Briefing: UK needs system that ‘fully incentivises’ ADR

By Editor Katie Scott

Following the launch of the Ministry of Justice (MoJ) and Motor Insurers’ Bureau’s Official Injury Claim (OIC) portal in May this year, one remaining bone of contention for many industry commentators has been the fact that alternative dispute resolution (ADR) remains outside the portal’s functionality.

Although the portal was initially designed in a pre-pandemic era, we cannot ignore the fact that the tool finally came to fruition when the UK had been ravaged by Covid-19, meaning policyholder behaviours and the context around submitting claims is now different – and already requires new thinking.

For example, court backlogs have escalated dramatically since the onset of the pandemic, as the judiciary juggled with moving to digital processes and video technology.

According to the MoJ’s Civil Justice Statistics Quarterly: April to June 2021 findings, published in September 2021, the mean time from when a claim is made up until it is heard at court continues to increase – even when compared to the first peaks of the pandemic in 2020.

The report said: “The mean time taken for small claims and multi/fast track claims to go to trial was 49.2 weeks and 71.1 weeks - 12.6 weeks longer and 12 weeks longer than the same period in 2019 respectively.

“These measures were also 7.5 weeks and 9.7 weeks longer for the same quarter in 2020 respectively.”

Graham Pulford, chief executive of Handl Group, told me that the court system is “falling to its knees”, therefore ADR must be more broadly introduced to help claims get settled faster and reduce some of these horrendous waiting times.

He said: “You see the backlog in the court system at the moment and the problem is it’s actually getting worse – it’s not getting better. We’ve reopened the courts now, but now they can’t process the current work and the backlogs, so they’ve now got to open up further courts to actually get through that.

“My view is that the whole legal fraternity has to deal with it via ADR of some form because otherwise, no one’s going to get anywhere quickly and the person that gets affected most is the claimant. It’s the person stuck in the middle of it, waiting a year for their money. At the end of the day, that’s no good for anybody.”

He added that although more insurers are getting on board with ADR, claimant law firms still need to fully buy in to the model. Pulford argued that ADR provides an ideal solution to ensuring that cases are not “tied up for nine, 10 months”, which in turn saves operational costs for all participants.

“It’s the ideal model to move forward to because it’s open, it’s transparent, everybody knows where they’re up to and insurers don’t mind paying claims per se, as long as they don’t think they’re being hoodwinked. And if they don’t and it’s all open book, that’s how it should be,” he said.

Incentivising early settlements

Sir Bob Neil, chairman of the Justice Select Committee and member of parliament for Bromley and Chislehurst, feels that the UK government missed an opportunity when it failed to include ADR in the OIC portal as part of its Civil Liability Act reform.

Speaking at an event hosted by the Association of Consumer Support Organisations (ACSO) and Kuro Health at the Palace of Westminster this month, Neil explained that ADR should be “the first starting point”, while progressing a claim in court should be a measure of last resort, saved for complex cases.

He said: “It does seem to me that the whole future of the way we’ve got to do civil litigation is where a form of mediation is the norm, is the first starting point and then you only [enter] the traditional format of court hearings if mediation fails.

“At the end of the day, it is just economic and mediation is much more likely to incentivise early settlement. Most people will take a bit of a discount for a price settled. But we don’t have a system that fully incentivises that yet.

“Investment in that will make absolute sense. And then let’s save that Rolls-Royce machine for the really difficult, intractable cases that do need to be heard in front of a High Court judge.”

Online options

Yes, ADR can work to reduce court backlogs and delays, but it can also play into consumers’ increased appetite for digital and self-serve solutions, which has come on in leaps and bounds since Covid-19 and the reduction in face-to-face interactions.

For example, in June 2021, claims resolution platform Nuvalaw launched to the wider UK insurance market following successful pilots with household names in the personal injury and motor claims arena.

Its cloud-based platform, developed in partnership with mediation service Trust Arbitration, provides an electronic claims resolution functionality for insurers, claimant law firms and third party administrators dealing in personal injury or stage three motor claims.

The platform has a heavy focus on ADR, in part to “to fill the void” left by OIC portal, explained Nuvalaw chief executive Willie Pienaar. This is “definitely where Nuvalaw wants to play or will play”, he told me at the time.

It feels as though ADR could be an incredibly valid and timely solution to tackling court delays, minimising costs and improving customer experience and trust – it’s time for the insurance sector to get on the same page here and put our heads together to really innovate and collaborate in this arena.