyone involved in the claims industry. February saw the announcement of the Prison and Courts Bill, which revealed the heavily anticipated (or dreaded, depending who you’re asking) whiplash reforms. In the same month, these same reforms were debated by James Dalton of the ABI and our cover interviewee, Neil Sugarman, APIL, at a Justice Select Committee session.

W

This was perhaps the first time the momentum of the debate swung in favour of the personal injury sector, and may have been the reason for what some might call a compromised reform package; though as Neil makes clear, he believes any reforms are unnecessary, no matter what form they take. He may have taken solace, therefore, in the news that the Justice Committee is launching an inquiry into the Ministry of Justice’s plans to address whiplash claims, which was announced shortly before publication.

Then some other polarising news came shortly after the whiplash reforms were revealed, with the announcement of a decrease in the Ogden/Discount Rate sparking further debate in the sector and throwing an expected £40 reduction in premiums into doubt.

Zoe Holland Managing Director ZebraLC

Lesley Graves Managing Director Citadel Law

With the biggest changes in the claims sector scheduled to come in October 2018, there has been a lot of discussion around what needs to be done in the lead up to this date, but in order to prepare, one must look beyond 2018 at the long term effects of these ground-breaking changes. This is what we have sought to do in the first of our special supplements published with this issue, in association with MSL. This project gathered interviews and articles by professionals across the sector to highlight the current and future challenges and opportunities presented to the claims market, including for those operating among more niche road users, namely cyclists and learner drivers, providing some fresh, and perhaps unheard, discussions around the state of the sector.

Mark Ledger Principal Prosthetist Blatchford Clinic

While so much is happening in the personal injury claims sector, it could be easy to overlook the repairers who are all the while working to restore the vehicles of those involved in road traffic accidents.

The bodyshop industry is itself undergoing a time of change, so Modern Claims has partnered with the NBRA for the second of this issue’s supplements, Bodyshops. Some of the key topics discussed in the Bodyshops supplement highlight the fact that changes to claims can come from consumers, partners and employees, not just the government, and these are influences the sector will need to constantly keep in mind if it is to prosper in 2018 and beyond.

Issue 24 March 2017 ISSN 2051-6495 Editor Brendan Gurrie

Editorial Assistant Poppy Green

Project Manager Rachael Pearson

Events Sales Kate McKittrick

Modern Claims Magazine is published by Charlton Grant Ltd ©2017

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

March 2017

In order to look ahead, one must also look at successes of the past, and Modern Claims will seek to celebrate the past year at the 2017 Doctors Chambers Modern Claims Awards, on Thursday 27th April at New Dock Hall, Leeds. Congratulations to all those that have made the shortlist for this year’s awards, and thank-you to everyone who submitted one of the huge number of nominations we received. The Doctors Chambers Modern Claims Conference will also return this year – watch this space for more details.

Brendan Gurrie, Editor, Modern Claims Magazine.

01765 600909 | @ModernBrendan| brendan@charltongrant.co.uk

Modern Claims 03

MODERN CLAIMS

CONTENTS NEWS

INTERVIEWS

07

13

07 Ashton West talks News

EdiTorial Board

Ashton West OBE explains how the impact of an accident on a Slovenian farm could have a fundamental impact on the UK’s compulsory motor insurance regime.

13 Neil Sugarman

Following a Justice Select Committee session in which arguments were made for and against the Ministry of Justice’s personal injury reforms, Neil Sugarman talked to Modern Claims about why APIL feels the reforms are unnecessary, and how they might impact on access to justice for injured claimants.

17 Dr Ali Hasan

While the benefits of traditional insurance models only become clear to policyholders following an incident, Vitality’s shared value model works on the basis that prevention is better than cure, engaging customers to improve their health and wellbeing, as Dr Ali Hasan explained to Modern Claims.

21

21 Navigating October 2018 - “Get lean, get agile, get profitable… or get out”

21 The Steps to Prevention

Sarah Roberts, Eclipse Legal Systems

25 End of the Road Traffic Act? David Williams, AXA Insurance

25 The Real Issues

Amanda Stevens, Hudgell Solicitors

27 Employment and Unreported Accidents

John Kushnick, Garvins (associated with the EDAM Group)

27 Internet of Things in 2017 - It is not all about data

contributors

Lesley Graves, Citadel Law

Leigh Calton, Ageas

29 Opportunity Knocks Oliver Smith, slicedbread

29 Problematic Premiums Scott Whyte, Watermans

31 Does the Bar need to re-invent itself, again?

Stephen Ward, Clerksroom

31 Selective Statistics

Donna Scully, Carpenters

32 Microprocessor-controlled knees

04 Modern Claims

Mark Ledger, Blatchford Clinic

March 2017

MODERN CLAIMS Issue 24 March 2017 ISSN 2051-6495

EdiTorial Board

FEATURES

33

38

33 The CN Consultation Paper: Good or Bad News, and How Do We Respond?

Zoe Holland, ZebraLC

33 Innovation, Investment and Insurtech Tim Wallis, Trust Mediation

34 How car hire can enhance the Third Party Assistance experience

James Roberts, Europcar UK Group

37 Machine learning: the new weapon in fighting insurance fraud

Through social media, apps, telematics and a range of other technologies, insurers now have a wealth of data at their hands. Amal Sud discusses how machine learning can help use this data to tackle insurance fraud.

38 Breaking the deadlock Mediation in the NHS

35 Meeting Millennial Expectations

Phil Ost, Zurich

35 Looking towards lower premiums

FEATURES

Jason Moseley, NBRA

Mediation provides the opportunity to resolve and move on from a dispute for both claimants and NHS staff, which is one reason the NHS LA has launched its new mediation service, as Julienne Vernon explains.

40 Sector Soapbox

42

42 Construction Claims - How a combined service can improve the claims resolution process

Bob Paterson explains how a ‘one stop shop’ approach can result in a more efficient claims service for the Insured, and lower claims costs expenditure for Insurers.

44 Market Changes: Sink or Sail?

As changes rock the Noise Induced Hearing Loss claims sector, Chris Fry explains how his firm has adapted its business model to survive the challenges the industry is currently facing.

46 Employee Engagement - The X Factor in Claims Management

Modern Claim’s panel of resident associations outlines the burning issues facing the claims sector.

A company is only as good as its employees, and engaging them will improve the experience of everybody involved in a claim, as Jason Tripp explains.

48 Interview with Mark Savill and Lisa Beale

Client Interfacing 02 Interview with Gary Gallen

One of the largest complaint areas in professional services is around a lack of communication and sharing of knowledge, as Gary Gallen explained when he spoke to Modern Claims about how technology, specifically machine-learning, can facilitate the availability of information and the understanding of law.

05 Case Study

Castles, Courts and Christmas

53 Case Study: Eclipse

Eclipse’s Proclaim Practice Management Software is the ultimate solution for new start-up, Morton Young Solicitors

06 Interview with David Williams

David Williams believes the insurance industry is ripe for technological change that will transform the way it interacts with consumers. Modern Claims spoke to David about the form these technologies may take, and how they will alter the structuring, benefits and value of policies.

March 2017

Modern Claims spoke to Mark Savill and Lisa Beale, who discussed the importance of reputation within the legal sector, as well as how firms could improve their services and make themselves more accessible to the public.

10 MINUTES WITH 54 10 minutes with…

Michael Ball, UKS Medical Diagnostics

Modern Claims 05

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NEWS

Ashton West TALKS NEWS Ashton West OBE explains how the impact of an accident on a Slovenian farm could have a fundamental impact on the UK’s compulsory motor insurance regime. rior to September 2014, an internet search for ‘Vnuk’ may have found a few hits for a Russian rapper. Now, as most insurance professionals will know, it reveals widespread concern about a European Court of Justice (CJEU) judgment on motor insurance. Headlines include “The need to insure your lawnmower” and “The end of the road for motorsports”, while Boris Johnson has called the whole thing “insane”. Department for Transport Minister, Andrew Jones, in his foreword to the Government’s consultation on the issue, called it “a complete gamechanger as far as motor insurance is concerned.” Indeed, it could be.

P

Open to interpretation

To recap, Damijan Vnuk was working on a farm in Slovenia. He was inside a barn, up a ladder, when it was struck by a trailer attached to a reversing tractor. His case was referred to the CJEU: insurers believed there was no compulsory insurance requirement because the tractor was being used as a machine, not a vehicle.

In its judgment, the CJEU stated that the tractor/trailer was a vehicle under the terms of the Motor Insurance Directive. Under Article 1, a “vehicle means any motor vehicle intended for travel on land and propelled by mechanical power, but not running on rails, and any trailer, whether or not coupled.” However, the question of when a vehicle’s use required compulsory insurance was less clear.

On this, Article 3 of the Directive states: “Each Member State shall, subject to Article 5, take all appropriate measures to ensure that civil liability in respect of the use of vehicles normally based in its territory is covered by insurance.”

The CJEU identified a key difference in the official translations of the French and English versions of the Directive. The French version, along with six other countries, linked compulsory insurance to use of a vehicle on roads, but the English version, along with 14 others, did not (although our law does!). The CJEU felt that the compulsory insurance requirement should not be left to individual Member States to interpret. It concluded: “The concept of ‘use of vehicles’ in that Article covers any use of a vehicle that is consistent with the normal function of that vehicle.”

Therefore, where a vehicle is used is no longer relevant in deciding whether it must be insured. The key question now is how it is being used: is use consistent with its normal function?

The restrictions of the Road Traffic Act

Since the 1930 Road Traffic Act (RTA), our law has linked the compulsory insurance requirement to the use of vehicles on a road. This was extended to include other public places in 2000.

Moreover, the definition of ‘motor vehicle’ has been tailored to use on roads. Section 185 of the 1988 RTA states: “‘Motor vehicle’ means, subject to section 20 of the Chronically Sick and Disabled Persons Act 1970…, a mechanically propelled vehicle intended or adapted for use on roads.” This definition is far more restrictive than the definition in the Directive.

Where a vehicle is used is no longer relevant in deciding whether it must be insured. The key question now is how it is being used: is use consistent with its normal function?

Until the Vnuk case, linking compulsory motor insurance to the use of vehicles on roads appeared entirely consistent with the

March 2017

Modern Claims 07

NEWS

Broadening the scope of the compulsory insurance requirement to cover ‘off-road’ use in respect of a wider definition of ‘motor vehicle’ opens up a myriad of problems for UK insurers, the public and for MIB aim of European law. The first EU Directive on Motor Insurance in 1972 was expressly intended to do away with border checks and to facilitate the free movement of traffic between Member States.

Subsequent Motor Insurance Directives, whilst emphasising the need to protect third party victims, continued the same theme.

Indeed, over the years there have been many references by the EU in a motor insurance context to “road traffic”. Article 12 of the current Directive refers to “users of the roads”. Vnuk shifted the emphasis further towards protection of victims and away from the original purpose.

Broadening the scope of the compulsory insurance requirement to cover ‘off-road’ use in respect of a wider definition of ‘motor vehicle’ opens up a myriad of problems for UK insurers, the public and for MIB.

From dodgems and lawnmowers to industrial machinery

Many machines have never been the subject of the compulsory insurance requirement in the UK. They have not been viewed as motor vehicles. Many are not used on a road or public place. Some are insured voluntarily, others are not. Following Vnuk, ride-on lawnmowers, mobility scooters, Segways, certain children’s toys and even fairground dodgems are now in scope.

There are also industrial machines to consider, such as ride-on floor cleaning machines, fork lift trucks, combine harvesters or mobile platforms. Currently, many such machines will be covered

by EL or PL insurance to reflect the risks arising from their use.

It would appear disproportionate and expensive to insist that the requirements of the Directive should apply in full in these situations. Policies would need to include €5 million liability minimum cover for using the vehicle anywhere in the EU and a guarantee fund in place. But who takes their lawnmower or floor cleaning machine outside the UK when they go on holiday? This could mean questioning the UK’s long-standing commitment for unlimited personal injury cover in the ‘road’ context, which seems very much a backward step.

Specific examples: airports and motorsports

Vehicles used airside at airports will already have PL insurance, albeit with levels of cover that differ from the Directive.

In the motor sports arena, a racing car involved in competition on a private track is being used in a way consistent with its normal function. In the UK however, as in many countries across the EU, accidents between competitors do not require compulsory insurance as the cost of cover (if policies can be found) would be prohibitive, especially if it had to be in line with the Directive.

Under Article 5 of the Directive, any type of vehicle can be removed (derogated) from the insurance requirement by the Government. However, there would have to be a guarantee fund (MIB in the UK) or the state would have to guarantee claims from innocent victims. This could work with some low-risk machines (e.g. the ride-on lawnmower or child’s toy car) where the likely financial burden on the insuring motorist would be limited, but derogation would clearly be undesirable where risks and costs were potentially higher.

impossible and therefore a threat for all law-abiding motorists.

On-road enforcement with police ANPR technology along with enforcement from the record using the Motor Insurance Database and DVLA’s database has been very effective. The number of uninsured vehicles on UK roads has halved over the last decade.

This works because the vehicle-owning public understands the need to be insured for vehicle use on roads and public places and that there are strong measures in place to enforce this requirement.

Enforcement is threatened by the Vnuk judgment for the following reasons: • Off-road accidents are now in scope. There is no easy way to enforce vehicles used on private land having insurance. It is also difficult to verify whether accidents have happened, increasing the potential for fraud.

• Many newly in-scope vehicles have no registration markings and there is therefore no database to facilitate enforcement from the record. Continuous insurance enforcement would not be possible.

• It would be time-consuming and expensive for the police to check individually whether a vehicle is insured.

• If insurance of certain vehicles used on private land cannot be enforced. This will risk undermining the successful, existing enforcement programme and confuse the current clear messaging.

The final word

The government has launched a consultation on the options to amend motor insurance law in light of Vnuk. MIB has maintained a close interest in this issue and firmly supports the government’s preferred option for the law to be amended in line with amendments to the Directive proposed by the European Commission, which would limit the compulsory insurance requirement to vehicle use in traffic situations. Whilst not ideal, in that the definition of ‘vehicle’ would still be extended, it would mitigate many of the problems created by the judgment by largely excluding private land use.

The final word should be on Brexit. There is much about the Motor Insurance Directive that works well, especially to facilitate crossborder travel and cross-border claims resolution. Whatever the outcome in terms of UK law, it will be desirable for UK policies to still provide EU-level cover for driving in the EU. Even where the EU has implemented Vnuk in full and the UK has not, additional cross-border risks created by the judgment are low because cross-border travel generally involves traditional vehicles driving on roads, as now. I confess that I have not listened to the other Mr Vnuk’s rap music, but on motor insurance, and cross border travel in particular, we should stick to the status quo!

Ashton West OBE is Chief Executive Officer of MIB.

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INTERVIEW

Neil Sugarman Following a Justice Select Committee session in which arguments were made for and against the Ministry of Justice’s personal injury reforms, Neil Sugarman talked to Modern Claims about why APIL feels the reforms are unnecessary, and how they might impact on access to justice for injured claimants.

Q

Do the Ministry of Justice’s proposed reforms focus too much on whiplash claims, and how will they impact other types of claim?

A

The proposals shouldn’t be focusing on any personal injury claims because they’re not necessary. The consultation referred specifically to whiplash and then threw in other types of claim. So, it’s a bit surprising that it’s about whiplash when there wasn’t actually a great deal in the consultation about it. At the Government Select Committee session, James Dalton himself said he doesn’t think it’s appropriate at the moment to raise the small claims limit in relation to other types of claim. So, we don’t think the reforms are necessary in the first place because there are other targets the government should be looking at. In any event, we shouldn’t be going beyond whiplash.

Q A

To what do you attribute the higher volume of whiplash claims in the UK, as opposed to other European countries?

We dispute the basic assumption that we’ve got a higher volume of whiplash claims. We suggest that this is a myth that’s been peddled by the ABI for some considerable time. The data we’ve analysed shows the UK spends less on motor claims than other European countries of a similar size. The ABI seems to keep referencing a survey done in 2004, but we dispute that whiplash claims cost more, or that they even cost more in 2004.

Unfortunately, other European countries don’t have an equivalent to the Compensation Recovery Unit, and so The House of Common’s Transport Committee in 2013 concluded that there was no foundation at all for the ABI to suggest that somehow we have more claims than other countries in Europe, because there’s just no data to substantiate that.

What we do know, however, is that we have very busy and very highly congested roads. We have, according to the studies we’ve looked at, up to 50% more traffic per kilometre on our roads than any other country in Europe. Because of vehicle construction safety, we have fewer very serious accidents, but more minor accidents that result in this type of injury. We just don’t accept that we are different to the rest of Europe, despite the myth being peddled by the ABI.

Q

Should there be more emphasis in government, and perhaps in the insurance industry, in improving road safety and reducing the number of accidents, and therefore claims?

A

Absolutely; the two are intrinsically linked. We know we’ve got busy roads that are getting more congested, so it’s almost inevitable the traffic gets closer together and there is a higher likelihood of accidents. We were extremely surprised that in the consultation, and even before the consultation, nowhere but nowhere has the government been seen emphasising how important it might be to look into why these accidents are happening. APIL has for some time run a tailgating campaign called Back Off, a public awareness campaign telling people not to drive too close to the person in front, because that’s how these accidents happen. That’s the sort of thing the government should be concentrating on, rather than looking at legislation.

March 2017

The proposals shouldn’t be focusing on any personal injury claims because they’re not necessary

Q

Should reforms to the personal injury sector seek to enforce existing legislation around personal injury claims, rather than adjusting or creating new legislation?

A

There’s not too much wrong with the existing legislation; we’ve developed a pretty good system for road traffic and whiplash cases in recent years, including a portal system for lower value claims and so-called ‘less serious’ claims. This portal works extremely well, because it forces insurance companies to make early decisions about liability, something they very rarely used to do before the portal came in. It’s in their interest to make their minds up quickly, as well as in the interest of injured people.

Modern Claims 13

INTERVIEW

We were extremely surprised that in the consultation, and even before the consultation, nowhere but nowhere has the government been seen emphasising how important it might be to look into why these accidents are happening Since LASPO, we’ve now got the element of MedCo, which has only really been given the chance to bed in. So we say to the government that everybody’s buying into this structure, why throw it all away overnight before it’s been given the chance to work?

Q

How much consideration is given to psychological damage in a claim, and what effect would reforms to personal injury have on this aspect of claims?

A

There are suggestions within the consultation that psychological injury should be singled out and treated differently. The logic behind that is influenced by inappropriate thinking in the insurance industry that if there are limits in what people can claim for from a physical injury, people might also start claiming for psychological damage.

We say that’s entirely false. The suggested compensation figure of £25 as part of some sort of tariff is deeply insulting. If somebody has psychological damage arising out of an accident, that should not be undermined or underestimated. They can become hypervigilant; for example, some people won’t drive past the scene of the accident and have to change their route, or are reluctant to put the kids in the car.

If they have a psychological injury, then the compensation for that is assessed in exactly the same way as in any other injury; they have to produce compelling medical evidence to satisfy the insurance company or a court that it’s genuine and they’re entitled to some money from it. We say there’s nothing wrong with that, and the system should stay the same.

Q

Why do you feel the suggested small claims limit increase for whiplash claims was to £5,000, when inflation would only account for a rise to £1,600?

A

That question came up in the Justice Committee session, and both myself and Mr. Dalton said we don’t know. There’s no relation to any measure of inflation that we’re aware of, so we think it has no relevance. Our position is that we should be looking at the cost of doing work in the small claims court. Personal injury claims can be extremely complex, and just plucking out some artificial figure that bears no relation to inflation is totally wrong.

Q

A

Historically, it may be that they have been able to raise the profile of people’s rights, and we have no difficulty with people being made aware of their rights if they’re injured; nobody should apologise for that, be it the government, the insurance industry or solicitors.

In terms of handling people’s claims when they need to bring a personal injury claim, we say that CMCs are unnecessary and people should go to a qualified, regulated, insured solicitor.

We have been running a campaign in the past year called Can the Spam, and rather than implementing the proposals in the consultation, the single biggest step the government can take to address any issues in personal injury will be to have an outright effective total ban on cold calling by CMCs, be they regulated or unregulated. Cold calling is intrusive, it can be tasteless, it can put undue pressure on people, and it certainly raises false perceptions and false expectations.

Sir Oliver Heald appeared to be a little lukewarm about how far he was prepared to take that sort of ban, and we were disappointed with that. In fairness, James Dalton shared that view in the Justice Committee, and has openly said he agrees that it will be an effective way to proceed, and that it will do a great deal to address these issues, as will an outright ban on pre-medical offers.

Q A

Would a twelve-month limitation period of bringing a claim help reduce the level of fraudulent claims?

There has been a fundamental attempt to mislead by the insurance industry into the level of fraud, and this is largely behind the government’s thinking about why they are doing what they’re doing.

If you take the number of fraudulent claims as a basic concept, the ABI has been consistently talking about 7% of claims being fraudulent. When pressed, they accept that there are actually 7% of claims in which there is suspected fraud, which is very different to proven fraud. When pressed further, or when analysing the ABI’s own data, it appears that it’s nearer to 0.25% of cases in which there’s been some finding of fraud. In the 0.25%, that is across all motor claims, not just personal injury, so that might include people exaggerating the theft from a vehicle, for example. We totally oppose the suggestion that there is a large percentage of fraudulent claims.

Is there a place for claims management companies in the insurance sector, and how can the negative impact they can create be combated?

We think the twelve-month limitation period is wrong, because some people’s injuries genuinely take time to develop and not everybody wants to bring a claim immediately. Furthermore, the claims management sector would see a shorter notification period as a wonderful marketing opportunity to pressurise people into bringing claims on the basis that they’ve got a shorter period in which to do so.

The claims management sector would see a shorter notification period as a wonderful marketing opportunity to pressurise people into bringing claims on the basis that they’ve got a shorter period in which to do so

Q

14 Modern Claims

Would a claims source referral system aid in identifying fraudulent claims management companies and any solicitors taking advantage of them?

A

Our overview is that we don’t have a problem in solicitors identifying the source of their instructions if there is a source, i.e. through a CMC. If that assists in identifying fraudulent claims then we’re eager to co-operate. We have to accept that there is fraud in every walk of daily life. For that reason, we are committed to doing everything we can as a responsible profession to assist in detecting and stopping fraud. We’ve already worked with the insurance industry on a collaborative basis with askCUE, which is a

March 2017

INTERVIEW

fraud database sharing arrangement, and if identifying the source helps further then the general view is that it’s not a problem.

Q A

What are the benefits and pitfalls around a fixed fee tariff for personal injury values?

The government has suggested a starting figure for a personal injury tariff for injuries lasting up to six months at £400. That’s insulting. Even the average figure, under current brackets through the Judicial College guidelines for a short duration of injury, is nearer to £1,750. We’re fundamentally opposed to a tariff system because it’s a blunt instrument. The duration of somebody’s symptoms from an injury are but one factor. One has to look at the type of symptoms, the intensity of the symptoms, when they occur, and how they affect any given individual.

I do a bit of work under the Criminal Injuries Compensation Scheme, and that has a tariff approach for people injured through being a victim of crime. It’s a terribly blunt instrument, and it is a recipe for trying to force people into a bracket that is inappropriate to their injury.

Q A

What are APIL’s aims in the next twelve months as representatives of personal injury lawyers and injured people?

First, we will try to persuade the government that it’s inappropriate to pick on a vulnerable section of society, just because a commercial section of society, i.e. the insurance industry, is making a big noise about the fact they are paying out for whiplash injury, and that there are other reasons why insurance premiums cost what they do. The government are hitting a soft target in injured people, which is grossly unfair, and there are other things they should be doing, such as banning cold calling.

Secondly, Lord Justice Jackson is carrying out his review on whether to fix costs in the multitrack. We are going to try to persuade Lord Justice Jackson that people injured in accidents should be treated on an individual basis, and they’re not in a commercial situation; they’ve not chosen to be injured. One of the difficulties in being injured is you have no control in your recovery. To try to fix the costs of an unpredictable process will be unfair to injured people.

We are responding to the government’s consultation on whether to fix costs in clinical negligence cases. Again, we’ve had to try to persuade government that although we’re very keen to work to be effective and to save costs in clinical negligence claims, that they also need to address behaviours in the NHS amongst medical professionals, but we do want to work collaboratively to do that.

We want to carry on the work we’re doing already to persuade the Lord Chancellor to reduce the discount rate to what it ought to be, and we’re going to try to hold her to account on that because it has a massive impact on people whose lives have been totally turned upside down; they have been under-compensated for many years indeed.

We want to concentrate on some positives too. A great deal of collaborative work has been done between claimant lawyers and insurers, for example the Rehabilitation Code. If that’s made to work properly then it’s highly beneficial to injured people, who should always be in the centre of this process, and we should never lose sight of that. Another positive is the Serious Injury Guide, which is a roadmap for good collaboration been claimant solicitors, defendant solicitors and insurers. It will be cost effective and will be in the best interest of the claimant, and we want to build on these positives.

Injured people seem to have stopped being the focus of who we should all be looking to support, and we need to refocus on the rights and entitlements on genuinely injured people.

March 2017

Neil Sugarman Neil qualified as a solicitor in 1981 and has practised exclusively in the field of personal injury litigation. He has been the managing partner of GLP Solicitors of Bury, Greater Manchester since 1999.

He is a past member of the Law Society Personal Injury Panel, an APIL fellow and is an APIL accredited specialist brain injury lawyer. Neil has been on the executive committee since 2005, becoming vice-president of APIL in 2015, and president at the 2016 annual conference.

Neil has been involved closely in APIL’s work in the field of rehabilitation.

He has a special interest in conducting CICA claims on behalf of catastrophically injured shaken babies. In 2009, he represented a client who is understood to have received the highest award ever made under the Criminal Injuries Compensation Scheme. He received a commendation for this work in the UNICEF Child Rights Lawyer of the Year Awards 2001. Neil is an APIL delegate to the CICA’s Policy and Equality Forum.

A contributor to a major legal text on the handling of serious personal injury claims, Neil is also an updating author to Butterworths Personal Injury Litigation Service. He has lectured widely to a variety of groups on the topic of personal injury and had many academic articles published.

Neil is an appointed tribunal judge to the First Tier Tribunal of the Social Entitlement Chamber.

Modern Claims 15

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INTERVIEW

Dr Ali Hasan While the benefits of traditional insurance models only become clear to policyholders following an incident, Vitality’s shared value model works on the basis that prevention is better than cure, engaging customers to improve their health and wellbeing, as Dr Ali Hasan explained to Modern Claims.

Q A

How have the key public healthcare concerns changed in the UK over the past several decades?

The shape of health and healthcare has evolved tremendously over the past few decades. Many of the key concerns have evolved rather than changed – and this encompasses a long list of areas as wide as financial pressures, changes in population demographics, antibiotic resistance, medical errors and nutrition.

However, as well as the concerns, we must also recognise the tremendous positive advances that have taken place. The sophistication of the care people receive today is astounding compared to just half a century ago, which over the timeline of human existence is an extremely short period. The growing understanding of the importance of health and wellbeing as the foundation of health, as opposed to just treating disease, is both a growing success and an expanding area of opportunity for improvement.

As consumers have become increasingly health conscious in recent years, they are also more aware of the healthcare available to them. Alongside this, consumers want more interaction with insurers than ever before, and expect more for their money than just knowing a policy is in place. At Vitality, not only do we provide protection for our members, but we strive to help them lead a healthier life and reward them for doing so.

Our approach to insurance is to unlock shared value, and this relies on making our members healthier. We know that physical activity is a significant determinant of health, so by increasing our members’ levels of physical activity and reducing the likelihood of them making a claim, we are able to use the emerging savings to develop the range of rewards and so help sustain their activity.

That’s why we are focused on rewarding our members to ensure they engage with the programme and benefit as much as possible.

Looking to the future there are many other potential concerns that will require intense debate, from the role of government in health improvement to the limits of genetic engineering, and of paramount importance is that we must remain clear and focused on what ultimately improves health for all.

Q A

How has the healthcare industry adapted in the 21st century to meet the changing expectations of consumers?

The biggest changes in healthcare in this century have been the integration of technology into healthcare, particularly into consumers’ lives, and the increasing focus on the importance of healthy living (rather than healthcare). Wearable technology is one example of an area that has straddled both these trends, and the technology has grown at an incredible pace over the past few years. Research from Deloitte found four out of ten UK health insurance customers would consider tracking and sharing their health and fitness data to get a more accurate premium. Vitality is

March 2017

The introduction, and rapid recent increase, of Insurance Premium Tax (IPT) has and will have a big impact on the health insurance sector. It means that it’s even more important for insurers to continue to innovate as a means of delivering better customer outcomes Modern Claims 17

INTERVIEW

Within a year of introducing Active Rewards, 34% of customers who had previously earned no activity points were earning them in order to receive their rewards, and there was an eight-fold increase in the number of engaged members hitting weekly activity thresholds currently the only UK health and life insurance company actively using wearable technology to get a clearer picture of members’ needs and we have seen a huge uptake in members using it to improve their health.

Q A

What are the main challenges facing the health and life insurance industries in 2017?

Market growth in the PMI industry has not followed gains made in the economy and in employment, so the big challenge over the next year and beyond is how to stimulate growth in the sector. A continuing challenge is how best to communicate its benefits to consumers, particularly where the NHS has been relied on to provide a high quality of healthcare and where the cost pressures of PMI may be quite high for the average earner.

This has provided a strong stimulus for us to reflect on how to ensure our product, and our benefits, are relevant and add value to consumers. Every one of our members has access to a range of best in class benefits, which have the power to really improve their health. We are seeing more innovations in the market in general too, which is great news for consumers and intermediaries.

Q A

How are health insurance policies written to cover the wideranging health issues that can affect a policyholder?

Throughout Vitality we have embedded deep marketing, actuarial, and clinical capabilities. We have empowered them to be effective and to work closely with the rest of our organisation to understand the current healthcare perspective and future horizons, and to combine that with a deep understanding of our customers to ensure that we can stay relevant and balance as much as possible. This applies whether we are talking about young, healthier individual members, or large corporates. We were the first organisation to develop a physiotherapy network, for example, and to date the only one to provide primary care benefits to every single one of our members.

Q

What opportunities does health insurance present for engagement with the policyholder that other types of insurance do not?

A

Vitality’s core purpose is to make people healthier and to enhance and protect their lives. To do this we try to engage

With increased working hours and life demands, finding an opportunity to see the doctor can be challenging. This often results in employees having to go during working hours or even not at all 18 Modern Claims

with them as much as possible to help them live more healthily, as opposed to other insurers who are focused on mitigating the catastrophic and often only engage with customers at renewal or when they claim.

Through the use of technology, health insurers are able to engage with members in new and exciting ways. In our proposition, through the Active Rewards benefit, we not only use technology to help incorporate physical activity into our members’ daily lives, but also as a mechanism to incentivise activity with immediate rewards, for example in the form of a Starbucks coffee, cinema tickets or reducing the cost of an Apple Watch. Within a year of introducing Active Rewards, 34% of customers who had previously earned no activity points were earning them in order to receive their rewards, and there was an eight-fold increase in the number of engaged members hitting weekly activity thresholds. Both are excellent outcomes in terms of a person’s health and mortality profiles, and they show how beneficial regular engagement and the effective integration of technology with insurance can be.

Q A

Has Vitality seen much variation in healthcare needs across the various countries it operates in?

Vitality’s parent company, Discovery, operates in many countries across the globe in many different capacities.

Universally, there is always more that can be done to improve health, and that is what we are focused on as a group.

Q A

What role can telematics play in health and life insurance?

We are seeing a rapid global increase in the use of telemedicine, with 50% of World Health Organisation members now developing telemedicine solutions. With increased working hours and life demands, finding an opportunity to see the doctor can be challenging. This often results in employees having to go during working hours or even not at all. Telemedicine means workers can have access to a GP at their convenience and with less damage to a business’s bottom line.

Telemedicine presents a key opportunity for health and life insurance providers. Vitality GP, for example, is able to offer members 24-hour access to a medical professional via telephone, as well as video appointments within 48 hours. Vitality GP can also refer patients for minor diagnostic tests, prescribe medication and make immediate referrals into consultant care without the need for an NHS GP referral, alongside coordinating treatment and delivering prescriptions through the Lloyds Pharmacy network.

Our goal as an organisation is to deliver holistic healthcare and wellness to our members, and through Vitality GP we’re several steps closer to achieving this.

Q A

What government and legislative changes have had the biggest impact on health insurance in the past decade?

The introduction, and rapid recent increase, of Insurance Premium Tax (IPT) has and will have a big impact on the health insurance sector. It means that it’s even more important for insurers to continue to innovate as a means of delivering better

March 2017

INTERVIEW

Market growth in the PMI industry has not followed gains made in the economy and in employment so the big challenge over the next year and beyond is how to stimulate growth in the sector customer outcomes. We want to see a healthier society and we believe the way to do this is by providing value and increasing engagement. Because our members can engage with our product everyday by getting something back (even if they don’t claim), they are seeing a real benefit.

We have invested heavily in engaging consumers, which is fundamental to growing the market and building awareness around the importance of a healthy lifestyle. Raising awareness is essential to our strategy as well as our success, and the further growth of our industry. It benefits both advisers and customers, and it can be done in a positive way. However, today’s savvy consumers often need something more, which is why we believe in rewarding healthy behaviours today as well as providing comprehensive cover over the longer term.

Q A

Is fraud a problem in health insurance, and how does Vitality combat this?

Fraud can be an issue in health insurance and this has been demonstrated by a high-profile case in the media recently.

There are also grey areas where the clinical practice of a facility or individual may demonstrate unexplained variation, and this may mandate deeper investigation by one of our clinical review teams. However, for the most part, criminal fraud is an uncommon (while serious) issue for our organisations. Clinicians and hospitals are relied on to uphold the trust of our members, their patients, and the vast majority of the tens of thousands of clinicians and facilities we work with do so.

Q A

How is Vitality working to improve the health of their customers in 2017 and beyond?

As previously mentioned, our core purpose is to make people healthier and to enhance and protect their lives. Our ambition is to be the UK’s best health and protection insurer and a powerful force for social good. ‘Best’ for us does not necessarily mean the biggest or the most profitable, but the one that has the greatest impact on society, and the one that makes a meaningful difference to the lives of the members we serve.

Dr. Ali Hasan Dr. Ali Hasan is Clinical Operations Director at VitalityHealth.

Ali initially trained as a doctor at St. George’s Hospital Medical School, and practiced medicine in teaching hospitals in London. Following clinical practice, he joined an international management consultancy firm. Ali subsequently worked as Regional Medical Director at a major UK healthcare company and also undertook independent advisory work and a board position at an early stage medical products company.

Ali is currently a Director of the Healthcare Purchasing Alliance, Chairman of CCSD, and a Non-Executive Director at a mental health NHS Trust.

Shared value is at the heart of Vitality; not just in the way we do business, but also as an embodiment of what we stand for. Our model recognises that the main driver of insurance risk is member behaviour. By encouraging positive behaviour, Vitality reduces risk.

By reducing risk, we fund the incentives that change behaviour.

We call this a shared value model because it’s a virtuous circle that’s good for the member, good for our business, and good for society. We want to make this shared value model ubiquitous globally. Through our model and innovative product approach, we are looking to solve today’s greatest health problems in unique and sustainable ways.

At Vitality we’re constantly innovating. We recently launched two new collaborations with Apple and Ocado that reward people for living healthily, and we will be launching further products and initiatives in 2017. So watch this space!

March 2017

Modern Claims 19

EDITORIAL BOARD

Navigating October 2018 - “Get lean, get agile, get profitable…. or get out” P

ersonal injury (PI) firms have business critical choices to make before the government reforms in October 2018, placing future strategy acutely under the microscope.

When Lord Justice Jackson’s April 2013 reforms landed, some law firm owners and commentators said, “Get big, get niche or get out.”

Most law firms have struggled since, whether they are big and niche, small and niche or simply have PI as part of a wider service firm.

To stay or exit?

The choices for many PI law firms are stark. When advising my clients, the “stay” or “exit” options are broadly as follows: • Trade on in a leaner and more profitable way • Acquire PI caseloads/teams/firms • Be acquired • Trade out and run your PI caseload down • Disposal of PI by sale at best value What ever option you ultimately take, consider the following checklist as a priority: 1. Reduce debt 2. Increase cash-flow 3. Reduce WIP and disbursement lock up 4. Have you diversified in recent years and added serious injury, clinical negligence, occupational disease/noise induced hearing loss or holiday sickness claims to your suite of PI services?

How’s that worked out for you?

5. Have you experienced a hardening of attitude from insurers?

Has this resulted in thinner profit margins? WIP and capital lock up? Negative impact on cash flow and profitability? If so, do you understand why the insurance sector has hit your firm and can you change that?

6. Are case acquisition costs stacking up?

7. Are cases being run expertly?

8. Are you running cases with no prospects?

9. Is your WIP real?

10. Are you profitable?

How good are you?

In terms of what “good” looks like, what do you really know about your business and how you fair against your peers in relation to your: 1. Case management system – utilisation and potential for development?

2. Governance and oversight regarding fee earner technical capability, financial performance and risk management?

3. WIP valuation, financial forecasting and cash collection?

4. Management information (MI)?

All of these will require a review whatever decision you ultimately make to get under the skin of your PI book and assess its value.

The steps to prevention Cybercrime, data breaches and ransomware attacks are growing concerns within claims and insurance. What are firms doing to combat these risks, and how can they improve this? ue to the increase in sophistication of cyber-crime tactics, security is no longer a back-office IT issue. The risk of exposure to cyber-crime and the steps to prevention are rapidly becoming key business decisions, and high on the agenda for the claims sector, as the cost of cyber-security breaches can be disastrous in terms of financial, professional and reputational risks.

D

Essentially, the greatest dangers can often be overcome by taking straight forward preventative measures. Below are a few of the common threats and the simple steps to combat the risk of breaches.

Email

Email is the most common method in which employees can cause security breaches, for example by sending a message to the incorrect recipient. Using a secure online document delivery and acceptance tool means fee earners can utilise an email messaging function that allows only the intended recipient to securely view the documents via an online portal.

These are rapidly growing in popularity across the sector and can be attributed to firms’ increase of awareness in the importance of sending and receiving confidential information, particularly in light of recent hacking threats.

Software and technology

Insurance and claims companies’ customers are increasingly conducting audit inspections as part of their initial research period, and as such expect their chosen firm to have measures and technology in place to ensure sensitive data remains confidential.

The right legal software can aid in this aspect, enabling administrative users to limit file access and therefore ensure only relevant fee earners can view and/or open a particular file.

Furthermore, an effective audit trail will ensure full case histories can be viewed at-a-glance.

Know Your Client (KYC)

Compliance, risk management and diligence are always at the top of the list for the claims sector, and as part of any customer inception process, reliable and accurate ID checking needs to be carried out.

Successful integrations with software systems, such as an online ID/AML checker will provide a comprehensive solution to the KYC problem, enabling fee earners to request ID checks directly from their desktop application, serving to enhance efficiency for both the business and customer.

So, critically looking at whether your PI work is as lean, agile and profitable as it can be is the fundamental starting point from which to navigate towards October 2018.

In conclusion, a vital strategy to combat risk is to identify the information that matters most and ensure policies are in place to prevent attacks, or quickly detect those that can’t be. In addition, the basics cannot be forgotten – developing a robust business continuity plan to react quickly and effectively if compromised.

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March 2017

Modern Claims 21

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EDITORIAL BOARD

End of the Road Traffic Act?

The real issues

The Department for Transport recently announced their intention to extend compulsory motor insurance to driverless cars. How will this affect the insurance process following an autonomous vehicle crash?

The Department for Transport recently reported that around 500,000 road traffic casualties go unreported to the police.

Do these figures undermine the changes made in the MoJ consultations?

B

y the time this goes to print, the Modern Transport bill, renamed the Vehicle Technology and Aviation Act, will be in place, and good news it is as well.

The self declared experts had been saying that we were approaching the end of the Road Traffic Act (RTA) and conventional Motor Insurance, and that everything would move to Products Liability and some big Motor Company Captive. The problem with that was it ignored the reason why we have the RTA; it’s not for Manufacturers or Insurers to sell policies, it’s to protect the man on the street. That protection is even more important for autonomous vehicles as the naysayers are still out in force, and we need to give confidence that people will be looked after.

So rather than a slight dent having to be referred to some motor companies’ most expensive lawyers, taking 3 years to settle as they are anxious to avoid any precedent, the act will impose a statutory liability on insurers to deal with claims if a vehicle is operating in autonomous mode. This gives confidence to other road users, and also, by virtue of it extending the RTA, all the usual protections & prohibitions of ‘Small Print’ etc. will be there, along with unlimited policy coverage as opposed to usually much lower limits for Products Liability.

So if an accident happens, less frequently of course with these safer cars, there is no need to establish which insurance regime is in place, or variation of this depending on the vehicle ‘mode’ at the time; the RTA will apply and the insurer will deal with the claim. Yes, there will be possibilities of recovery from manufacturers, software programmers or others involved in vehicle or infrastructure maintenance, but if they can show they weren’t negligent, or argue ‘state of the art’ defences, it doesn’t matter; the damaged or injured road user is compensated by effectively a conventional insurance policy. Contributory negligence can still apply, and undoubtedly there will be some developing case law on the ‘recovery’ side, but once enacted, the UK is up and running and ready to let autonomous vehicles loose on our roads.

And a side effect of this approach, in addition to comfort and safety of road users? Well, there might be more of a future for Motor Insurers and Claimant Lawyers than some under that Products/Captive scenario prediction we’ve moved on from!

David Williams, Technical Director, AXA Insurance.

he MoJ consultation was a curious piece of work from start to finish. It began with a provocative statement: “The government is bringing forward a package of measures to crack down on minor, exaggerated and fraudulent soft tissue injury (“whiplash”) claims stemming from road traffic accidents (RTAs).”

T

But nowhere in the 42 page document, excluding appendices, was the so-called problem quantified to justify the swingeing reforms; reforms that aim to reduce the judicially determined rates at which pain, suffering and loss of amenity are currently valued and to remove the ability for most victims to be legally represented, despite the insurance backed opponent regularly being funded for counsel if the claim proceeds through court.

The consultation cited 770,000 new claims registered in 2015/16, but only 142,000 RTAs were reported to the police in 2015.

Although it wasn’t alleged that the difference between the two figures could only be accounted for by fraud and/or the most minor of vehicle bumps unlikely to cause significant bodily damage to human occupants, the inference was clear.

So when the DfT announced 500,000 RTA casualties do, according to their records, go unreported to the police, those representing claimants were certainly not surprised. The commonly held view was that the Government didn’t much care for statistics in this area; they were on a longstanding mission to end the UK’s position as the “whiplash capital of the world”.

Non-partisan bodies such as the Transport Select Committee have conducted extensive enquiries into the RTA claims market and reached some fascinating conclusions. For example, in 2013: “Insurers must immediately get their house in order and end practices which encourage fraud and exaggeration.”

“We are concerned that use of the small claims track could prove counterproductive in efforts to discourage fraudulent and exaggerated claims.”

An earlier Ministerial report in 2010, “Common Sense, Common Safety”, commenting on the new Pre-Action Protocol for Low Value Personal Injury Claims in Road Traffic Accidents, had said, “It delivers fair compensation by way of a simple procedure to any claimant making a low value personal injury claim”.

So, to conclude, the new DfT statistics simply add to an already large body of independent material that points to a wholly different understanding of the issues surrounding low value RTA claims. They may further undermine the credibility of arguments in the consultation, but not its progress to the statute book, it would appear.

Amanda Stevens, Group Head of Legal Practice, Hudgell Solicitors.

March 2017

Modern Claims 25

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EDITORIAL BOARD

Employment & unreported accidents What effect will the MoJ Consultations have on employment in the PI sector? n economic impact study, carried out for the Access to Justice lobby group by Capital Economics, calculated that 35,000 direct jobs will be lost in firms undertaking work related to personal injury cases. Taking into account supplier companies that support the industry, Capital Economics concluded that 66,000 jobs are at high risk. The MoJ’s Impact Assessment states that in the event of imposition of the reforms: “Those providing services (lawyers, medical experts, Claims Management Companies) are assumed to find alternative economic activities.”

Helpfully, the MoJ provides no empirical data to support this assumption. It’s a hunch. In the context of the number of jobs that will be lost, it is an incredible hunch. Clearly those working in the personal injury sector will need to re-train and hope to find a firm willing to take on a person with no experience in that sector.

Capital Economics warned that re-deployment to other areas of the legal sector will be tough given the sector has grown by only three per cent in the last six years. It is extraordinary that this government is contemplating destroying the livelihoods of tens of thousands of ordinary people based on an empty promise that the insurance industry will reduce motor insurance premiums, a promise which the government has no mechanism of enforcing.

A

The Department for Transport recently reported that around 500,000 road traffic casualties go unreported to the police. Do these figures undermine the changes made in the MoJ consultations?

The MoJ repeatedly argues that while accidents have declined by 26% since 2006, claims have gone up by 50%. However, its data is based only on those accidents reported to the Police. The DfT has acknowledged that a large number of minor casualties are not known to the police; its best estimate is that there are in the region of 710,000 people injured in road traffic accidents each year. Of these, only around 191,000 causalities are reported to the police. Clearly it is wholly inaccurate for the MoJ to consider reported cases only, choosing to ignore more than half a million casualties that go unreported each year. Additionally, anecdotal evidence would suggest that the police actively dissuade people from reporting accidents and are reluctant to take details. It does therefore appear to be somewhat strange to base the number of accidents on data that has become increasingly irrelevant by design. It would surely make sense to use the best available data before planning such a fundamental change, especially when the figures are available from another government department.

Internet of Things in 2017 – it is not all about data nderstanding the Internet of Things (IoT) and the potential solutions it offers consumers is a key priority. We are aware that if we only think about IoT and insurance from one perspective or dimension, it can lead to the wrong solution. We need to speak the same language as consumers.

U

An IoT solution that has been developed to be an integral part of how people live their lives is always going to have a great chance of consumer adoption, engagement, and ultimately, success. If it doesn’t fit in with what consumers really want or need then, no matter how good the idea is, it will fail.

The key to this is to remove the gap between what consumers want and what insurers think consumers want. In part this is due to language, as our own research shows that the majority of consumers don’t understand terms like ‘Internet of Things’ and ‘connected homes’. When designing solutions, the challenge is to get in the customer’s shoes so that everything is understood from their perspective.

IoT and connected homes also create a great opportunity to engage and partner with other industries and sectors to form much bigger eco systems to deliver innovative solutions and services. This year will see a sharp rise in purchases of connected home solutions and now is the time for service providers and other organisations to review their positions in this new world.

Also, in 2017 popular trends are likely to be based around a new generation of wearables and usage based, on-demand propositions, like Back Me Up, Trov and Cuvva, as well as using IoT to prevent claims and to give advice on home maintenance.

Fundamentally, it’s important to start with the consumer, not the tech or data, and align our thinking. We need to ensure we continually get to know our customers and understand how we can support them in their daily lives. Only then should we start to design solutions.

Leigh Calton, Head of Research and Development, Ageas.

John Kushnick, Managing Director, Garvins (associated with the EDAM Group).

March 2017

Modern Claims 27

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EDITORIAL BOARD

Opportunity Knocks

Problematic Premiums

What are the benefits, opportunities and challenges for early adopters of Artificial Intelligence?

Car insurance premiums rose by 14% in 2016 – to what could this be attributed, and how can the claims sector work to lower premiums this year?

he study of patterns in claims and predicting future losses is nothing new. It’s what the industry has been doing for over a century. However, the introduction of cutting-edge technology and a sophisticated algorithmic approach will result in massive changes to the industry as a whole.

T

Let us start by looking at what AI is and what it can do. Artificial Intelligence is basically the concept of machines being able to carry out tasks normally requiring human intellect. Different applications of AI include; machine learning, speech and visual recognition and native language research. The applications are far reaching.

Machines can analyse language, voices and data to produce data that they can learn from, but how does this lend itself to the insurance field? For starters, AI can merge the lines between past and present and provide insurance firms with a continuous loop of information, enabling more accurate and bespoke pricing outcomes. However, the scope of AI doesn’t end there; machine learning lends itself to claims, fraud prevention, marketing, behavioural analysis and preventative insurance.

Before I discuss the benefits of AI, I should first look at some of the challenges. An investment in AI can be daunting and costly. It’s a big task and one that your resources are not likely to be familiar with.

Get down to the fundamentals; what is your firm trying to achieve?

Start from there and work out who and what is needed. Get all involved departments harmonious. Expertise is likely to be needed too, so partner with companies who know what they’re doing and combine knowledge. Finally, take advantage of cloud computing and SaaS products to minimise upfront costs.

Big data and AI have the potential to provide unprecedented benefits to the insurance industry. Insurers are better equipped to mitigate fraud to improve profits. Claims management, our speciality, is also important; machine learning can find the most effective, fast and cost efficient way of processing large volumes of work.

AI will also pave the way for new services, in particular preventative insurance. The Internet of Things is made up of a network of connected devices, from fitness monitors to homes.

The industry has the opportunity to ingrain services into society by offering products that predict when things might happen, and this could benefit individuals by reducing fires, emergencies, breakages and even improving their health.

he dark art of calculating insurance premium is something way beyond the head of a lowly personal injury lawyer like myself. I imagine a room full of boffins and super computers whizzing through algorithms and computer code to come up with their numbers. Either that, or it may be a hamster in a cage, turning a wheel that powers an old Comodore 64, which in turn spits out some numbers. Either way, whoever sets these figures has little to no grasp on reality.

T

Premiums went up 14% and not one insurer could provide a credible explanation for this. I think one of the attempts went something along the lines of, “cars are now smarter and cost more to fix”. Well that’s odd, as labour rates for both fault and non-fault repairs haven’t increased for years.

In the same period, the number of reported accidents and the number of claims arising for these accidents went down. The 2016 increase also came on the back of personal injury claim costs falling to £5.8 billion in 2015, according to the ABI’s own data; so again, the search for any reason for an increase bears no fruit.

So then, let’s look at insurer profits on the back of that increase. In February alone, main insurer AXA announced an increase in profit of 12% to £263m and RSA’s profit jumped a whopping £112m to £259m. Now we see where the increase has come from.

February was also the month where we saw the renewed (but not committed to) slogan that everyone will save £40 a year, following the MOJ’s decision to all but eliminate the right to claim for personal injury and receive legal representation for the whole of England & Wales. That would be reneged just days later with the long overdue change to the discount rate, which will apparently add anywhere between £75 and £1,000 on to the average premium (depending on which newspaper you read).

The bottom line is therefore pretty simple; insurers, and only insurers, can control whether premiums go up or down, and whilst shareholders continue to mean much more to them than customers, and much much more than injured people, who are regarded as a total inconvenience, we will only see them head in one direction; after all, the fat cats must continue to be fed.

Scott Whyte, Managing Director, Watermans.

Artificial Intelligence is an area that insurers cannot ignore. It will shape the future of the industry but it’s a long and challenging road.

However, by starting small and working in partnership with specialist businesses, your journey doesn’t need to be intimidating.

Oliver Smith, Marketing Manager, slicedbread.

March 2017

Modern Claims 29

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EDITORIAL BOARD

Does the Bar need to reinvent itself, again? arristers in England & Wales have battled to protect the profession from attack since the first inception of the Bar. If you believe what you read then we are now preparing to fight the largest ever battle for survival.

B

Every legal publication you open starts with a headline of doom and gloom, musing: how the Bar is at an end; how can we cope with another cut, another change to the fee regime, etc?

What I struggle to reconcile with all the headlines is that, in spite of recent media attacks on lawyers, the public perception of the Bar is fantastic. We have only carried out a very small recent study but even this suggests that the Bar of England & Wales has an excellent reputation and is a globally recognised brand.

‘Brand Bar’ is alive and well and open for business. The opportunity for respected barristers in England & Wales to market their services globally is simply huge. The marketplace in the UK alone is widely accepted to be in the region of £32bn. Then there is the rest of the world…

The Bar does not need to re-invent itself, it needs to be marketed more effectively and with a collaborative approach so that we all benefit.

We don’t see Clerksroom Direct as a threat to the solicitor side of the profession, but more as a new way of working in partnership and we welcome any discussion as to how best to do this.

We have been able to implement significant change to our business thanks to the rise of ‘Brand Bar’, and the growth of ADR and Public Access as well as our own investment in accessing new markets. These have presented us with new ways to work and allow us to offer new client services and generate new income streams.

We have spoken before about consumers’ needs; we know they want legal services when they want them and delivered in a way that suits them. Accessibility and high standards are important to them, as is certainty on cost before a purchase is made. We believe Public Access is a major component in delivering this and Clerksroom Direct is seen as a major disrupter by many marketing streams. This was demonstrated by the reaction to our pitch on Disruptive Pitch TV, a British online show that invites emerging technology companies to pitch their way into the final. Clerksroom Direct was seen as an exciting marketing proposition; we won episode 3 and will take part in the live final at Business Expo 2017 in March.

Selective statistics The Department for Transport recently reported that around 500,000 road traffic casualties go unreported to the police.

Do these figures undermine the changes made in the MoJ consultations?

he selective use of statistics to present a case more favourably is probably as old as the origin of statistics themselves. It’s clearly not in the same category as the deliberate dishonesty of alternative or false facts with which we are becoming depressingly familiar, but it should be highlighted when it is identified. Particularly when they are being used as one of the central arguments by government to justify a serious attack upon the rights of injured persons in reforming the claims process.

For months now, MoJ Ministers have trotted out statistics about how UK roads are amongst the safest in the world. The narrative goes that the falling number of fatalities and reported accidents neatly coincides with levels of claims not seen since 2006. Without question, we can all welcome fewer deaths on our roads, but this myopic view only tells part of the story. The rest doesn’t fit so comfortably into the MoJ’s narrative.

Anyone in the sector knows that most, more minor, accidents are not reported to the police. The statisticians at the Department for Transport estimate that between 2011 and 2015, around 460,000 “slight” injuries per year went unreported to the police, with around 60,000 serious injuries from RTAs also going unreported.

True, it is an estimate, but based on hospital admissions and other collected data, the statisticians give the figure a 90% reliability. That sounds pretty good to me. No politician would publicly dismiss the notion that we need evidence-based public policy. For Ministers to continue denying the very existence of unreported accidents would smack of gross dishonesty in the face of the evidence.

With the legislation now being progressed, the issues around sound evidence will become more pronounced. In reaching a judgement on the relevant parts of the Prison and Courts Reform Bill before them, parliamentarians need to have all the facts and understand all the likely intended and unintended consequences of the Government’s reforms. Legislate in haste, and not part of a full coherent package of wider measures, and we will all suffer the consequences. As ever, though, it will be the most vulnerable in society who will suffer the most.

T

Donna Scully, Partner, Carpenters.

Nobody likes change (particularly lawyers) but change is inevitable, which is why it’s part of our culture to embrace it.

Change brings opportunity, so it is not all doom and gloom - even if it sometimes feels like it!

Stephen Ward, Managing Director, Clerksroom Barristers, Clerksroom Mediation, Clerksroom Direct, Public Access Portal.

March 2017

Modern Claims 31

EDITORIAL BOARD

Microprocessorcontrolled knees New NHS funding for advanced prosthetics could lead to lower patient injury rates and aid future technology development.

HS England recently announced it is making microprocessor-controlled prosthetic knees available to patients, a treatment that was previously only available to those with private healthcare.

N

Access to microprocessor-controlled knees will be hugely beneficial to amputees who face potential injury caused by falls and long term health issues associated with uneven weight distribution, caused by a lack of confidence in their current devices. Using current systems available on the NHS, amputees often struggle to stand still as their knees have limited stability.

The lack of trust in their prosthetic limb means the user shifts their weight to their sound side. This has a detrimental effect on other joints. Users of microprocessor-controlled knees also benefit from stability on different terrains, slopes and steps, as well as being able to walk more naturally and efficiently at varying speeds.

Microprocessor-controlled knees such as Blatchford’s Orion3 adapt hydraulic resistance in real time, providing the wearer with support when moving in any environment or standing still. This model has stumble recovery technology, ensuring the knee remains stable should the user falter. This may reduce the risk of falling when walking or changing environments and provides users with the stability needed to move without fear. Such benefits make a huge difference to patient safety and quality of life and reduce their lifelong care needs. Prevention of falls is just one aspect; effective stabilisation can also reduce the knock-on medical problems often experienced by amputees with conventional prosthesis and joints, such as lower-back pain, arthritis and hip replacements.

Making microprocessor-controlled knees available to NHS patients may act as a catalyst to accelerate the development of more advanced technologies to improve patients’ lives further.

Previously, this technology was only accessible to a small market, hindering developers’ potential to grow and expand and limiting the amount of user feedback and supporting research available.

Now that this treatment is available on the NHS, it will provide a much larger user group whose feedback can help steer further technological advances in this area. This user input is crucial for Blatchford as we endeavour to work closely with end users to ensure that the technology we develop is truly working to enhance their lives.

Mark Ledger, Principal Prosthetist, Blatchford Clinic.

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March 2017

EDITORIAL BOARD

The CN Consultation Paper: Good or bad news, and how do we respond?

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he proposal that the regime will only apply to cases where the value is between £1000 and £25,000 is better than the initial thoughts of a limit at £250,000.

Bad news may come in Jackson’s report, due July 2017, particularly if he wants fixed costs for all Personal injury Claims up to £250,000.

Innovation, investment and insurtech What impact will insurtech have on the insurance sector in 2017 and beyond?

T

he impact will be significant. This confident prediction is on the basis that it is quite apparent that insurtech is already happening.

4 proposed fee options

Aviva, for example, is reported to have asked its employees whether their jobs could be better done by a robot. The answer “Yes” books you a ticket to re-training.1

2. A lower flat fee plus a percentage of the damages. An example provided is a pre issue settlement of £20,000. The fixed fee would be £3500 being a flat fee of £1500 plus 10% of the £20,000. The maximum recoverable post listing is £9,000.

Startupbootcamp2, London’s insurtech accelerator programme, is another example of current activity. The 3-month programme starts by selecting the 10 most promising insurance technology start-ups. It then provides them with funding and connections to mentors, investors, and partners from around the world. In April there is Demo Day, when guests are invited to work with the startups in the future. Programme partners include Admiral, Allianz, LV, Munich Re, PwC, and Swiss Re, to name but a few.

1. A flat fee linked to the stage reached. A matter that settles pre issue = a fee of £3000. Settlement post listing but pre trial will be a maximum £7150.

3. Reduce the fees where there is an early admission. Recoverable costs are reduced by 10 – 15% of option 1 costs. A matter that settles pre issue is reduced to £2700. After the case is listed the fee is reduced to £6435. The amount recoverable where a case settled between issue and allocation is reduced by 15%.

4. The fourth option (Professor Fenn) is based on real costs using data from costs lawyers, rather than estimates of time. Using a calculation based on a flat rate with a percentage uplift, this model produces significantly higher fees – up to £22,000.

It is proposed that the general fast track Trial costs will apply as per Table 8. This means a capped Trial fee of £1650. All of the proposed fixed costs included counsel’s fees.

The consultation recommends a total cap of £1200 for all expert reports on breach, causation, condition and prognosis. That could be a real challenge, particularly in more complex cases. The fixed fee regime might be excluded where there are more than 2 experts per side on breach and causation.

The issue of recoverable ATE premiums is silent but expect this to be removed.

Initial response?

• Cap on cases up to £25,000 is welcomed; • Professor Fenn’s option is favoured but don’t hold your breath; • The real cost of medical reports vs the proposal is a concern.

The figures proposed are low; • The use of counsel in cases up to £25,000 is going to be very limited indeed; • Serving expert evidence with Letter of Claim not welcomed.

Zoe Holland, Managing Director, ZebraLC.

Insurers are not sole pioneers in this field. Lawyers are involved, as demonstrated by IBM’s Ross3, Chrissie Lightfoot’s RobotLawyer Lisa4 and Riverview Law’s Kim5. Government is also engaged, with £17.3m being provided for universities’ research into automation6.

How will jobs be affected?

There are conflicting views. Mark Carney is on record as saying that “Every technological revolution mercilessly destroys jobs…” and he suggested 15 million jobs might go. Consultants McKinsey have predicted that insurers’ administrative staff will probably see their roles automated. Against that, however, academics at North Carolina University have found the impact of automation on lawyers’ work to be merely light or moderate, and commentators on Aviva’s initiative suggest that the outcome may not be machines replacing people but a move to “remove the robot from the person”.

Which of the many innovative developments now afoot will gain traction quickly?

This is a trickier question. In book-making terms, Blockchain must be a strong favourite because of its apparently immense potential in insurance. But might an outsider win the day? One of the startupbootcamp contenders is LifeSymb. Its offering is an artificial intelligent health robot that uses multiple sensors, such as 3D depth cameras and accelerometers. It also has a machine learning application that could be used, rather topically, to classify whiplash symptoms.7 If it can be used as an effective counter-fraud tool, it would doubtless have no trouble in attracting investors.

1 Sunday Times 26.02.17.

2 www.startupbootcamp.org 3 www.ft.com/content/19807d3e-1765-11e6-9d98-00386a18e39d 4http://entrepreneurlawyer.co.uk/RobotLawyerLISA 5 www.riverviewlaw.com/global-launch-first-virtual-assistants-powered-kim/ 6 Sunday Times 26.02.17.

7 www.lifesymb.com

Tim Wallis, Mediator, Trust Mediation and Expedite Resolution and Member, Civil Justice Council’s ODR Advisory Group.

March 2017

Modern Claims 33

EDITORIAL BOARD

How car hire can enhance the Third Party Assistance experience hird Party Assistance’ is, unquestionably, an area of the motor claims process that has caused much debate over the years. Every insurer knows that ‘capturing’ the innocent third party in a claim goes to the heart of managing costs. But, in the past, there have been concerns that some less reputable insurers’ practices weren’t necessarily in the best interests of the ‘not at fault’ motorist.

‘T

Consequently, a few years ago, the ABI issued a Code of Conduct for how to treat the ‘not at fault’ in a road traffic accident. Central to the Code of Conduct is the need to be transparent in what is being offered to a third party and what their options are. Ranging from vehicle repairs and the provision of a replacement vehicle while repairs are taking place, to assistance with claims for personal injury, the Code of Conduct is very clear about treating the unrepresented third party fairly.

an integral part of the Third Party Assistance can not only play a fundamental role in reducing the ‘at fault’ insurer’s costs, but also provide the opportunity to create a positive experience with the ‘not at fault’ motorist. And this could potentially enhance customer acquisition in the future.

It is crucial, therefore, that the replacement vehicle experience is efficient and hassle-free, as well as being financially equitable.

Since its implementation, insurers have examined the Code of Conduct to identify how they can improve the experience for both their own policyholder and the innocent third party. And one area that has received particular focus is the replacement vehicle provision.

At Europcar we are working with a number of insurers to provide a replacement vehicle service that not only streamlines the process and provides transparency on costs but gives policyholders and not at fault motorists alike choice and control.

As well as tapping into our network of more than 200 locations across the UK, and the choice that comes from a peak fleet of 60,000 cars and vans, our Deliver & Collect service means that the driver doesn’t even have to worry about getting to the nearest rental branch to collect and return their vehicle. And this is enabling insurers to eliminate some of the friction that often adds cost to the claims process, instead achieving a positive claims experience for everyone involved.

Being able to tackle the provision of a replacement vehicle as

James Roberts, Business Development Director, Insurance, Europcar UK Group.

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EDITORIAL BOARD

Meeting millennial expectations

Looking towards lower premiums

What can insurers do to build relationships with a growing new generation of millennial drivers?

Car insurance premiums rose by 14% in 2016 – to what could this be attributed, and how can the claims sector work to lower premiums this year?

he cost of car insurance for young drivers can often be high, driven by the fact they are simply less experienced and therefore more likely to be involved in an accident.

This, coupled with a higher propensity to have young friends in the car, can lead to larger claims, which ultimately translates into higher premiums for these drivers.

T

One way the insurance industry can help to lower premiums for young drivers is through the use of telematics technology to encourage better driving. By having a telematics device installed, drivers are able to prove they are a safe and conscientious driver, which is ultimately reflected in their premiums. In the last 5 years the industry has seen a sharp rise in the volume of telematics policies becoming available, and it’s easy to see why.

Zurich, in partnership with telematics expert Carrot, offers a combination of both hard wired devices and mobile apps. Both can measure driving performance and offer a personalised insurance premium based on how well customers drive, putting them in control of their premium.

We’ve found that millennials are very receptive to the use of this technology and are happy to share their data when they see a clear value exchange in the form of lower premiums and the chance to earn quarterly rewards for better driving. And for the parents, there is also peace of mind knowing that the technology is able to trigger alerts in the event of an accident.

Young drivers are often frustrated at having to pay higher premiums because of their lack of experience. We understand this, and appreciate that young adults want the independence and freedom owning a car can bring. Telematics is a good example of how the insurance industry has taken a view of the needs and frustrations of young drivers and created a product with these customers fully in mind. Telematics offers regular, positive touchpoints with the driver, which insurers don’t usually get the chance to do, and this helps to build an ongoing two-way relationship. Going forward, this is exactly what insurers need to do to ensure they meet the growing expectations of millennial customers; creating products and services that address the challenges and needs of this generation in an engaging way.

Phil Ost, Director of Direct & Partnerships, Zurich.

here has been much talk about the rising cost of insurance premiums being attributed to increasing cost of actual vehicle repair costs. Data analysed by NBRA shows this not to be the case.

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Data compiled from the UK´s leading repair cost calculation tool shows that average hourly labour rates and hours applied to repair vehicles are at worst static and in many cases falling. The same directional cost charged by repairers to insurers for parts prices were again, on average, static. This challenges assertions from the ABI that this is due to “repair bills”.

The average cost of a motor policy in 2016 hit 700 GBP, a rise of around 100 GBP a policy, which is at odds with what costs have been seen at the repair facilities.

It is clear vehicle technology is exponentially rising and repair complexity is increasing. However, through the innovations and adaptability of accident repair centres, this is not being passed through to insurers.

It must also be noted that vehicle manufacturers are far more conscious of reparability in their vehicle designs than they have ever been, making the technology and increased repair expense not necessarily linked.

The key areas to focus on are the claims farming culture still prevalent within the sector and the intervention of 3rd party accident management businesses squeezing additional revenues from claims. This is particularly dilutive around Personal Injury, which makes up around 37% of insurers’ costs. This culture continues to breed an unhealthy ethos and associated criminal behaviour, which must be stamped out and genuine cases fast tracked.

In addition, the claims industry could do much to improve the communication with policyholders. Greater use of data and technology, such as digital communications, could significantly improve the numerous phone calls and contact points still being made. This has moved on a lot; however, the accident repair sector is keen to develop these protocols further, jointly with insurers, to improve both entities’ customers’ experience.

Jason Moseley, Executive Director, NBRA.

March 2017

Modern Claims 35

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Machine learning: the new weapon in fighting insurance fraud Through social media, apps, telematics and a range of other technologies, insurers now have a wealth of data at their hands.

Amal Sud discusses how machine learning can help use this data to tackle insurance fraud. ver since the insurance industry was founded, one of its biggest challenges has been fighting fraud. The FBI estimates that insurance fraud costs the industry more than $40bn per year, while Britain’s Association of British Insurers (ABI) claims that fraud adds an extra £50 to the annual bill of every single policyholder in the UK. To make matters worse, new technologies are often exploited by the fraudsters to stay one step ahead, despite heavy investment from insurers to stop them.

E

Getting around the issue is hard, and to date it has been a cross that insurance companies have had to bear. Today’s world offers far more opportunities for creative uses of technology. If other industries can now make use of automated cyber threat detection through machine learning technology, then surely insurers can gain in their battle to discover and combat fraudsters.

The next big thing

Despite being arguably the very first data-driven industry, insurers are starting to wake up to the quantum leap data analytics and machine learning can provide. They realise that they have access to much more data than ever before. With significant advances in technology, multiple disruptive innovations are driving change by providing much more data than was previously available. IoT devices, real time sensors, wearables, digital interactions, social media and telematics provide more and more information, which insurers can then use in multiple areas, including fraud prevention.

Machine learning now has the potential to decisively change fraud prevention as we know it.

Data acquired through various IoT, digital and social platforms can now be processed alongside the insurer’s historical data. When analysed together, this data can give indications of fraud and help insurers take specific actions to prevent it. Coupled with machine learning technology, these analytics can be taken to the next level; they can be applied to real time decisions. Intelligent algorithms can identify patterns and machines can be taught to tag certain indicators and provide predictive, more accurate responses.

Machines can also learn and update their repository of indicators, and alert insurers to potential fraud. These machine learning tools are on the verge of a quantum leap.

We now have the capacity to have various outcomes evaluated by powerful processors instantly. We can process claims and score them, incorporating patterns of fraud detection. We can now reduce that extra £50 that fraud adds to policy holders’ bills. This isn’t something that the industry can afford to miss out on.

March 2017

If other industries can now make use of automated cyber threat detection through machine learning technology, then surely insurers can gain in their battle to discover and combat fraudsters Putting it into practice

Data has to be looked at holistically and is the basis and starting point of analytics. Data sources and data acquisition (both structured and unstructured), or in other words, the data that we do or don’t have and how it’s accessed, are typical questions to start this journey. This is followed by an in depth study of data storage, intelligent data manipulation algorithms and data visualisation. Algorithm definition is key as it forms the foundation of intelligence. Once applied, data visualisation helps understand the relevant analysis and orients a decision.

Machine learning models are the second element. Identification of what a machine must learn, definition of a learning process, including a method for capture and use and application of the knowledge in a business process to provide business value are the next key.

In the fight against insurance fraud, the claims data received through the FNOL process via a mobile app/portal, call center, additional data received during the adjudication process, external data sources such as CUE (Claims and Underwriting Exchange) and MIAFTR (Motor Insurance Anti-Fraud Theft Register) and feeds from IoT devices, social media such as Facebook, Twitter, etc. all become sources that help corroborate the claim or show indications of fraud. It’s only through machine learning technology that the indicators can be reviewed, assessed and acted on automatically, increasing the accuracy of any decision. It’s this greater level of accuracy which provides the biggest cost savings to an insurer, and could prove to be the ‘silver bullet’ in the fight against fraud. If other industries can now make use of automated cyber threat detection through machine learning technology, then surely insurers can gain in their battle to discover and combat fraudsters Amal Sud, Global Head of Solutions for Healthcare, Insurance and Life Sciences, VirtusaPolaris.

Modern Claims 37

FEATURES

Breaking the deadlock Mediation in the NHS Mediation provides the opportunity to resolve and move on from a dispute for both claimants and NHS staff, which is one reason the NHS LA has launched its new mediation service, as Julienne Vernon explains. he NHS Litigation Authority (NHS LA) has been resolving clinical negligence claims for over 20 years and, despite its name, has been something of a pioneer in the world of alternative dispute resolution (ADR) and mediation.

Over the years the health service has been hit by some serious issues concerning system or organisational failure, with successive public enquiries on events such as those occurring in relation to Bristol Paediatric Heart Surgery and in Mid-Staffs. The NHS LA has worked closely with its trust members throughout these events to resolve the ensuing claims and today deals with around 1,000 new claims a month, arising from anything from a slip on ice in a hospital car park to serious life-long brain damage at birth. It has increasingly looked to innovative ways to resolve disputes fairly for patients whilst obtaining value for money for the taxpayer. In 2003, it led a widely publicised mediation over 2,000 cases for the nationwide practice of retaining organs following post-mortem, delivering personalised apologies to affected families and a government commitment to law reform as outcomes.

T

This year, the NHS LA has led the way in being the first organisation of its kind to launch a mediation service, following a pilot and subsequent procurement.

The organisation currently spends over £1.4 billion annually on clinical negligence claims alone and has provisions (a figure held in the government accounts for claims yet to be paid) of £56.4 billion Vernon continues: “We selected this cohort of cases because they often involve the extended family and mediation can provide a way for not only all voices to be heard, but for someone who is neutral and who is not part of the history of the case to act as an intermediary. Healthcare staff can also be very traumatised by these events and want to say sorry and explain things to the family but sometimes don’t know how to do so without causing further distress. The mediation process can help with that.”

The pilot itself was a modest exercise in the context of the NHS LA’s overall book. The organisation currently spends over £1.4 billion annually on clinical negligence claims alone and has provisions (a figure held in the government accounts for claims yet to be paid) of £56.4 billion. The NHS LA has acknowledged that it is difficult to persuade lawyers on both sides to engage in mediation. It is a feature of its current panel tender that it has priced its contracts to incentivise its lawyers to mediate on any case, of any value, at any stage. The NHS LA’s Chief Executive, Helen Vernon (herself an accredited mediator) says:

The NHS LA has bold ambitions in this area in all areas of claims, including resolution of costs, for which it has selected a specialist provider. The organisation also plans to extend its activity closer to the incident for cases involving brain damage at birth (which represent 40% of its reported claims by value) and to test mediation at the ‘point of incident’ on these cases in the future.

“It’s a different way of working to the ‘arms length’ approach that lawyers are used to and needs different skills. Mediation is not an easy option and needs a commitment by both sides to put aside entrenched positions, really listen to each other and to make an effort to understand what lies behind their dispute. It is a terrific opportunity to bring people together face to face, without the misconceptions and loss of trust that legal proceedings can sometimes fuel.”

Not only are the success rates good, there are other benefits to seeking to resolve a case by mediation. It is a voluntary and confidential process, flexible and can be arranged quickly. It provides an opportunity for face-to-face discussions if the parties wish and dispenses with the need for a formal court process.

Key for many claimants that take part in mediation is that it encourages other, non-financial outcomes, such as providing an opportunity for apologies or an explanation of what went wrong.

The NHS LA often sees incidents escalate into complaints and then claims when the relationship between the staff of an NHS organisation and a claimant and their family breaks down. It has often stated that this can be because there has been no apology or investigation into what has gone wrong and so no assurance can be given that lessons have been learned and the incident they have suffered will not be repeated and experienced by

The NHS LA’s pilot focussed on fatal and elderly care claims, although throughout, offers of mediation continued to be made on other cases as a matter of course. Of the 91 offers of mediation on pilot cases, 49 were accepted and 81% of the cases settled. 61% of those settlements were achieved on the day of the mediation and a further 20% a short time thereafter.

38 Modern Claims

NHS mediation – why, who and how?

Why?

March 2017

FEATURES

Key for many claimants that take part in mediation is that it encourages other, non-financial outcomes, such as providing an opportunity for apologies or an explanation of what went wrong anyone else. Mediation can provide a forum for formal apologies, if they haven’t already been received, and some closure around what went wrong. The process allows time for reflection after discussions and, finally, nothing is binding until a written agreement is signed. Opting for mediation does not preclude a claimant from litigation if that is ultimately necessary.

There is a fixed fee structure for mediations lasting up to eight hours depending on the value of the claim/costs dispute and an hourly rate may be also applicable. The NHS LA will fund the cost of mediations in cases where liability is admitted in whole or in part, or where the claimant is unrepresented. In all other cases and in all costs mediations the fees are shared equally by the parties.

Who?

The new mediation service is open to all suitable clinical negligence and personal injury claims. There is no limit on the number of cases that are eligible for this service.

Attendance is always discussed with the mediator beforehand and who is going to attend is notified to both sides taking part in the process. Often the claimant and/or family members or a friend to provide support will attend in person. The NHS trust may be represented by trust staff and someone from the NHS LA. Many people choose to have a lawyer attend the mediation with them, however this is not obligatory.

Julienne Vernon is Head of Claims Quality at the NHS Litigation Authority (NHS LA).

How?

Once the parties agree to mediation, the claimant will be offered the choice of a mediator from a panel of experienced and accredited individuals from a range of backgrounds. The selected mediator will contact the parties over the telephone to fix a suitable date and location and to obtain the background information. Information shared with the mediator is confidential and only disclosed to the other party with prior agreement. On the day of the mediation, each side will have its own room and will meet with the mediator in private. There may be facilitated meetings with both sides together or between individuals, but only where everyone agrees that this should happen. The mediator will explore the case and go back and forth between the parties in order to help and support them in reaching an agreement. Once a way forward has been agreed, a written, binding agreement is drawn up. Even if agreement is not reached on the day, the matter may be settled shortly afterwards once there has been time to reflect upon what has been heard.

The new mediation service has been designed to support claimants, families and NHS staff in working together towards the resolution of incidents, complaints, legal claims and costs disputes, and avoids the need and expense of both sides going to court.

The service provides access to an independent and accredited mediator, selected from a panel drawn from a wide range of backgrounds.

The tender enabled the NHS LA to use its unique buying power on behalf of the NHS to procure the highest quality mediation services for the NHS at the lowest possible cost. The contracts were awarded to the Centre for Effective Dispute Resolution (CEDR), Trust Mediation and Costs Alternative Dispute Resolution (CADR).

March 2017

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FEATURES

Sector Soapbox

Modern Claims’s panel of resident associations outline the burning issues

Sights fixed on recoverable costs n January, the Court of Appeal delivered yet another judgment (the fourth in 12 months) in respect of how Fixed Recoverable Costs should operate. In Sharp v Leeds CC, Lord Justice Briggs confirmed that the FRC regime did apply to pre-action disclosure applications, where the case had departed from the Pre-Action Protocol. Fixed Costs are very much at the top of the agenda currently.

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The judgment, the third given by Briggs LJ in as many months concerning the FRC regime, came in the same week as both the closing date for submissions to Lord Justice Jackson’s review of fixed costs and the announcement that the Department of Health is to consult on the introduction of FRCs in clinical negligence claims up to £25k.

In his speech in January 2016 where he first proposed the extension into all types of litigation up to £250,000, Jackson LJ suggested using a grid which contained ten stages and four financial bands.

He also proposed actual figures which might represent the amount of costs recoverable for the various stages. Moving into his review he has said that he will keep an open mind “about what types and levels of cases should fall within such a regime, and what the costs figures should be”. He will also be looking at whether an extended costs management process by the court, including control over prelitigation costs, can be part of the solution.

Whilst there is likely to be disagreement about the value and type of claim that will be the subject of an extended FRC regime, as well as whether the costs figures proposed are at the right level, there seems to be widespread agreement that the regime will be extended in some way. There are clearly a variety of views as to what the limit should be and whether introduction of a new limit should be reached progressively to allow issues to be identified and worked through.

There also appears to be agreement, as the need for the four recent Court of Appeal judgments would suggest, that the existing process must be reviewed to determine whether any changes or improvements should be made, and horizontal extension to cover all fast track claims is a must.

For me, certainty and simplicity reduces friction and in turn prevents satellite litigation. Making the rules as clear as possible is essential, including the provision of a comprehensive guide and the flexibility to adapt to any changes in court practice.

Nigel Teasdale, President of the Forum of Insurance Lawyers (FOIL) and Partner at DWF LLP.

Still more claims texts but still no action! n March 2016 the Chancellor announced in his budget that the government accepted the recommendations of the independent review by Carol Brady into the regulation of Claims Management Companies (CMCs). The Treasury confirmed that the FCA would be put in charge of the new regulatory regime, but here we are, almost 12 months later, with no legislative vehicle to action this policy change.

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Colm Holmes, Aviva UK GI CEO, commented that there has been a “150% increase in aged claims more than 300 days old since 2011”, which is consistent with Edmund King, President of the AA’s commentary, where he highlighted research conducted amongst the AA membership. Of 19,317 drivers canvassed, 63% were contacted by a CMC in the preceding 12 months about personal injury claims, 95% of those thought it was a nuisance, and more than a third were contacted more than 10 times.

The recent British Insurance Brokers Association (BIBA) manifesto, amongst many other market issues, calls for action from the government to bring forward the necessary legislation to begin the new regime of FCA regulation of CMCs, as it detracts from the fact that the majority of insurance policy holders are both honest and contribute to the £1.3billion cost of detecting what can be a mask for fraudulent operators.

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It is BIBA’s view that the regulator should: • Effectively police the referral fee ban.

• Prevent the use of failed and restarted “Phoenix” companies.

• Consider how to deal with those organisations providing claims management services outside the regulated sector.

• Liaise with the information commissioner’s office regarding the abuse of data protection rules.

• Maintain a robust regime to ensure that regulated firms are run by fit and proper persons.

The stakeholders in insurance have made great strides in recent years in removing referral fees and trying other measures to bring down the cost of insurance and to take direct action against unscrupulous organisations. We have formed the Insurance Fraud Task Force, which is also doing excellent work, but the time for direct government action is required to drive home what would otherwise be an empty government promise.

Andrew Gibbons, ACII, Managing Director, Mason Owen Financial Services Ltd and Chair on behalf of BIBA of the Industry Claims Working Group.

March 2017

FEATURES

Failed objectives fter months of uncertainty, the Government’s intentions are now abundantly clear. In the words of Justice Minister Sir Oliver Heald, they wish to disincentivise minor, exaggerated and fraudulent whiplash claims. It is apparently no matter that, despite all the warnings, the proposed changes will singularly fail to achieve at least one of these objectives. Raising the small claims limit and the introduction of a ridiculously low fixed tariff system may indeed dissuade some claims, but it will come at the expense of legitimate claims for justice and a likely increase in fraudulent claims.

In the absence of professional legal support, with lawyers, in the cold calculation of the MoJ, finding “alternative economic activities”, many accident victims will face three options. They may choose not to pursue their right to compensation as an injured party, even though they have paid for this protection with their compulsory motor insurance premium. They may embark upon the potentially difficult path of self-litigation, although how they will be supported to do this or indeed pay for the information necessary to conduct a claim remains deafeningly unexplained. Or they will be drawn into the shady world of CMCs, embraced by the grateful arms of claims farmers eager to exploit their vulnerabilities.

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their myopic view of the claims market. For all the heralded changes to CMC regulation, the system appears incapable of preventing cold calls and their active encouragement to pursue dodgy claims.

Forget the millions of pounds worth of fines issued. Only 3% of them have reportedly been paid, as those behind the call centers fade once more into the background.

The Prisons and Courts Bill, with the tariff, uplift and ban on premedical offers, will by now be busily progressing through the House of Commons. Hopefully the rationale behind the measures will be challenged more rigorously later in the House of Lords.

Later this year, the regulations required on the definition of a whiplash injury, damages, uplift and regulation of the ban on premedical offers will be drafted, hopefully consulted upon and then introduced as secondary legislation. When the final proposals are implemented on 1 October 2018, in whatever shape they emerge from this process, one thing is already clear: the Government will have already failed in their stated objectives, and at a considerable cost to the rights of the motor accident victim.

Simon Stanfield is Chair of the Motor Accident Solicitors Society (MASS) and a Partner of Simpson Millar.

The latter option will undoubtedly lead to more fraudulent claims, and the Government seems intent on actively encouraging it with

Pros and cons t has been a busy month for motor insurers, with a series of Government announcements that will have a major impact on the industry. Some are more welcome than others; the positive steps the Government has taken on whiplash and automated driving unfortunately have to be balanced against the extremely disappointing approach the Lord Chancellor has taken to the Discount Rate.

It is not often that the ABI publicly calls a Government Minister’s decision “crazy”, but Lord Chancellor Elizabeth Truss’s decision to set the discount rate at -0.75% (the lowest in the western world) certainly fits that description. The Chancellor Philip Hammond has already signaled that this will be urgently reviewed, and the ABI has called on the Government to take immediate action to ensure that the process for setting this rate allows for a fair rate to be set in future.

However, the ABI welcomes the long overdue personal injury reforms and hopes that at long last the increasing safety of British roads and vehicles will be reflected in the volume of claims pursued, and that with the financial incentives lessened, there will be a dramatic reduction in nuisance calls made to the ever frustrated public. We look forward to working with the Government on the fine-tuning of the detail of the reforms and to ensure their smooth implementation, intended on 1 October 2018.

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March 2017

In the meantime, we anticipate the Government’s second response document outlining their intended measures related to matters including early notification of claims, rehabilitation and recovery of disbursements.

The publication of the Vehicle Technology and Aviation Bill confirmed that the Government has accepted the ABI’s proposals for a simple insurance regime for the first wave of automated cars, based on the principle that a motor insurer will have initial responsibility for settling claims backed by a new right of recovery against manufacturers. Insurers are 100% supportive of the development of automated driving, which has the potential to be a game changer for road safety. Although this legislation is only the first step and there will still be lots of work to do, particularly on access to vehicle data, this legislation means insurers will be at the forefront of enabling technological change.

This will no doubt continue to be a hot topic as the legislation goes through Parliament. The ABI will be hosting a conference on automated driving on 24th May, at which Transport Secretary Chris Grayling will be the keynote speaker and will set out how the Government intends this to work in practice.

Ben Howarth, Senior Policy Adviser, Motor & Liability, Association of British Insurers (ABI).

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FEATURES

Construction Claims How a combined service can improve the claims resolution process Bob Paterson explains how a ‘one stop shop’ approach can result in a more efficient claims service for the Insured, and lower claims costs expenditure for Insurers. he Construction industry generates a significant number of insurance claims, many of which are technically complex and of high value. The attention these claims can attract in the insurance market means that they are recognised as a specialist area and considerable time and expense is incurred by the insurers, brokers, policyholders and the claims service providers in dealing with them.

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Loss Adjusters have been at the forefront of the claims process and traditionally have used their skills and expertise in the adjustment and resolution of material damage claims under a building or engineering Contractors’ All Risks (CAR) policy, where physical damage has been caused to the works under construction.

The inherent nature of construction works also means that Contractors’ Public Liability (PL) and Employers’ Liability (EL) policies are essential to provide Contractors with an indemnity to third parties and to indemnify their liability for death or personal injury to their workforce.

As most large construction projects are now procured under a design and construct (D&C) form of contract, it is necessary for the Contractor to take out and maintain professional indemnity cover for their liability and loss which arises out of a professional error in the design and/or specification of the works. In some cases this liability can continue for up to 12 years after the contract has been completed.

In construction contracts, a formal claim relating to a dispute or problem may not be made immediately against the Contractor and if a D&C Contractor complies with its contractual obligations to rectify a patent defect in the works (i.e. one which occurs within the contract period), a claim may not materialise.

Most professional indemnity policies written for D&C contractors allow for this within the Insuring Clause of the policy by providing a supplemental “mitigation of loss clause” to cover costs and expense incurred in mitigating or preventing a potential claim which would otherwise be covered under the policy. This mitigation clause is subject to various conditions, most notably that the prior consent of Insurers is required, which would not be unreasonably withheld.

Adjuster Involvement

These types of professional liability claims also benefit from the early involvement of an Adjuster as there is inevitably a need for the insured Contractor to act quickly in order to prevent or mitigate any delays to the project. However, a degree of control and adjustment of the costs being incurred is essential from an Insurer’s perspective, which is where a specialist technical Adjuster

42 Modern Claims

In our experience, being able to “speak the same language” as an Insured means that they are immediately put at ease in what can be a daunting process with the ability to also consider what costs are covered can be invaluable to reduce the lifecycle of the claim.

Professional liability claims are also made against the design professionals such as the Architect, Consulting Engineer, or Quantity Surveyor and an understanding of their role on a project from an experienced Adjuster (who is often dual qualified in a construction and insurance/adjusting discipline) will assist greatly.

In our experience, being able to “speak the same language” as an Insured means that they are immediately put at ease in what can be a daunting process, particularly if they are facing allegations of a breach of professional duty and have never submitted a claim of this type to their insurers before.

Of course, Loss Adjusters are not the only appointment that Insurers will make and the involvement of Lawyers on a complex construction claim is also necessary and an invaluable part of the claims process. The nature of construction disputes often involves multi-parties, each appointed under bespoke forms of contract or appointments, which all need careful consideration in order to determine the respective liabilities. Collateral warranties and novation agreements are commonplace.

Larger Contractor Insureds also generate a significant number of notifications, although their policies tend to have larger deductibles, which means that not all notifications will materialise into claims resulting in a policy indemnity. However, the efficient use of bordereau reporting and management information means that the skills of Third Party Administration (TPA) Claims Handlers can also come to the fore.

Third Party Administration Claims Handlers

Construction claims require extensive technical enquiries in order to establish what has gone wrong and why, who may be responsible and what are their contractual obligations and liabilities, is there an insurance policy that may cover the liability or

March 2017

FEATURES

For an Insured, the ongoing uncertainty regarding policy coverage can be a worse situation than a reasoned argument stating why a claim is not covered loss, do immediate mitigation steps need to be taken, and is there a cost effective remedial solution?

The combined skills of Loss Adjusters, Lawyers and Claims Handlers, whether in-house at the Insurer or a TPA, all serve to reach an effective resolution to a complex construction claim. At DWF, we advocate a joint appointment of specialist Adjusters and construction Lawyers from the outset, rather than separate appointments at different stages of the claim. The traditional approach by Insurers faced with such a claim might be to appoint a Lawyer in the first instance who then engages various technical experts to investigate and report on their particular discipline.

However, this process takes considerable time to complete and the early stages of a notification to Insurers can be critical, particularly if the contract is ongoing and has tight deadlines. It is often at this time when key decisions need to be taken which can avoid a protracted and expensive legal dispute later on. If the Insurer is not fully informed of the issues and is awaiting a report from the Lawyer/Expert, then they are unable to advise the Insured on the best course of action to take in order to protect the interests of both the Insured and Insurers.

The often used phrase of “act as a prudent uninsured” provides little comfort to an Insured or their broker facing a significant liability or loss, often from an aggressive Claimant. Most Insurers would rather not resort to this action as it leaves them with little control over the course the claim may take.

Differences of opinion

or working alongside a Lawyer to assist their understanding of the technical nature of the claim. In many cases the Adjuster’s involvement means that it may not be necessary to appoint a separate expert, unless a Part 35 Expert witness appointment is immediately required.

Furthermore, where specialist third party expertise is necessary, the Adjuster who is already familiar with the technical issues can assist in directing the expert’s enquiries and defining their brief to ensure that the advice obtained is of immediate relevance to the matter at hand.

Understanding the claim

The recent changes that were implemented in November 2016 to the Pre-action Protocol for Construction and Engineering Disputes places a greater emphasis on keeping costs proportionate by requiring the parties to the dispute to provide sufficient (but not necessarily all) information to enable the claim to be understood.

In the General Aims Section of the Protocol it now states that experts’ reports are generally not expected or required at Preaction stage, but can be helpful in cases where expert evidence is central to the claim.

The stricter timescales now imposed under the Protocol for responding and attending a Pre-action meeting means that an Insurer will need to act quickly in order to obtain an understanding of the claim that their Insured is facing. The timescales for responding are even more onerous where a construction dispute is referred to Adjudication.

It is also inevitable that differences of opinion will arise over policy cover as the expectations of an Insured or their broker may not match those of the Insurer and their advisers. However, these differences can be compounded if an Insurer is unable to make an informed decision on the extent of cover available due to a lack of information. For an Insured, the ongoing uncertainty regarding policy coverage can be a worse situation than a reasoned argument stating why a claim is not covered.

This is where an “expert led” approach by a technical Adjuster working in conjunction with a Lawyer comes into its own, to provide Insurers with an early stage appraisal of the claim, the potential liability and cover available under the policy, and crucially the likely exposure. All too often Pre-action meetings and mediations fail to make any progress or reach a settlement because one of the parties does not fully understand the others’ position, or does not have all of the facts to hand.

For construction claims there is a potential for significant cost savings to an Insurer by the early appointment of a specialist dual qualified Adjuster, either in advance of any legal involvement

Of course not all claims are resolved amicably or via an alternative dispute resolution process. Although formal litigation is regarded as a last resort to claims resolution, the early knowledge and engagement in the claim by both the Adjuster and the Lawyer allows for continuity when it is necessary to engage other experts and Legal Counsel.

In our experience, being able to “speak the same language” as an Insured means that they are immediately put at ease in what can be a daunting process March 2017

As DWF employs Lawyers, Claims Handlers and Adjusters, Insurers are able to benefit from a “one stop shop” providing specialist input as and when it is required, which results in a more efficient claims service for the Insured and a lower claims costs expenditure for Insurers.

Bob Paterson is a Chartered Civil Engineer and Chartered Loss Adjuster and Global Head of Adjusting at DWF Loss Adjusting.

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Market Changes: Sink or Sail?

As changes rock the Noise Induced Hearing Loss claims sector, Chris Fry explains how his firm has adapted its business model to survive the challenges the industry is currently facing. hroughout my 20s and early 30s, most of my spare time was spent racing Enterprise dinghies around the National Circuit with my brother crewing. We got to the point where there wasn’t anyone we couldn’t beat. When we turned up, the general presumption was that we would win.

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At 35 life changed. I jumped out of the boat and into being a Dad. I became a co-founder in a new law firm. Change happened. Life was not smooth sailing; it was a series of storms with plenty of race wins but a few spectacular capsizes.

My competitive sailing experiences have brought plenty of comparisons to my experience of running a law firm, and indeed just being a lawyer. We lose cases, and races, but we don’t stop trying if we want to be the best. We reflect on what happened, what we can control and what we can’t, but fundamentally we learn and adapt where necessary. In a boat, being agile enough to make those incremental changes creates marginal gains. The build of an Enterprise sailing dinghy ensures that marginal gains are what win races by better technique, tweaking sail shape or rig tension, and changing weight distribution. Over time those marginal gains can accumulate sufficiently to create a resounding lead.

A storm on the horizon

Over the last 12 months, the conditions around us NIHL lawyers have changed significantly, and there’s clearly a storm brewing on the horizon that will bring a big shift. Imagine you’re in a boat waiting to start the race alongside me. What are the chances that we’ll all finish?

The racecourse I’m talking about relates to firms completing Noise Induced Hearing Loss claims, although the principles probably have significance on a broader basis. Where the goal is to trade profitably in this work type, for many of us actually crossing the finishing line will be an achievement.

I don’t know with absolute certainty that the way I set myself up will avoid capsizing along the way, but I at least know how I’m setting myself up to be competitive. Firstly, I believe that the firm should structure its work around the market; and in turn that I should recognise that the way in which we engage with the work will determine the way in which the firm should be organised, and hence its structure.

Firstly, we need to be agile. This means making sure that we can take decisions quickly, and have a structure which is responsive enough to react fast. We need well functioning crew who understand what’s going to happen, how they fit in, and what is expected of them. Those at the helm need to be confident enough in the ability of the team to fulfil their roles to drive the boat forwards so that they can keep their head out of the boat. We

44 Modern Claims

Some of the ‘big boys’ will do fine initially, but will find their teams significantly reduced as core team members jump ship and join the Consultant working model, which generates them greater income and improves quality of life need to be as trim as possible, which means getting rid of extra weight, and we need to pressure test to ensure that everything works under strain. Gear failure anywhere down the line almost guarantees that it will be difficult to finish.

Tomorrow’s Lawyers

These (possibly obscure sounding) references should in fact resonate with David Susskind’s prophecies about ‘Tomorrow’s Lawyers’.

Susskind predicted that the market would change around us, and that we would be forced to provide more for less, expecting significant change by 2020. How right he was. NIHL lawyers are hampered in that task by having to accommodate the extra time it takes to complete cases, by the delays inherent in our work as the Quindell/S&G bubble of cases works it way through HMRC, expert witnesses, and ultimately an over burdened Court Service.

Fixed costs are inevitable, and profits will be very much reduced.

Sitting around and assuming that we can cope is not an option, although I recognise that its hard to convince established law firms full of millionaires that they need to change their business model. But I’ve changed mine to the extent that I’ve changed boats entirely. As Warren Buffet said, “In a chronically leaking boat, energy devoted to changing vessels is more productive than energy devoted to patching leaks.”

Collaborative working, for me, is essential to being able to compete moving forwards

March 2017

FEATURES

Over the last 12 months, the conditions around us NIHL lawyers have changed significantly, and there’s clearly a storm brewing on the horizon that will bring a big shift This new vehicle is built differently because clearly the changes we’re seeing are not going to blow over. I can’t compete with the big established law firms and the cash reserves that will allow them to sail through and absorb the hits, so instead I’ve decided to be deliberately disruptive to try to compete.

The new vessel

Firstly, I’ve analysed every stage of every NIHL case, worked out how many hours it takes to complete and who the right person to do that work is. Then I’ve focused on that process to work out whether by using better technology we can complete that process more quickly and with less human energy. This then allowed me to identify what level of fee earner I need and at what cost. I have guessed at the level of fixed costs on what I believe to be a fairly pessimistic basis, and then I have identified that I can undertake that work profitably with a core in-house team. An important part of that process is obviously to work out what can be ‘unbundled’ or outsourced.

Fundamentally, I need to keep my overheads low. This has inevitably led to downsizing a core in-house team, and investing more capital in technology. However, whilst systemising work in pre-action fixed costs stages is possible, there’s no escaping the need for experienced lawyers to assist with strategic decisions on cases as they progress, and to complete them. The problem is that most experienced lawyers are too expensive to employ on a caseload of largely fixed costs based cases where margins are reduced so significantly, and there will be many lawyers working in-house who will be worried about their career progression. Some of those lawyers will be used to high earnings, and some will be partners in middle tier firms looking towards retirement planning.

able to compete moving forwards. Essentially I’m reliant upon the outsourcing concept in two ways; firstly, lawyers (on profit share) outsourcing pre-action work into our core model and thus eradicating that overhead from their own business and secondly by outsourcing our own cases that continue outside of the scope of fixed costs to a network of experienced Consultant lawyers on a profit share model.

What does this do to the race? Some teams will simply be unable to react to the changes and won’t compete at all. Some of the ‘big boys’ will do fine initially, but will find their teams significantly reduced as core team members jump ship and join the Consultant working model, which generates them greater income and improves quality of life.

For me, this entire model recognises that we’re not going to make large margins, and that to succeed we must achieve either overhead hungry scale to compete, or work collaboratively using reduced overhead to share profits with others. Perhaps unusually for a competitive No Win No Fee lawyer, I see the definition of success as working with others to share the race win as being important to the survival of the fleet as a whole.

Chris Fry is Managing Partner at Fry Law.

Collaborative working

The solution for me has been to keep a lean core in-house team able to handle the cases likely to fall within the impending fixed costs regime, but then to develop a co-operative of other lawyers. Collaborative working, for me, is essential to being

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Employee Engagement The X Factor in Claims Management A company is only as good as its employees, and engaging them will improve the experience of everybody involved in involved in a claim, as Jason Tripp explains. ngagement is a buzzword that is everywhere - from customer and social media engagement to employee engagement. Whilst employee ‘satisfaction’ has long been the goal, the term ‘engagement’ recognises that satisfaction, as a concept or measurement, doesn’t fully reflect the state of mind and commitment required to make a positive change. A change that transforms your employees into a high performing, motivated team that wants to give its best every day is something any forward-minded business must surely want to achieve.

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Employee engagement is about creating an environment within which your staff can feel truly committed and connected to what they do. A workplace in which they genuinely care about the business and want to give outstanding service - rather than simply turning up, going through the motions and going home!

Engagement is about getting involved; be that in decisions about the business or taking ownership of a customer’s problem.

Outsourced claims management providers such as Motorplus help customers during stressful or even extremely distressing situations.

Front line staff can quickly create a lasting impression on those individuals they speak to, with a good impression helping to build positive brand associations. However, a bad impression may be shared many times with an unhappy customer’s friends and family.

Engaged front line staff go further for the customer. It’s apparent in everything they do, from tone of voice through to the accuracy of data capture.

A challenge faced by many claims managers may be higher than average staff attrition - disinterest and low involvement may see staff leave, with the recruitment and training cycle having to begin again. Worse still, top performers may seek greater job fulfilment elsewhere, and a key asset will have been lost. So what can claims managers do?

Engagement experiences

Some team leaders at Motorplus shared their own experiences on employee engagement. For James, a team leader in Quality Assurance, ownership is one of the factors that contributes to increased engagement. “My team deals with dedicated issues and follows them through to conclusion. This means they can build rapport as well as fully understanding the problem, and they feel personally invested in getting the case resolved. They’ve told me how much more satisfying this is.”

Enabling and empowering claims staff to make their own decisions is another factor in engagement. Claims handling can be very process-orientated, often managed in a hierarchical style that can leave those at the ‘bottom’ feeling insignificant. Coaching techniques that help staff to develop their skills alongside real-time data to front line teams enables claims handlers to make their own, informed judgements. This greater involvement in the decision

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Engaged front line staff go further for the customer. It’s apparent in everything they do, from tone of voice through to the accuracy of data capture making process improves efficiency and enhances individuals’ sense of self-worth. However, it’s also important for these employees to have good support, as you otherwise risk piling on pressure and devolving leaders of responsibility. This can quickly have the opposite effect on engagement.

Supporting staff with good communication is a key factor for team leader, Danielle. “I’ve taken time to get to know everyone on a personal level – listening and finding out where people need support.

We do a lot of communicating; holding small huddles, which cascade information from management and between teams. Little and often is more effective than a big meeting every once in a while.”

Another problem with the hierarchical structure is that front-line staff may feel disassociated from the overall business purpose. A clear vision that directly links to teams’ and individuals’ objectives helps everyone understand their contribution and see their input in terms of the bigger picture. For Danielle this is about making it real: “I translate KPIs into information that means something to the team so they can easily see how what they do makes a difference.”

Leading by example

Finally, leading by example is vital. To really inspire staff, leaders need to be available and ‘walk the walk’. Nicola, Call Centre Manager, doesn’t believe in management from afar: “We have rigorous processes to maintain our high quality standards, but it’s not just a box filling exercise. I spend time every day on the shop floor and look out for what’s going particularly well, because it provides the opportunities I need as a leader to give credit. To inspire your team you need to notice them doing things well and make sure you say, ‘YES, keep doing that!’”

Employees cannot be forced into engagement (whilst their bodies might be present, their hearts may not!) and a management team must build the right environment in order to develop true engagement. Whilst it is undoubtedly difficult and requires a cultural shift in thinking, without passion and commitment your employees are just putting in time.

Jason Tripp is Operations Director at Motorplus.

March 2017

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Interview with Mark Savill and Lisa Beale Modern Claims spoke to Mark Savill and Lisa Beale, who discussed the importance of reputation within the legal sector, as well as how firms could improve their services and make themselves more accessible to the public.

Q

The LSCP Tracker 2016 has revealed reputation is the most important factor in choice of legal services for consumers.

Do you believe customer service or outcomes are more important in establishing reputation?

Mark Savill. Reputation is built on being able to deliver what the customer wants, and not all customers want the same. Some customers will be driven by the overall outcome of their case, and this will take priority over the way the service is delivered, as it is purely result driven. For other customers, the service, and in particular how they work with their legal representative, will be more of a priority, with issues such as speed of settlement or completion of the transaction being more important than the final result.

Lawyers need to listen to their clients and determine their objectives.

Reputation is established by delivering against those objectives.

Lisa Beale. Not all customers want the same service. However, we are all consumers, and being treated as a valued customer is important.

From the outset, it is important to feel listened to. Trust, a good level of communication, inclusion, being kept informed and transparency in the service can help clients gain respect and confidence in the service provider, thus be a great reputation builder.

Q

The report also revealed ‘the public’s levels of trust in lawyers telling the truth have fallen since the 2015 study, where 47% of the public reported that they trusted lawyers to tell the truth’. To what do you attribute this, and what can firms do to improve trust in the public?

MS. The level of mistrust is born out of the lack of transparency within the sector, and the preconceptions that customers have about the service that lawyers provide. Basic information about product, price and service isn’t readily available to the consumer, and they are left concerned about the cost and complexity of the legal solution to any problem they have. Using online information and social media to provide information about the services and products they wish to purchase and the choices they can make is key. Underlying this, a clear guarantee on pricing is really important, so that customers can feel confident that they will not be opened up to further unexpected cost.

LB. A general guide on pricing may be achievable, however for some transactions this may be subjective. Legal services for many is an unknown transaction. It is true that the client is hoping for their desired outcome, but how that is reached can be a complete mystery in some cases. With this lack of understanding, to then be concerned about costs can lead to the client questioning what was involved to warrant the costs. If the client journey was a pleasant experience and they felt they had been kept informed, with explanations provided, including delays, this would be better than

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Reputation is built on being able to deliver what the customer wants, and not all customers want the same Mark Savill no explanation and the need for someone to constantly feel they are chasing their provider for an update on their case.

Q

Are comparison sites mainstream among consumers of legal services, or are they still seen as niche avenues to representation, and how do legal professionals perceive these websites?

MS. Comparison sites are not mainstream in the legal sector. There is no centralised structure to measure quality or product content, which makes comparison difficult for the consumer; they may compare the price of a product but it is often not clear what the consumer is getting for the advertised price. Part of the difficulty here is that the purchase of legal services can be a complex decision, in terms of the factors outside the price that are taken in to account. Often client feedback or recommendation can be more important than price, especially where the price differential may be small or where the value provided by the service is more important than the cost of the service itself. That is where the role of intermediaries can be very influential, whether for insurers, brokers, trade unions or membership organisations.

LB. Comparison sites are not mainstream, however demand is and will continue to grow.

March 2017

FEATURES

We have always valued working with the regulators and going forward this will enhance awareness to our users Lisa Beale Evidence in many other sectors, who themselves doubted and questioned the validity, shows that consumers like to use these.

It is worth remembering that placing barriers in front of clients can cause concern. A site that provides users with access to information without having to register or provide personal information will, as we move on, be more desired, as requesting private data from prospective clients can be understandably offputting. Not to mention, the data could then be sold on and the client wouldn’t be aware of who will be calling them. This removes ‘a more informed choice’ for the client.

For many, freedom of being able to compare offers, transparency, an independent third party view on services provided, an easy to use and understandable service, confidence in those firms offering their previous client experience for prospective clients to read, how clients comment and service are what’s valued.

Pro-active firms will be sought out and rewarded for their transparency and valuing their clients.

Q

The recent CMA report into legal services identified transparency of pricing as a key area of improvement for law firms. How can increased transparency help simplify legal services for consumers and improve their access to them?

MS. The CMA report clearly signposts the need for law firms to publish their prices, and this will give customers greater ability to compare firms. A key issue about transparency is not just publication of a price, but clarity around what the price covers.

Most firms have moved to fixed prices for consumer services, but there is still the potential for confusion as to what that covers, what disbursements are payable and when extra charges will apply. The key is to provide a fixed price that covers those eventualities and to stick to it, and to be clear on any expenses that are also payable.

There is a certain degree of conflict between simplicity and choice. A fixed fee for an employment tribunal for unfair dismissal, which takes the matter through to tribunal, gives the customer certainty, but the question is often: how does the customer want

The CMA report clearly signposts the need for law firms to publish their prices, and this will give customers greater ability to compare firms Mark Savill March 2017

to deal with situations where the claim settles at an earlier point?

Providing a range of fees for different stages for settlement gives more flexibility to the customer but creates a more complex structure that takes more explanation.

The same is true for unbundled services, which is an area that I can see growing. Customers are increasingly looking to do part of the work or preparation themselves. They are computer literate and used to working with self-service applications. At the same time they want the support and guidance of someone on hand, whether that is access to a 24/7 legal helpline, or a lawyer checking the work they have done, such as an online will. Unbundled pricing gives them options on how they can work with a lawyer at different stages of the claim or transaction to reduce the overall cost to them.

LB. Being able to find out through previous clients how and what part of a service a firm played will become increasingly searched for. Feedback will take on many strands as we move forward.

There will be many different avenues opened up, simply by client demand. It will be crucial for firms to open themselves up to new areas of information for prospective clients to search for. One size fits all will most definitely be the norm!

Q

Is it important for organisations such as the Legal Ombudsman and the SRA to make themselves more known among the public, and if so, how could they do this?

MS. It is important for the profession to respond to the issues raised in the CMA report and improve current delivery of legal services and leadership by the regulator is important. Ultimately though, it may be that real change comes from market disruptors who drive change through competition if the regulator doesn’t lead the debate here.

LB. We have always valued working with the regulators and going forward this will enhance awareness to our users. This is important.

Q

How might attitudes towards customer service and reputation differ between firms of varying sizes?

MS. Most law firms would consider that they approach their clients with a focus on the needs of their customer, perhaps more as part of their professionalism than from a perspective of customer service. It isn’t really an issue of size but culture that drives the behaviour of firms and the degree to which they focus on how the service is delivered, rather than simply looking at the outcome. The thing that size brings though, is the ability to invest in technology to help improve accessibility and service delivery.

We have had the benefit of working closely with a number of consumer brands who have a good understanding of customer service, and we have taken a lot from them to apply to our legal

Modern Claims 49

FEATURES

Pro-active firms will be sought out and rewarded for their transparency and valuing their clients Lisa Beale service and improve the way that we deal with customers. This has been an important part of our relationship, and our partners are confident about the experience of their customers after we have been recommended to them.

Even changes around how we handle complaints have helped introduce a cultural shift in our approach. Getting the team to complete root cause analysis for any issues they record, extending their scope to responsibility for measurement of customer satisfaction as well as complaints, and even changing their name to the Customer Services team all provide a totally different focus.

LB. Whether big or small, business to business or business to consumer, diligence, transparency and a level of customer service is sought. It is important to make information for prospective clients as easily accessible and independent as possible. At the end of the day, whether the legal sector likes the idea or not, client demand for a more informed choice will increase. It will not just be about the name of brand, as in years gone by large businesses have failed due to perceived lack of valuing and listening to their clients. Reputation matters for all.

Q

What does Lyons Davidson do to demystify the law for clients to help them understand the services they are purchasing?

MS. An important development has been a project around reviewing the tone of voice of our documents, which has come out of work we have done with our key partners. We have worked hard to review our documentation and to step away from technical language to try to simplify the communication with our clients. A key focus has been to try and reduce the length and volume of documents that we provide, some of which was there to give us comfort that we had covered all eventualities, but which just ended up obscuring the key information the clients needed to understand.

From a pricing point of view, we have focussed on simple fixed fee packages to make legal services more accessible and put in place clear, practical advice about other funding arrangements, such as CFAs, membership benefits or BTE cover.

Mark Savill Mark Savill is Managing Director of national legal business Lyons Davidson Limited. He has led the development and implementation of a number of joint ventures with insurers, creating separate Alternative Business Structures and new business models. As a solicitor, he managed the civil litigation team, and before managing the IT team, implementing its file management process across all workstreams and developing customer facing online applications. He was also a member of the Ministry of Justice Portal change control committee.

Lisa Beale Having originally worked in London for a large global bank, Lisa was responsible for a wide range of financial services. She was then able to use these skills to set up her own mortgage advisory business dealing directly with clients and ensuring they obtained the best possible mortgage deal. This attention to detail and experience of dealing with clients on a one to one basis put Lisa in good stead, and on joining Checkatrade she was placed in charge of pushing the business forward, from a 500 membership base to nearly 7000, before being asked to head up the new and much requested sister site Checkaprofessional.com.

We’ve also worked hard to deliver self-help solutions to customers, to show them how to do certain legal tasks themselves with the online document solutions and unbundled legal services I’ve mentioned earlier, and the support of 24-7 helpline provision to give the confidence with the decisions that they make.

Q

Ten years on, do you believe the Legal Services Act 2007 has been successful in its purpose of improving quality and choice for consumers? How will current and future legislative changes impact access to legal services?

MS. There has been good progress in this area, with new entrants extending the choice that customers have, bringing new ways of working from their business sector and building legal services under brands that customers recognise. This has been incremental though, and we haven’t yet seen any radical changes from a market disrupter. Within the claims sector, the emphasis so far has been around claimant motor services. The proposed reforms to the personal injury process may well be a catalyst for further change across the legal services industry, with businesses introducing innovative solutions for injury claims, an emphasis on diversification in other areas of legal service delivery and the potential for new market entrants as the legal market inevitably consolidates.

Mark Savill is the Managing Director of Lyons Davidson and Lisa Beale is the Head of Checkaprofessional.com.

50 Modern Claims

March 2017

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CASE STUDIES

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E

Based in Ashton-under-Lyne, Greater Darren Gower Manchester, the new start-up handles all aspects of Personal Injury law - from road traffic accidents (RTA), accidents at work and accidents in public and private places, through to product liability claims. The practice boasts an exceptional and personalised service, providing clients with direct access to a team of experienced, senior lawyers.

Key requirements for the new start-up were full lifecycle management for a broad range of claim types, rapid process automation and streamlined volume throughput. In order to accommodate these necessities, Morton Young Solicitors is implementing a full Proclaim Practice Management Software solution, incorporating a comprehensive accounting and financial toolset with an out-of-the-box Personal Injury Case Management solution.

Fee earners at Morton Young Solicitors will benefit from a completely centralised desktop application, ensuring consistency and security throughout the practice, whilst streamlining case progression and ultimately enhancing client service – a vital offering for a new start-up in the competitive injury claims arena.

John McCormick, Director at Morton Young Solicitors, comments: “As a new start-up business, we know how important it is for us to be able to underpin our operations with the best legal software on the market. Having previously worked with Proclaim, my partner and I knew straight away it would be the solution of choice for our practice. For us, Proclaim is the ultimate solution, providing us with unlimited flexibility and scalability, as well as being ‘ready-to-go’ to ensure we hit the ground running.”

For further information, please contact Darren Gower, Marketing Director at Eclipse Legal Systems, part of Capita plc, via darren.gower@eclipselegal. co.uk or call 01274 704100. Alternatively, visit www.eclipselegal.co.uk

10 MINUTES WITH

Michael Ball Q A

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

I started working in the industry over ten years ago. Since then, many changes have occurred, some good, some not so good, but the basics are still the same; we are all dedicated to ensuring the client receives the very best care available.

When I first became involved in the personal injury sector I was very much focussed on third party capture, pre-med offers were in abundance and speed and resolution of the claims were a high priority. Client care was an obvious consideration, but not as we know it today. Having moved on and worked for medical agencies and solicitors, I now have the experience of being able to see the claims cycle from all aspects.

Now I’m working with UKS and we have a brilliant team who can cater for each individual client’s need, offering the very best service in the industry.

Inevitably with some of the changes brings resistance, with the biggest reform being announced only a few weeks ago.

This will dramatically change the way in which clients receive potentially the right treatment, in a timely manner, along with any compensation they are entitled to. Will the industry adapt? I believe it will.

Q A

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

UKS have been at the forefront of client care since it was founded around 14 years ago, proving invaluable to many, many clients over that time. The key positive fact is that rehabilitation, diagnostic and surgical procedures are now an integral part of the client journey, with UKS able to provide the very best service available. Over time it has been proven that the positive impact treatment and aftercare have on a client’s recovery is paramount.

Over time it has been proven that the positive impact treatment and aftercare have on a client’s recovery is paramount

Inevitably with some of the changes brings resistance, with the biggest reform being announced only a few weeks ago. This will dramatically change the way in which clients receive potentially the right treatment, in a timely manner, along with any compensation they are entitled to

Q A

Who inspires you and why?

Many people inspire me on a daily basis. In this industry you see many innovative pieces of technological aids, designed to make lives better. But for me one person stands out. He has the drive, passion and the ability to make you listen and has done for many, many years: Sir David Attenborough. Even at the ripe age he has reached he grips a nation, you instantly recognise his voice, he is leaving a legacy behind him that has inspired many, his knowledge is outstanding, but his passion for what he does is unsurpassed.

Q A

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

The best piece of advice I have received is to “listen” and “watch”; you can learn a lot from simply taking a step back and taking the time to listen to your clients without imposing your company needs and wants. By doing this you not only gain the trust of your client but also build long term business relationships.

Q A

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

I have a passion for Crossfit, a form of functional fitness, along with Aston Martin cars. So if paying the bills wasn’t an issue, I suppose I would pursue one of those passions - maybe both!

Michael Ball is Business Development Manager at UKS Medical Diagnostics.

SAVE THE DATE Doctors Chambers Modern Claims Awards Thursday 27th April 2017 New Dock Hall, Leeds CONTACT Event enquiries | ellie.campbell@charltongrant.co.uk | 01765 600909 Sponsorship enquiries | kate@charltongrant.co.uk | 01765 600909

54 Modern Claims

Month 2017

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