Can a transplant heal our claims system?

Last week, to a great fanfare, the Personal Injuries Assessment Board of Ireland (PIAB) released its 2006 results, which detailed significant cost and time savings for personal injury claims.

The performance of the independent statutory body has been closely monitored since its inception in 2003 and has ramifications for the UK insurance market. Its findings have arguably provided the strongest evidence yet of the potential impact of claims reform. In turn, they have attracted some considerable invective.

In its report, the PIAB details that last year it made awards to accident victims totalling €115.m (£78m). In 2005, the total was just €16.3m.

Despite delivering awards at the same level as the courts, the PIAB processed claims in less than a third of the time and 70% cheaper than via litigation. As a result, the PIAB has outlined projected savings of €40m, and awards totaling around €170m in 2007.

Though the introduction of a similar scheme would be largely welcomed in the UK, especially by the ABI, a number of bodies – most notably claimant lawyers – are opposed to such a move.

They claim the system represents a threat to a claimant’s access to justice. Moreover, they repeat their assertion that the framework to carry out necessary reform already exists.

What is clear is that comparisons on a like-for-like basis are difficult, if not untenable. The achievements of the Irish model cannot be readily transplanted to the UK. The system in England existed before the PIAB came into being and is a different beast from the system in Ireland. Until the PIAB was launched, Ireland had seen no reforms to the civil justice system that were seen in England in the aftermath of Lord Woolf’s report 10 years ago.

That does not mean that there are no lessons to be drawn from its activities. Indeed, the government and the ABI have been to Ireland to discuss its work, and its success has been seized upon by various advocates of claims reform – including, unsurprisingly, the ABI itself.

Justin Jacobs, head of motor, liability and risk pricing at the ABI, says: “The PIAB proves that the government can deliver bold reforms in the claims arena. We would hope to deliver similar savings in time.

“Claimants are not getting any less. The claimant must be consulted on liability. If he admits liability, he or she falls out of the system,” argues Jacobs.

Eoghan Coyne, operations manager at the PIAB, adds: “There has been a movement away from the adversarial system to a consensual system, and consequently there has been a massive reduction in the amount of cases actually going to court.”

Research shows that the number of circuit and high court writs issued has fallen from 35,000 in 2001 to 4,000 in 2005. The PIAB claims that 40% of all future claims will be settled either before or during the PIAB process, 40% through awards made by the PIAB, and 20% using litigation.

Coyne says: “The same level of compensation is being delivered to accident victims, with lower delivery costs, and in a faster timeframe.”

This is a hotly disputed claim. Not least by members of the Association of Personal Injury Lawyers (Apil). Martin Bare, Apil’s chairman, says: “The PIAB’s original intention of allowing no independent legal advice has clearly proved unworkable. The fact that almost 40% of awards made are not accepted is another indication that the PIAB is not working properly.” 

Apil says that the PIAB is silent both on the question of 40% of awards not being accepted, and how many are rejected by insurer and claimant respectively.

Bare adds: “The PIAB’s annual report claims that taking a claim through the board is 70% cheaper. But the reality is that costs are just being passed on to the 90% of claimants, who are having to pay for independent legal advice to help them navigate the PIAB system.”

Despite the charge, the concept of the provision of an arbitration body in the UK is compelling. As a result, some insurers have called for the adoption of a similar scheme.

Nick Gunter, technical claims manager at Fortis, says: “Transparency at the lower value end of cases has clearly been improved. I don’t see why a similar system in the UK has been ruled out.

“Presumably the government is unwilling to spend taxpayer’s money – it doesn’t win votes.”

Hugh Price, head of litigation at Hugh James solicitors, agrees. “There is no appetite on the part of the government to develop a state-sponsored concept like the PIAB. The number of claims in the UK is far too high.”

It is universally agreed that the last thing anyone wants is another layer of government to bog down the claims process.

If there is division on what the PIAB system means for the UK market, the logical option, some commentators suggest, is the introduction of a pilot.

Price suggests an “insurance instigated solution, perhaps part of a voluntary scheme”.

In a wider context, Price talks of the failure of the state to implement Lord Woolf’s recommendations in full.

“If universally observed and acted upon by the ‘stakeholders’, the problems identified by Lord Woolf – namely delay, excessive cost and over complexity – would have been solved.

“In my view the new Ministry of Justice proposals are largely the consequence of the ‘costs war’ and not any failure on the part of earlier reforms. The costs are the problem – not the system.”

His sentiments are echoed by Bare, who concludes: “We have a system in this jurisdiction which allows vulnerable claimants proper access to independent legal advice. Our system can, and should, be streamlined, and this can easily be achieved without removing the claimant’s right to legal representation.