Conference Report: Future of Personal Injury Claims - Assessing the claims landscape

Peter Williamson, chairman, Solicitors Regulation Authority

First of all, on the leaflet about the conference, it refers to this panel being how the leading trade association and representative bodies currently review the personal injury claims arena.

The first point I want to make is that I am not part of a representative body as the Law Society decided two years ago to split the governance and regulation from representation. We are, as far as we can be, the independent regulator of the solicitor’s profession. We are not in any way subject to representative control. I speak as an independent regulator.

Our interest primarily is to regulate in the public interest, and not necessarily in the interests of the profession, but I happen to believe that the two are, at the end of the day, the same thing.

The aspect of what you have been discussing today that is of most relevance to me, is referral arrangements. We have worked closely with the Ministry of Justice, and share their concern to stamp out bad practice, those who have worked against the interests of clients, and brought the solicitor’s profession into disrepute. As the newly independent Solicitors Regulation Authority (SRA) we have run a crackdown campaign against bad practice, which we believe is bearing fruit.

My board has recently reviewed the progress made on our crackdown, following the distribution to all solicitors of our warning card. This contains the details of what can happen if you do not act in accordance with our code of conduct, particularly with regard to referral fees. The code came into effect on 1 July 2007.

As a regulator, our concern is to have rules that are enforceable, and that are actively enforced. Regulation of claims managers is to be welcomed. Again we have worked closely with the Ministry of Justice, in helping with the design of their rules, and we have highlighted with solicitors about only using registered claims management companies.

Lea Brocklebank, president, Forum of Insurance Lawyers (FOIL)

I have got a few thoughts to contribute to the debate that you heard on claims process and claims track limits. When the consultation paper was introduced in the press, it was heralded as no increase in the small claims limit.

The reality, as I see it, is a modified basic small claims limit, and a streamlined process for cases worth up to £2,500.

We are effectively seeing a combination of fixed costs and streamlined traditional assistance for those cases, and it seems to me that that is welcomed. It is, in reality, something that looks not too dissimilar to the current small claims system, with a bit more running for the claimant’s representatives.

There has been some comment on time limits, and response to times, and I will refer to Justin on the insurer’s views of that, but what does not seem the case is any suggestion as to what might happen if parties want to opt into the streamlined process later on.

It seems to me that there will be some cases where it is perfectly reasonable for it to take a bit longer than 30 days to make that decision. Once you have reached that decision, and you have agreed it, and some money is going to change hands then why not have the mechanism to go back into the process.

Some words about the reforms in context, the speaker this morning talked about a decade of change and a lot of reform. I thought it was pertinent of me to remind you of something that Lord Woolf said in 1996, in his interim Access to Justice report: “if the profession is not willing or able to meet this challenge, in reducing legal costs, then it should not imagine that the status quo can be retained. More fundamental measures, possibly involving the removal of at least moderate sized personal injury claims from the mediation system, would have to be envisaged.”.

That was in 1996, and we have been talking about the costs ever since then.

There has been a lot of reform. This year, for example, we see the consultation protocol from the Civil Justice Council, fixed trial costs, consultation on court fees, the process consultation and also the damages consultation.

We have seen the introduction of the recovery of After the Event (ATE) premiums and the legalisation of referral fees. It seems to me the insurance industry has borne the brunt of much of that reform, and it has led to a distortion of the legal procession and economic model, which has cost the insurance industry dear.

A streamlined process, which is what we are talking about, has got to be welcomed. We have got an opportunity to improve the system now, and we have got the training at the centre of it.

I have just got one word of caution that with more innovations there is more uncertainty for the market. I think we need to get it right this time, I think there is a general acceptance that it was not right after the Woolf Reforms.

A year from today I am not sure whether or not these reforms will be in place, there is quite a lot to be done.

Ultimately we will see a new landscape, I think we will see claims management companies and legal expenses insurance companies, handling the initial stages of the claims, and the cases will go out to the claimant’s solicitors when they get a bit more tricky.

We will see clearer, larger and consequently higher ATE premiums. On the defendant side we will see a greater emphasis on claims handler expertise and experience, and people who can make quick decisions and make those offers much more quickly.

Justin Jacobs, head of liability and motor insurance, ABI

In terms of our priorities next year I would like to raise five areas. The first one is obviously what we have been talking about for most of the day, the reform of the personal injury compensation system. I gather you had a very personal individual viewpoint this morning.

On behalf of the insurance industry we recognise this as a once in a lifetime opportunity to deliver a better system for claimants, and we want to make sure that we take this opportunity.

We need to throw out existing timescales, throw out existing costs and start afresh with a new and better system. I think the government is looking to do that, and we think their reforms are, on the whole, very, very good.

There will be challenges for us, we need to make sure as an industry we can rise to the timescales proposed, and whatever final ones are agreed. We have got some proposals we want to discuss with the government, but overall we accept there needs to be changes in delivering quicker decisions on liability.

We recognise the ATE market may need a period of remodelling to understand the new process, and we need to promote Before the Event (BTE) as a product that can help really deliver access to justice for all customers, and all claimants, going into the future.

It is clear from the language in the consultation document a tariff, or something similar, will come, and we want to work together with everyone to make sure it is designed to deliver fair and consistent compensation to claimants.

We want to ensure that fixed fees for solicitors reflect the quality of the solicitor involved, the quantity of work involved and fair hourly rates.

Clearly we need to have a thorough assessment of what that involves in all three areas. We need early implementation. Of course there needs to be some lead time, but ultimately we cannot deny claimants this new, improved system, because we need time to adjust our business practices.

We need to get it in quickly and I hope that maybe in a year’s time we will be on the cusp of implementation of the new proposals

The second area is personal injury fraud. We need to look at how the civil justice system treats exaggerated personal injury claims. There are too many examples of claimants exaggerating their injuries and still walking away with a tidy sum. There are absolutely no penalties for exaggeration. That is wrong, and it needs to change.

We need to do more, in the third area, to promote rehabilitation. There are still too many examples of all sides being far too suspicious about rehabilitation, and we need to change that.

We also need to widen the debate, it should not just be between insurers and the claimant’s solicitors, we need to get the employers and trade unions involved more, because ultimately we need employers to take a responsible attitude towards the employees that they injure.

Regardless of whether it is at work or not, and who is at fault, we need to ensure that these people get better, and we need to work with employers and trade unions, and others, to make sure that rehabilitation is provided in all those circumstances.

The challenge to the industry is how we deliver products that match that need, should it arise.

The fourth area is disease. I think we need to do more to speed up the process there. As an industry, again, we need to rise to the challenge of making sure the the chasing code for employers liability insurers (the EL code), is delivering effectively in an increasingly challenging world.

Finally, we need to look at the volume of road traffic accident (RTA) claims. Year on year we know that road safety is getting better and better, and there are fewer and fewer accidents.

At the same time, we know year on year the number of RTA claims are going up, and up, and up.

If that is just increasing awareness, we welcome that. People should be making legitimate claims, but there is an indication that some of it is perhaps whiplash, perhaps false whiplash claims, and I would like to work with Martin and his colleagues, the Department of Transport, the Ministry of Justice, and others, to really understand why RTA claims numbers are going up, and up, and up, while road accident numbers are going down, and down, and down.

Colin Campbell

I represent Airmic on this panel. We could almost be called a trade association. We represent 75% of FTSE100 major companies, and many of those major companies suffer many losses and are involved with lots of claimants. Most of which are probably uninsured.

I have been heartened to hear about some of the proposals, which the Department of Constitutional Affairs (DCA) have come up with, and Airmic as a body have welcomed the proposals – although, as with everyone, we have a few reservations.

Harking back to 1996, when we were faced with the Woolf regime, I remember going to AXA, talking to them, and being quite frightened by some of these deadlines that we were going to have to meet with information provision and documentation supply.

I guess we rose to those challenges in industry with our insurers help, and essentially I can see us again rising to the new challenges.

Information provision is key to accelerating early claims settlement, in that we can, again, make decisions on liability much earlier, which is key to an early settlement.

We see that as key to reducing claims costs. The experience in rehabilitation, certainly on my part, and on the part of many of our members, has been varying, partially to do with our attitude towards the selection of cases where we feel rehabilitation is appropriate.

Nevertheless, we are very enthusiastic about continuing along the rehabilitation line, and hope that all the providers currently on the market will continue to come up with innovative solutions, and the use of technology is clearly one of those.