1 Linking the Industry Together May 2013 Issue 01 ISSN Steve White new CEO of BIBA outlines his manifesto priorities for members and underlines his commitment to fighting for fairer, more relevant regulation for insurance brokers. Motor sense: Instead of moaning about the state of the insurance market, a team of claims professionals decided to try and do something about it, as Ant Gould, CII, explains. Modern Claims Magazine May 2013 Issue 01 Charlton Grant Supported by Claimant representatives and insurers are always going to be on opposite sides of the fence. But we can agree to disagree on some issues and put that aside and work together on issues of mutual interest, fraud, for example. James Dalton, ABI Dominic Clayden I don t believe having lawyers in those low value claims adds any real material value the value can be delivered by going directly to the insurer so from an Aviva point of view, let the insurer have the first go at settling it. Association of Regulated Claims Management Companies A CENTURY OF PROFESSIONALISM Sponsored by
2 General Insurer of the Year ALL YOU NEED IS At LV= Broker we support our brokers with a wide range of personal and commercial products. This allows us to build meaningful relationships with our brokers. Relationships that stand the test of time. You ll love LV= Broker! /13 LV= Broker
3 Introduction 03 Welcome to the first issue of In the spirit of change for the claims sector, we are delighted to bring you Modern Claims magazine a unique new publication created by all spheres of the industry, for the industry. Modern Claims features exclusive opinion, indepth interviews and analysis from claimant and defendant lawyers to insurance companies and brokers, expert witnesses, funders, rehabilitation specialists and the creators of effective claims processes. It endeavours to expose the realities of effective claims processing in light of reform and regulation; what the industry / customers / clients and partnerships might be missing or indeed getting right and sharing those stories with the wider sector. I m delighted to welcome you to the first issue packed with new faces and recognisable VIPs who make up our editorial board and author our features. We have been lucky enough to secure exclusive interviews with the ABI, Aviva, the BIBA and the former MASS Chairman and partner of Carpenters for the launch edition and there s more to come. So read on and stay in touch this is your platform for knowledge and analysis exchange. Come, join in the debate and share your understanding of where the claims market is heading, what clients need and how to service expectations under the new legal and regulatory regimes. As well as the bi-monthly publication we have also launched a new website (www.modernclaimsmagazine.co.uk), to be followed by specialist roundtables made up of industry figureheads as well as regular supplements. At a time when the claims industry is currently facing its biggest fear the unknown - make sure you stay in the know and have Modern Claims and its experts to hand. Modern Claims - helping to inform, arm and innovate the industry in a new era... Emma Waddingham, Chief Editor Modern Claims Magazine Issue 1 May 2013 ISSN Project Director Kate McKittrick Accounts Director Karl Mason Chief Editor Emma Waddingham Editorial Department Charlotte Parkinson Head of Events Julia Todd Interview Editor Bippon Vinayak Events Manager Charlotte Parkinson Advertising Rachael Pearson Production Lindsey Thomson-Heley Design Richard Berry Contact t: e: w: Modern Claims Magazine is published by Charlton Grant Ltd 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.
4 04 Contents CONTENTS Intro & THE News 07 Ant talks news Instead of complaining about the state of the insurance market, claims professionals have been trying to do something about it, to put the sense back into motor, as Ant Gould explains The INTERVIEWS 11 Interview with... Steve White, BIBA Steve White tells Emma Waddingham about BIBA s rejuvenated focus through its mandate to help grow the sector and fight for fairer regulation. 15 Interview with... James Dalton, ABI Emma Waddingham speaks to the ABI s Assistant Director, Head of Motor and Liability, about the impact of reform and the need to step up the fight against fraud The Opinions 20 New horizons BIBA 20 Whiplash: where are we now? Craig Budsworth, MASS 21 Improving support for Mesothelioma suffers ABI 21 It s all up in the air Rod Evans, Forum of Insurance Lawyers 23 Cowboys and Indians Alan Nesbit, Association of Regulated Claims Management Companies 24 Collaborative marketing Matthew Waterfield, Simply Lawyers 24 With a push of a button Robert Kelly, Acorn Assessors 25 CMCs: Going back to their roots Jim Toole, First Response Law 25 The balance of rights Peter Parry, Independent Accident Investigations 27 Further intervention Peter Horton, LV= 27 The balancing act Donna Scully, Carpenters 28 Money to be made? Alan Nesbit, Nesbit Law Group 28 Take control of change Rob Smale, Ageas 29 Do you know what diminution is? Emma Bell, Clifford James Editorial Columnists Alan Nesbit Managing Partner Nesbit Law Group & Chairman, ARC Craig Budsworth Chair, MASS & RTA Partner, Glaysiers Jim Toole Operations Director First Response Law Nik Ellis Managing Director Laird Assessors Rob Smale Claims Director Ageas Alan Strange Underwriting Director LAMP Group Limited Darren Gower Head of Marketing Eclipse Legal Services Keith Crosier Managing Engineer Legal & Technical Assessors Peter Horton Chief Operating Officer - GI LV= Rod Evans President FOIL Andy Kirk Director Quartix Andy Whatmough Director S & G Response Ant Gould Director of Faculties Chartered Insurance Institute Anthony Hughes Chief Executive Horwich Farrelly Solicitors Bippon Vinayak Chairman & CEO Doctors Chambers David Brierley Business Development Executive Willis UK Retail David Williams Managing Director, Underwriting AXA Insurance Donna Scully Partner Carpenters Emma Bell Director Clifford James Gary Pomfret Casualty Practice Leader UK, Ireland & Asia Regions XL Group Laurence Waterhouse Associate Director REC Flood Risk Mark Savill Managing Director Lyons Davidson Matthew Waterfield Head of Legal Development Simply Lawyers Michael Davidson Head of Strategy & Sales Goldsmith Williams Solicitors Michael Nixon CEO Inter-est Ltd Peter Parry Managing Director Independent Accident Investigations Raymond Southern Joint Head of Fraud Berrymans Lace Mawer Richard Clark Director Xuber Richard Forth Managing Director Forths Forensic Accountants Robert Kelly Key Account Manager Acorn Assessors Stuart Brown QC Parklane Plowden Tim Wallis Mediator, Solicitor, Director Expedite Resolution Tony Rand Managing Director Kingsley Law Ltd Tony Walton Managing Director Questus
5 Contents Shades of grey Raymond Southern, Berrymans Lace Mawer LLP 31 An intelligence choice Nik Ellis, Laird Assessors 31 The balance of rights Alan Strange, Lamp Group Limited 33 Outsourcing: the future? Michael Davidson, Goldsmith Williams 33 Diverse expertise: the expert conundrum Keith Crosier, Legal & Technical Assessors 34 A new era for motorists? David Williams, AXA Insurance 34 The wait is over...well, almost Gary Pomfret, XL Group 35 Legacy systems and risk Richard Clark, Xuber 35 Wider choice for consumers? Andy Whatmough, S & G Response 36 The time is now for mediation Tim Wallis, Expedite Resolution 36 Getting it right for claimants Richard Forth, Forths Forensic Accountants 37 Consistency is Key Mark Savill, Lyons Davidson 39 Change beyond expectation Michael Nixon, Inter-est Ltd 39 Beyond LASPO and AHSE 6115 Tony Rand, Kingsley Law Ltd 40 Complicating revolution Anthony Hughes, Horwich Farrelly 40 Evolving for efficiency Bippon Vinayak, Doctors Chambers The Features 43 We ll miss the good old days Will we really miss days gone by for legal services and will the clients? Tony Walton visualises a worryingly possible scenario which you ll either love or hate Good relations? LASPO & the Jackson reforms, ABSs and joint ventures between insurance companies and lawyers, have led to a more unique relationship between claimant and defendant legal practitioners, as Anthony Hughes reports 48 Reconsidering the Approach: catastrophic injury claims Stuart Brown QC reminds practitioners to look at how the finances should be used and/or invested in outside the box, to ensure long-term and real benefit for the injured party 50 Interview with...donna Scully, Carpenters Donna Scully, Partner at Carpenters and immediate-past Chairman of the Motor Accident Solicitors Society MASS speaks out about the issues facing the PI claims sector from business planning to further reform in the post LASPO landscape 53 Telematic-based opportunities Telematics technology is fast-becoming mainstream with motorists as insurers recognise the advantages of telematicsbased insurance, as Andy Kirk explains 55 An affinity for quality partnerships The last 12 months have certainly been history in the making for the professional services sector with the advent of ABS. With legal and RDR being the key focus for most of the financial sector, it has been a challenging but interesting time for all professional service stakeholders concerned. Michael Davidson reports. 56 Interview with... Dominic Clayden, Aviva Dominic Clayden, Aviva s Director of Claims, speaks to Bippon Vinayak about controlling costs, fraud, settling fairly and quickly for clients and the effective use of medical reporting agencies. 59 A flood of concern Laurence Waterhouse asks, is the risk from climate change increasing for insurers, developers and property owners? 61 Taking stock: APIL Annual Conference 2013 At a time of fundamental unrest within the claims sector, how will the new President of APIL, Matthew Stockwell, manage to take stock of the industry to face the changes head on? Charlotte Parkinson reports minutes with... Ashton West, Chief Executive of the Motor Insurance Bureau MIB 62 Welcome to the self-service future of law Darren Gower, Eclipse Legal Services
6 ACORN ASSESSORS CONSULTING AUTOMOBILE ENGINEERS
7 Ant Gould talks news 07 Putting the sense back into motor Instead of moaning about the state of the insurance market, a team of claims professionals decided to try and do something about it, as Ant Gould explains. This time last year, eight young insurance claims professionals were tasked by the Chartered Insurance Institute with the challenge of making a difference to their own profession and ultimately to customers. A very broad brief indeed, but perhaps in recognition of the mood at the time they quickly settled on the issue of motor claims as an area ripe for improvement. The group s project idea came from within their own ranks and echoes much of the rhetoric in the market. Indeed, Axa s UK CEO Paul Evans, speaking at a conference last year made a passionate plea to his fellow insurers, to stop trying to shaft each other over issues such as referral fees and credit hire. And it is not only those within the insurance market that see the motor sector as one due for a little help. In the autumn, the Office of Fair Trading took the much mooted step of referring the UK s private motor insurance market to the Competition Commission for further investigation amid concerns that the market is not working well for motorists. It had mooted the move back in May after undertaking a market study which it said provided reasonable grounds for suspecting that the market displays features that prevent, restrict or distort competition. The core statement that has generated many column inches is that it viewed the market as dysfunctional and claimed that insurers are too distracted with lowering costs and pushing up rivals premiums to provide policyholders with quality replacement vehicle services. The Competition Commission is expected to cost 3m to run, take two years to complete and take up a lot of time and energy across the profession. Should the watchdog find that the market is harming competition it also has the powers to impose remedies. The market study provisionally found that the insurers of drivers responsible for an accident appear to have little Members of the CII Claims Faculty New Generation Group who produced the report above Gemma Glasspool Cert CII, Zurich Claire Holland ACII, Ecclesiastical Edward Frost, Axa Insurance Richard Codd - Crawford & Co Catherine Spencer, Allianz Lee Watts ACII, QBE Laura Terry ACII, Brit Stuart Floyd Cert CII, Direct Line Gropu New Generation Claims Group members Graham Stait. ACII, Allianz Jenny Neale ACII, Ecclesiastical David Clements Dip CII, Zurich Nigel Fryer ACII, NFU Mutual Martin Kilshaw,Cert CII, Axa Helen Taylor ACII, RSA William Talbot Dip CII, Crawford Ryan Spies Dip CII, Direct Line Neiha Chohan Dip CII.Atrium Underwriters control over the way repairs and replacement vehicles are provided to the not-at-fault driver. This might enable the insurers of not-at-fault drivers, and others such as insurance brokers, credit hire organisations and repairers, to engage in practices which appear to result in the cost of replacement vehicles and vehicle repairs provided to not-at-fault drivers being higher than they might otherwise be. An OFT statement read: Having considered the responses submitted during a public consultation process, the OFT continues to hold the view that a market investigation reference to the Competition Commission is warranted. OFT chief executive Clive Maxwell said: Competition appears not to be working effectively in the private motor insurance market. The insurers of at-fault drivers appear to have little control over the bills they must pay, and this may be leading to higher costs for them and ultimately higher premiums for motorists. Having publicly consulted on our provisional decision, we
8 08 Ant Gould talks news are still of the view that there is no quick fix to these problems, and that a more in-depth investigation by the Competition Commission is therefore appropriate. It is against this background that the CII Claims Faculty New Generation Group launched their thought-leadership report which proposes a new way of approaching motor third party damage claims. At the core of the report is a challenge to insurers to sign up to a new process that promises a shift in motor claims best practice. The group s original investigations found, not surprisingly, that the speed of claims resolution in TPD claims, from a customer perspective, can be overly-lengthy. This was based on the group examining almost 17,000 samples of open stock data which showed a settlement peak of days regardless of the value of the claim. Equally, the group claims that the absence of an effective inter-insurer network contributes to huge losses in the industry and that disagreement about liability in motor accident damage settlements is leading to arguably unnecessary litigation in 20 per cent of cases costing in excess of 280m per year, which could be removed if the need for legal support is avoided. To tackle the challenges, the New Generation Claims Group s mission statement encourages the industry to sign up to a new blueprint for how TPD claims are handled. To create a simpler, fairer and more transparent process, the group is urging insurers to: 1. Change behaviour in favour of collaboration in achieving a quicker resolution of motor claims. 2. Adopt a protocol that resolves liability disputes and achieves a definitive customer outcome within 72 days 3. Follow a process that offers a realistic chance to resolve a claim at each stage without further delay. That process involves: i. Assessment: insurers reimburse costs where liability is accepted after a maximum of 15 calendar days. ii. Negotiation: where liability remains in dispute, a maximum of 36 days for insurers to prepare a case, exchange documents and reach a conclusion if liability is agreed. iii. Adjudication: if liability is still disputed, the use of pendulum adjudication in which an arbitrator decides which party has the most reasonable position provides the best option for settlement, with costs shared by each party involved. The CII New Generation programme The insurance profession, and with any profession, is only as good as the quality of the young talent coming through and it was with this in mind that the CII set up a New Generation programme across its faculties covering claims, underwriting, insurance broking and the London Market. The year long programme takes a handful of insurance practitioners, nominated by their line managers, and brings them together to consider and develop new and innovative ways to improve their sector. In addition to their project work they also provide unique access to Westminster and the FSA. The CII is the world s leading professional organisation for insurance and financial services. Its more than 108,000 members are committed to maintaining the highest standards of technical competence and ethical conduct. A robust framework of learning and development solutions enables the CII to support corporate partners and individuals across the industry. It ensures that all members comply with minimum standards and inspires many more to achieve advanced levels of technical and professional competence. What do you think next year s CII Claims Faculty New Generation Group should look at for their project? suggestions for their consideration to me at The NGCG report lays down a need for all participating insurers to believe they each stand to gain equal benefit from the process and adhere to clear and strict mandatory requirements rather than guidelines to create a culture whereby all parties work together to improve the claims experience. While the pre-action protocols set out following Lord Woolf s 1996 Access to Justice Report were considered effective in helping to each party to understand the other s position and enabling resolution through Alternative Dispute Resolution ADR rather than resorting to litigation, it was felt they did not go far enough and were not prescriptive enough for non-injury claims. There is hesitancy for motor claims insurers to work co-operatively due to today s increasingly price-driven marketplace and naturally not wishing to break competition law even more so now in the light of the decision for the Competition Commission to investigate the private motor insurance market. Yet, perhaps ironically, it is fierce competition that has driven insurers apart and created unnecessary adversarial activity in some cases to customers detriment. Co-operation, or collaboration between insurers, in this case is not about collusion but the application of common sense removing unnecessary attrition for the benefit of customers. The New Generation Claims Group s work should act as a timely call to action for a part of the market that touches so many people s lives. The suggested protocol may not be the perfect answer, but the recommendation of a step-by-step change, with improved inter-insurer relationships at the heart of it, is one the industry needs to take seriously both for its sake and, more importantly, the benefit of customers. Ant Gould is director of faculties at the Chartered Insurance Institute The full report is available at the CII s website: claims/articles/claims-faculty-newgeneration-group-2012-project/22166
9 XL Group Insurance Properties, transport, energy, art, manufacturing, insurance, aerospace, contracts or people. Whatever your world is made of, we re here to help your business move forward. MAKE YOUR WORLD GO xlgroup.com and MAKE YOUR WORLD GO are trademarks of XL Group plc companies
10 NO.1 IN MEDIC0 LEGAL CHALLENGES ARE HERE WE RE READY, ARE YOU? MOJ CHANGES LASPO REFERRAL FEE BAN
11 BIBA 11 Interview with... Steve White, BIBA Steve White has had little time to recline into his incumbency since becoming the new CEO for BIBA (British Insurance Brokers Association). He spoke to Emma Waddingham about BIBA s rejuvenated focus through its mandate to help grow the sector and fight for fairer regulation in the UK and Europe. Q What is the key focus for BIBA and its members in the modern claims arena? A 2013 is an important year for UK growth and our members have a part to play. We have published a new manifesto 1 that underlines the key campaign issues for BIBA going forward to help members address what we call the growth challenge. Stand-out campaigns will revolve around the consumer (brokers sell 50% of general insurance in the UK market), to ensure that we are regulated fairly and effectively and to ensure members help customers to manage risk and underinsurance ensuring business continuity and economic growth. There are also issues of sector continuity for the Broker industry. There are a number of mergers expected or happening as members (insurance brokers are mainly made up of small-medium sized firms) come towards the end of their career and are looking to sell their business on. These are all issues to be raised in the forthcoming BIBA conference 2 Meeting the Growth Challenge to ensure members have the tools and information to help compete at the same level. Q Why the need for fairer regulation? A Insurers play a significant role directly and indirectly in the UK economy around 1% UK GDP (which is comparative to agriculture in the UK). Yet this isn t reflected in terms of how the sector is regulated. We have been shoe-horned into another sector s regulatory process (the FSA) and the UK insurance brokers regulatory costs are the highest in Europe [regulatory costs as a proportion of general insurance intermediation revenue is 3% for the UK broker sector]. It s not proportionate for such a low-risk sector. Insurance brokers want to be regulated to keep the cowboys out of the industry and protect consumers - and we realise we have to pay for that protection but the year-on-year rise in regulation cost needs to be tackled. BIBA wants a regulator that is strong while at the same time ensuring an appropriate, proportionate and cost-effective approach to regulation which recognises the low risk but important nature of general insurance brokers who do not carry insurance risk. We have a great opportunity for change with the Financial Conduct Authority (FCA) replacing the FSA and our campaigns will ensure the right, not light solution. Martin Wheatley, the new CEO of the FCA will be on stage at the BIBA conference and interviewed by Nick Robinson - proving an opportunity for BIBA members to challenge him on what the regulator will do. 1. See page 20 for details of the latest BIBA Manifesto. 2. The Annual BIBA Conference (15-16 May 2013) will be covered in the next issue of Modern Claims. Steve White Cert CII, CEO, BIBA Steve has spent over 35 years in the insurance industry, working for the Guardian Royal Exchange Group, the General Insurance Standards Council and the Financial Services Authority. Steve joined BIBA in March 2004, bringing the experience, knowledge and enthusiasm which has significantly benefited both the Association and its members. He has a detailed understanding of the application of FSA rules to insurance intermediaries and is a source of informed opinion on regulatory and compliance issues. He was appointed CEO in May Steve sits on the Directors Committee of BIPAR (the European Federation of Insurance Intermediaries) and also on the Ministry of Justice s Claims Management Regulatory Consultative Group. In 2010 he was awarded the Compliance Personality of the Year award at the prestigious Complinet Compliance Awards.
12 12 BIBA Q How will the BIBA operate under your guidance? A We have a mandate aim to create a first class insurance broker sector and the leading UK general insurance trade association for members, customers and insurer clients. This means working more closely with members, to build data and segment membership more appropriately so we can build a better picture of the market and members needs. We are going to focus on resonating as one voice, resourcing for the executive team, commercial activities and a new principlesbased code of conduct to help increase customer confidence; especially in terms of communicating the value brokers bring to customers in the claims stage. Ultimately we get claims paid for customers that might not otherwise be settled valuable evidence of our commitments and benefit to customers, reflected in our recent member research: Insurance brokers adding value in the claims process (see below for research highlights). With this in mind I d like to call on members to get involved and add to the debate and call for evidence especially through the local committees - to help BIBA be the best it can be for its members and the industry. Steve White, BIBA Modern Claims asked Steve Foulsham, Head of Technical at the BIBA, about the impact of reform and business management change on insurers and insurance brokers in the claims sector. QDo you envisage a number of insurers looking to ABS models (either alone or as a Joint Venture) to overcome the shortfall in claims post-laspo? A Inevitably, some will, as will some brokers. QWhy haven t we seen many to date? AThere could be a number of reasons for this. Some may be taking a wait and see view at present, and some solicitors have failed financially, so it may not be so lucrative a business model as perhaps envisaged. It may also not be as flexible as the present system where the most suitable solicitor can be appointed for the case in question. Insurers have made the investment of setting up or taking over firms of solicitors incorporating greatly reduced fees, but arguably, this could reduce the quality as the lowest cost or next in line appointment may not necessarily provide the sufficient expertise required in the particular case. Some would argue that insurers should have sufficient skills in their claims areas to make a solicitor unnecessary other than to fulfil the protected areas and to provide access to a QC (although direct access to barristers is now allowed). QIs legal services outsourcing a more effective, efficient model for insurers? AYes, at the moment although one could envisage a set up similar to the personal debt firms setting up individual voluntary arrangements (IVAs) where there is one insolvency practitioner and hundreds of staff filling in the forms etc. You could have one qualified solicitor and lots of clerks who handle it on a call service basis and using a tick box form, gather the information which generates a standard letter. Insurers have reduced and/or deskilled claims departments so it is easier to pass work out to solicitors. QWhat would insurer ABSs mean for consumer choice? AFor most consumers, very little. The ABSs formed so far have been mainly for areas such as conveyancing and probate. Insurers would set them up only for litigation work and few consumers get involved in litigation (other than whiplash). Currently, where they do, and it is paid by the insurer, the insurer will nominate which solicitor shall be appointed, so there is not much choice at present. That is not necessarily a bad thing - if the insurer has done its job well, then the solicitor will be experienced in litigation work. If the consumer made the choice, he might choose the firm that did his conveyancing work and who rarely does anything else. QWhat would ABSs mean for the insurance broker market? the demise of referral fees, AWith probably very little. As with insurers, brokers would have to judge how good the insurer plus the ABS is, compared to another insurer plus panel solicitor. QWill reform in Employers Liability (in the Enterprise Bill) have a significant impact to the insurance and insurance brokering market in England and Wales? ADoubtful. At present, breach of statutory duty can give you an automatic right to compensation for the injury suffered. So if you fail to guard a machine and the operator has his fingers chopped off, he does not have to prove negligence to claim damages. It would seem in future given the same scenario; the operator would have to show the lack of guarding was the cause of his injury and the employer owed a duty of care and had failed negligently in not fulfilling that duty. The present basis is that the guarding should be sufficient to prevent the operator getting his fingers trapped, so there could be some cases where the guarding does not achieve this, but in future a court could rule that the guarding was reasonable and the operator had acted unreasonably. This might provide small savings for insurers, but offset by increased legal fees as the claimant has more to prove. QWhat is the biggest challenge for BIBA and its members this year in the claims industry? AEnsuring prompt and fair settlement of claims. QWhat is your key campaign for reform / management etc with regard to the claims insurance market? AOur manifesto includes a call to reduce the number and cost of whiplash claims and more appropriate regulation of claims management companies. In addition we would like to see more openness on claims reporting, including publishing of results. Steve Foulsham, BIBA
13 BIBA 13 BIBA member research: Insurance brokers adding value in the claims process The BIBA polled members across the UK about claims activity, insurer behaviour and award settlements. It published its findings in January 2013, with the key responses below: 89% of broker respondents believe that insurers are becoming stricter on paying claims. 77% believe this is because of the economic climate 56% said this is because of fraud Other examples include insurer reduced investment income and claims inflation 64% of broker respondents have had to fight harder on behalf of clients to get full settlement on claims during the economic crisis. In the last year 72% said they had overturned a claim rejection by an insurer. 43% said the average percentage uplift on a claim payment that they regularly negotiate on behalf of a client is between 11-20% 42% said up to 10% 8% said between 21% and 30%. In the last year 69% of brokers have secured an increased payment for a claim on behalf of a client following an initial lower offer. 53% said this was occasionally 16% said that this was often. For those that secured an increased payment for a claim on behalf of a client following an initial lower offer: 46% said that the uplift was between 0 10% 26% said between 11-20% 14% said between 21%-30% 5% said between 51% and 60% Note: Where percentages total more than 100%, brokers were able to select more than one option in their response. AccidentM anagem ent.sim ply.effectively. It isonlyw henyou have a headache that not-having-a-headache has such a very high value Claim shandling Replacem entvehicles Vehicle Repairs When an accident is not your fault, S&G Response will provide you with immediate assistance and support. Every claim is personally managed by one of our experienced and friendly operators ensuring a dedicated service. You will be provided with direct dial telephone numbers and direct , coupled with online tracking of your case and SMS updates. Your piece of mind is our priority. We will contact and manage all the parties involved in the process including the other driver and the insurance companies. We will be able to assist you with: Vehicle repairs (you will not have to pay your insurance policy excess and your No Claims Bonus will be unaffected) A like-for-like replacement vehicle Loss of earnings Out of pocket expenses CLAIMS INNOVATION AWARDS 2012 WINNER S&G Response St. Ann s House, Parsonage Green Wilmslow, Cheshire SK9 1HG Tel: Fax: Web: Authorised by the Ministry of Justice in respect of Regulated Claims Management Activities CRM S&G:A straightforw ard solution to m otoring problem s deliveredw ithsim plicity.
15 ABI Interview 15 Interview with... James Dalton Association of British Insurers Emma Waddingham speaks to the ABI s Assistant Director, Head of Motor and Liability, on the impact of reform for its insurer members and the need to step up the fight against fraud, collaboratively. Q Do ABSs and the rise of insurer partnerships or BPOs especially for non-fault claims increase consumer choice? Do they also mean that insurers are looking to expand into other lines of legal work? A ABSs enable non-legal capital to enter the legal service market through non-traditional legal service providers. A number of insurance firms in the market are considering opportunities to help them manage their claims. Their priority will, I am sure, to be to ensure that customers receive a good service, including access to a choice of legal services. Insurance companies aren t charities so if the business case stacks up and supports the bottom line, then we may see some such arrangements coming through the system. I think the ban on referral fees is a red herring when thinking about insurers possible entrance into the ABS market. And in any event, the Solicitors Regulation Authority which must approve any ABS has been very clear that they will not approve arrangements designed to get around the referral fee ban. The question that needs to be asked is; would the business case stack up for insurers in the context of the recent reductions in RTA fixed fees?. We have long argued that a 1200 fixed fee is too high in the context of referral fees being banned. But with fixed fees at 500, insurers will need to do the sums on whether an ABS model is right for their customers and their bottom line. Q What about the RTA portal are there any lessons learned from its introduction that can be extended to the forthcoming expansion horizontally and vertically later this year? A We got off to a shaky start. Both claimants and defendant solicitors have learned to work within the system. The Board has also addressed some of the The insurance sector has made a very public commitment to ensure that any savings will be passed onto consumers. In the last quarter of 2012, car insurance premiums were reduced in anticipation of savings against low-value RTA claims. But this is a highly competitive market James Dalton, Assistant Director, Head of Motor and Liability, ABI James is an Assistant Director and Head of Motor and Liability insurance in the General Insurance Directorate. James leads the ABI s work on improving the personal injury compensation system; tackling uninsured driving; and addressing and improving road safety, especially for young drivers. James also has responsibility at the ABI for the establishment of the Employer s Liability Tracing Office ELTO and improving the compensation process for those with occupational diseases. Prior to joining the ABI, James was a Senior Adviser at the New Zealand Ministry of Economic Development where he co-ordinated a review of New Zealand s standards and conformance infrastructure, undertook international trade negotiations and acted as Private Secretary to the New Zealand Minister of Commerce.
16 16 ABI Interview Really, claimant solicitors should have???? been adapting their business models to ensure they can meet the challenges of LASPO...and continue to provide high quality legal advice, rather than engaging in a frantic last minute fee grab behavioural changes that arose in the early days of managing claims through the portal and it has done a good job in doing so. After the forthcoming expansion both horizontally and vertically, the Board will, I am sure, address any new behaviour issues by solicitors or insurers to ensure the Portal does what it was intended to do. The Government has looked carefully at fixed fees in RTA and ELPL. It decided to extend and reduce fixed fees to avoid any behavioural changes that came into play when the Portal first came into existence but you can t tell what lawyers will do until the new system starts but the Portal Board will consider and address any new problems that emerge. Q Do you envisage any problems in the claims system due to the sheer scale of claims that have been processed prior to the 1 April 2013 deadline before Jackson and LASPO reforms kicked in? A Anecdotal evidence suggests claimant solicitors have tried to ensure a maximum number of claims were filed pre April 1 st deadline and certainly before the reduced fee levels start at the beginning of May. But we ll only know when these are worked through the system. A large number of claims are being managed through the portal and I m sure things will settle down in time. Really, claimant solicitors should have been adapting their business models to ensure they can meet the challenges of LASPO, which became law last year, and continue to provide high quality legal advice, rather than engaging in a frantic last minute fee grab. What they did was try to get as many claims processed on the higher fixed fee model. However those firms that are robust enough to do well post LASPO will. Insurers have been adapting to the post-laspo environment about reform as well. A lot of work has been undertaken in insurance firms to ensure they meet the rules and respond to claimant law firms as quickly as possible to keep costs and delays to a minimum. One of the most perverse behaviours to transpire after the launch of the RTA Portal was claims dropping out. Now, those that drop out are also subject to a fixed fee, curbing this behaviour and ensuring the process should work as smoothly as it can. Q When will LASPO and the Portal expansion offer the purported lower policy premiums to consumers? A The insurance sector has made a very public commitment to ensure that any savings will be passed onto consumers. In the last quarter of 2012, car insurance premiums did reduce in anticipation of savings against low-value RTA claims. And this is a highly competitive market. Insurers can do one of two things: keep the savings, break the commitment they made and potentially lose market share or simply pass the savings onto the consumer. They will be forced to do the latter due to the highly competitive insurance market. The insurance industry spends almost 10billion per year on RTA claims. The reduced legal fees are a small but significant part of that. And they need to be seen in the context of a 10% increase in general damages in the latest Judicial College Guidelines and a further 10% increase in general damages following the Court of Appeal s guidance in Simmons so there are other elements of the system which need to be addressed. It s simply inconceivable that there are 1500 genuine and legitimate whiplash injuries occurring every day in the UK. This needs to be addressed as does the ways in which the medico-legal system encourages and facilitates whiplash claims Q What are the biggest issues for the ABI and its members this year, regarding the claims sector? A There are two key areas of focus. Firstly on personal injury claims, especially whiplash. We have recently submitted a response to the Transport Select Committee Inquiry on whiplash to explore the contributing factors that have given rise to the compensation culture, costs issues and fraud. Fraud and exaggerated claims are key concerns when thinking about whiplash. Insurers spend over 2billion per year paying whiplash claims. It s simply inconceivable that there are 1500 genuine and legitimate whiplash injuries occurring every day in the UK. This needs to be addressed as does the ways in which the medico-legal system encourages and facilitates whiplash claims. There is also a need for a public policy debate about whether low speed shunts in supermarket car parks (for example) should attract the current levels of compensation awarded to the non-fault driver. This is a debate society needs to have as the cost of damages and fraudulent claims are passed onto those honest customers paying car insurance premiums. The insurance industry has, and always will, pay legitimate, honest claims as soon as possible. Claimant lawyers make money from whiplash claims and they should do, they are businesses. They aren t in business for purely altruistic reasons but it honest customers are tired of paying the price of lawyers pushing exaggerated whiplash claims through the system. That is why we also support the Government s recent consultation on medico-legal evidence and the independence of those providing that evidence. For our part, the ABI has invested significantly into tackling fraud and are working closely with both claimant lawyers and others to share information to reduce fraudulent claims. And the ABI continues to work with the DVLA to ensure that the driver record information provided to insurers corresponds with that given to the DVLA at point the customer buys insurance. By working with the Police,
17 ABI Interview 17 we have also tackling the number of crash-for-cash scams. Q And secondly? A Secondly, the ABI is involved in the Competition Commission examination of the private motor market; there needs to be a conversation about the cost of credit hire and the cost of credit repair market. The Commission is considering how those markets operate in what us a largely unregulated supply chain which adds unnecessary cost onto claims. Excessive credit hire and repair activities are part of the unnecessary claims spend and it needs to be addressed. We should look at the systems used by other EU countries where customers often choose not to take the replacement vehicle on offer. In the UK there are huge incentives for the customer to take a hire vehicle which is often a far more expensive model than the car being repaired. Why wouldn t you take a new model BMW if your VW polo is in the garage? Q Will the claimant / defendant divide diminish or shrink post LASPO and Jackson as they forge new ways of working within the system? A Claimant representatives and insurers are always going to be on opposite sides of the fence. But we can agree to disagree on some issues and put that aside and work together on issues of mutual interest, fraud, for example. We are in conversations with the claimant legal community to share data. Claimant lawyers don t wish to represent fraudulent claimants and insurance companies don t want to pay a fraudulent claim. We hope that by continuing our discussions we can get to a point that works for both of our sectors. James Dalton, ABI Claimant representatives and insurers are always going to be on opposite sides of the fence. But we can agree to disagree on some issues and put that aside and work together on issues of mutual interest, fraud, for example
18 Northern Base National Presence The largest, specialist Civil Law set on the North-Eastern Circuit We provide a nationwide service to all of our clients and present a first class service at all levels of advocacy and advisory work. With over 80 barristers practicing across 8 core practice areas, we have been consistently recognised as a leading set by Chambers & Partners and the Legal 500. Personal Injury & Fatal Accidents Family Law Chancery & Commercial Employment Law Insurance Clinical Negligence & Healthcare Court of Protection & Community Care Litigation Funding Costs...the undisputed heavyweight of personal injury work on the North Eastern circuit... has no challenger in terms of the depth and breadth of expertise of its members... its dominance looks set to continue. Chambers and Partners 2013 For more information of how we can cater for your legal needs and budget, please contact our senior clerks Michael Stubbs or Andy Gray on or Follow us on Leeds 19 Westgate, Leeds, LS1 2RD Fax: DX: Leeds Park Square Newcastle upon Tyne 4-8 Lombard Street, Newcastle upon Tyne, NE1 3AE Fax: DX: Newcastle Web:
19 The Opinions The OPINIONS
20 20 The Opinions A manifesto for growth As Steve White (pictured) takes over as CEO of the British Insurance Brokers Association (BIBA), the general insurance market has taken stock on its mandate to boost the sector and add value particularly in light of its members role in the claims process. Its members include large and small businesses which want to cooperate with government to help the wider economy with new innovations and growth. BIBA has stated its commitment to working with the Government and other stakeholders on solutions in areas such as flooding, motor insurance premiums, the Employers Liability Tracing Office, the Equality Act and signposting, underinsurance, business resilience and continuity. A key part of the Manifesto also outlines its commitment to customers in the following way, directly linked to the claims industry: Better insurance law: BIBA supports changes to insurance law from the Law Commission that ensures better clarity for consumers and businesses, and a competitive and fair legal framework for the insurance industry. Lowering the cost of motor insurance: According to BIBA, motor insurance costs are too high and it wants to see them reduced. The BIBA eight point plan to reduce costs includes tackling fraudulent claims, excessive claims management costs, application fraud and helping young drivers. Improving the insurance experience for customers: Among its aims here is to facilitate a solution for the future of flood insurance and will help to raise awareness and improve understanding of the consequences of underinsurance. The BIBA campaigning issues for 2013 are: Meeting customers needs 1. Promoting access to suitable insurance protection 2. Mitigating the impact of floods and major catastrophes 3. Reducing the cost of motor insurance 4. Helping customer compensation (Employers liability) 5. Reform of insurance law Managing risks and supporting jobs and growth 6. Guarding against underinsurance 7. Tackling fraud 8. Promoting business continuity 9. Developing careers in the broking industry 10. Promoting international competitiveness 11. Developing the insurance industry Promoting fairer regulation 12. Regulation by the new Financial Conduct Authority (FCA) 13. Threshold condition four adequate resources 14. The protection of client money 15. Revision of the EU Insurance Mediation Directive (IMD) 16. Financial Services Compensation Scheme (FSCS) Reform Whiplash: where are we now? For months last year the industry was on tenterhooks waiting for the Ministry of Justice consultation on reforms to the whiplash claims system. At the time of writing, we are now in a similar position only this year we are dealing with the massive changes brought about by LASPO; and now waiting to see if the small claims limit will increase. What MASS would like to see Fraud undoubtedly exists in the whiplash claims process and the whole industry needs to work together to address this. We must put aside our differences and focus on finding the appropriate answers. MASS are talking to the ABI about sharing fraud intelligence and hope to hear from them soon. As a first step MASS members would like to see: More forums in which the industry is able to discuss its problems holistically and the possible solutions, and; A system where no damages are awarded without a medical and we look forward to hearing more from the Government on expert medical panels and whether or not they should be introduced and if so under what guise. However, we are deeply concerned about the government s proposal to raise the small claims limit from 1,000 to 5,000. This will reduce access to independent legal advice and force motor accident victims to navigate their way through the complex process of bringing a small claim. The Government must remember that implementing the referral fee ban and the Jackson reforms in April 2013 has fundamentally changed how the industry operates. We should let this reform bed in before rushing into further change and reform. If ABI numbers are correct, then 93% whiplash claims are valid. Any further changes made to the justice system need to be carefully thought through to protect genuine accident victims access to justice. We must be sure we develop sensible, proportionate solutions. MASS have captured a package of simple reforms in the MASS Motor Claims Code that could address these problems and we urge everyone in the industry to give us their support. Craig Budsworth, Chair, MASS Motor Accident Solicitors Society and RTA Partner, Glaysiers