The Jackson Report - insurance industry myths and the reality for employers Tom Jones Head of Policy & Public Affairs Thompsons Solicitors
Background to Jackson Jackson Review of Civil Costs ordered in 2008 by the Master of the Rolls. Why? Years of insurance industry lobbying about disproportionate legal costs and a socalled compensation culture in the UK.
What is disproportionate? Reasonable and necessary. Right to challenge. Behaviour of the parties.
Compensation Culture? Better Regulation Task Force Routes to Redress said the compensation culture is a myth. (2004) Successive Datamonitor reports show non-rta PI claims falling. What makes people claim? Have a go? Greater knowledge? Less subservience? Or USA/ Daily Mail Armageddon?
The ABI agenda Asbestos. Premium chase to the bottom e.g. Independent. The crisis in EL and the death of the ELCI pilot (2004/2005). Compensation culture, claims farmers and the Compensation Act 2006.
The ABI agenda (2) Care and compensation ABI propose no legal representation for claims up to 25,000 and increasing small claims limit to 5,000 (2005). Frontier Economics report for ABI: injured people are better off unrepresented (2006). Our analysis showed the report was statistically flawed and did not compare like with like.
Government response to ABI and Judicial pressure DCA responds to ABI lobby with consultation: Case track limits and the claims process for personal injury claims (2007) MoJ proposes new claims process for RTAs but not EL claims (2008).
ABI response to RTA changes Frustration and continuing calls for across the board reform, before the new claims process even implemented. ABI continues to make claims about legal costs which it cannot substantiate. Jackson: In some areas of civil litigation costs are disproportionate and impede access to justice (Foreword, 2010).
Claimant lawyers position The current system isn t perfect. It takes two to tango. Defendant insurers often responsible for disproportionate costs. There are rules to push cases along.
Claimant lawyers position (2) There is a mechanism to challenge costs. No excuse that more economic to settle. Insurers can pass costs on to employers through premium increases but real cost or profit chasing?
Insurers win with Jackson With Jackson, insurers will be laughing all the way to the bank. There will be fewer claims and less to pay in costs. One insurer says EL premiums will still have to rise!
Jackson s key proposals Lawyers can deduct success fees from claimant compensation (up to 25%). Increased compensation for pain and suffering by 10% to offset deductions from damages.
Jackson s key proposals (2) After the Event insurance no longer recoverable = claimants can t insure against risk of losing. No cover available for disbursements = claimants have to pay up front. Losing defendants no longer have to pay for costs incurred by claimant lawyers investigating and pursuing cases. Claimant lawyers costs fixed.
Jackson s impact on claimants A 10% increase is no where near enough to replace what will be lost and is way behind what the Law Commission recommended years ago. Claimants will lose up to half their damages. Claimants access to justice will be reduced. Is the research robust?
Is Jackson good for employers? It appears to be but it will: Prevent individuals not in trade unions (most people) from funding litigation against an employer who injured them: a good thing for society/ industrial relations? Enable employers (because of fixed costs) to work out the cost of an injury and calculate if it s worth paying to cut health & safety corners.
Is Jackson good for employers? (2) Stop solicitors pursuing borderline cases. What is borderline test/landmark? What if asbestos, welders lung, deafness and other key landmark legal cases had not been taken?
Is Jackson good for health & safety? Is good health and safety good for employers? Will insurer s drive for greater profits undermine strategies for reducing workplace accidents? What is the impact of reduced access to justice for victims of poor health and safety practices?
Working together Employers and trade unions do work together to reduce workplace accidents. Can employers and trade unions now stand up to insurance industry spins on costs and premiums?
EL Premium increases Employers pay. Insurers give no hard evidence as to why EL premiums go up. An increase despite the massive savings Jackson represents?
What can employers do? Employers can together demand their insurers behave in court cases to keep costs down. Insurers to follow court rules and reach early settlements where claims are undeniable? Premiums linked to a good health and safety record?