dac-beachcroft-thought-leadership-rta-process-clear-road-ahead

RTA processClear road ahead?

DAC BEACHCROFTTHOUGHT LEADERSHIP SERIES

Contents

Introduction 06

Executive summary 08

RTA process in figures 10

1: Road to success – RTA portal shows its potential 11

Satisfied customers 11

Meeting objectives – early indicators 14

Faster settlement of claims, but only time will tell 16

Lower cost to insurers, but litigation rises 18

Drop-out rate – cause for concern? 19

ATE premium 20

2: Shaping strategies – implications of the portal 21

Changing claims systems 21

Skill sets 23

Low A2A take-up 24

Benefits of A2A 26

Competitive edge 26

Lacking functionality 27

A2A remains goal 27

Management information 28

3: Spirit of co-operation – some firms still playing the system 29

Portal improves relations 29

Little appetite for Stage 3 31

Playing the system 33

Apparent breakdown 34

Behaviour Committee 35

4: RTA portal – a fraudster’s charter? 37

Fraud detection rising 37

Changing fraud strategies 38

A new type of fraud? 39

Credit hire fraud 40

Portal encourages early reporting 41

5: Extending the process – insurers give the green light 42

Learning curve 43

Higher-value RTA 43

Employers’ liability 45

Public liability 47

Anticipating change 48

Contacts 49

04 05

Introduction

The introduction of the electronic portal and pre-action protocol for low value motor personal injury claims by the Ministry of Justice in April 2010 remains the single most important change to civil legal procedures in over a decade.

The process is intended to control escalating legal costs and bring down the time it takes to settle the more straightforward lower-value personal injury claims. Currently it applies only to road traffic accident (RTA) claims valued at between £1,000 and £10,000, but the government may extend the scheme to higher value RTA claims, as well as casualty lines of business.

The process fixes claimant solicitors’ fees, as well as setting a rigid timetable that gives insurers 15 working days in which to decide whether to admit liability or risk litigation. The three stage process – which includes the decision on liability, agreeing compensation, and a process to settle disputes over compensation in court – is effectively mandatory for those cases in the qualifying value band. Claims subject to this process must adhere to the protocol. Once in the process they can only legitimately exit if certain criteria are, or are not, met.

The portal is of huge significance to our insurance client base, as it directly impacts on the vast majority of their volume motor books. But the portal’s life did not begin smoothly, with insurers experiencing technical problems and behavioural issues with a small number of claimant solicitors. There has also been a relative lack of statistical management information from the RTA Portal

Co, which runs the electronic portal. However, the process has now had time to bed down, and with a possible extension of the portal on the horizon, it seemed an opportune time to take stock and assess whether the process is meeting its objectives and see how insurers have reacted.

In our discussions with clients we have become aware of differing approaches and claims management strategies in response to the RTA process. Clients have also had varying experiences of the portal, and have approached us for advice on RTA-related issues – highlighting a number of common themes.

We conducted detailed interviews in late summer of 2011 with 10 leading UK insurance companies (see opposite), including some of the largest personal and commercial motor insurers. All are ranked in the ABI’s top 20 Commercial Motor Insurers of 2010 (by GWP), and 9 feature in the top 20 Private Motor insurers. The findings offer a unique insight into insurers’ perceptions of the portal, which we hope will stimulate and inform debate.

David Pollitt Head, Financial Institutions Group

Our thanks go to the following people who kindly offered their valuable time and expert insight during the research:

Ageas: Antony Greensweig, Motor PI Controller; Gary Luff, Technical Claims Manager

Allianz: Graham Gibson, Director, Claims

Aviva: A spokesman

AXA Insurance: Chris Voller, Head of Commercial Motor & Liability Claims

NFU Mutual: Matthew Scott, Chief Claims Manager

QBE European Operations: Tom Helm, Head of Motor Claims

RBS Insurance: Geoffrey Leeks, Head of Bodily Injury, Motor Claims

Zurich Insurance PLC: Chris Bowers, Motor Technical Claims Manager; Derek McCann, UK Motor Technical Claims Manager

Two companies wished to remain anonymous.

Research participants

06 07

Executive summary

After 18 months of operation, and despite early teething problems, the MOJ’s electronic RTA portal and pre-action protocol now appear to be working well and are some way towards fulfilling their original objectives – of a faster settlement of claims and lower costs.

However, it is still early days and premature to judge the process is an outright success. There is plenty of scope to achieve improved outcomes, and for insurers to get more from the portal, such as better management information (MI) and lower costs.

The majority of claimant solicitors have responded positively to the process and are on the whole less adversarial in their approach. The process has led many claimant solicitors to adjust their business models and focus on resolving claims as quickly and efficiently as possible. In short, the process does not support time wasting or pointless haggling.

However, it would seem that there remains a number of firms intent on engaging in behaviour that could be considered to be outside the spirit in which the process was created, for example, refusing to communicate outside the portal. There are also reports that some claimant practices are aggressively issuing proceedings in claims that fall outside the portal in a bid to recoup fee income lost as a result of the RTA process.

Insurers participating in the survey were generally upbeat about the portal, though the impact of the longer tail, more complex claims that remain within the process will not be known for some time yet. All identified a clear need for greater sophistication in MI for cases in the portal.

The government’s plans to extend the process to higher-value RTA claims, as well as other casualty lines such as employers’ liability and public liability clearly has the endorsement of the industry in principle. As ever, the devil will be in the detail.

Under the current process, 90% of all motor personal injury claims pass through Stage 1 of the process, so extending the scheme to include road traffic claims up to £25,000, or perhaps even £50,000 is unlikely to be troublesome. The vast majority of cases between £10,000 and £50,000 in value are straight forward, with financial losses limited to claims for past loss of earnings and care and assistance.

There is a strong argument for extending the process to standard employers’ liability claims which are, in the same way as attritional motor claims, very much process-driven. Whilst public liability claims will inevitably pose more of a challenge to insurers, there are ways and means of shaping the process so that it is fit for purpose. Frankly, there can be no justification for excluding simple slippers and trippers from a wholesale review of pre-action procedure.

Initial concerns that the process increases the industry’s exposure to fraud remain, although the fears of a marked increase of fraudulent claims appear not to have been realised. One reason for this might be that both the speed of notification and the increased information required at the start of the process is helping insurers identify potentially fraudulent claims much sooner.

Any extension of the process – whether it is to higher value claims or other casualty lines – must draw on the lessons learnt from the existing rules.

The process as it stands offers no route to challenge behavioural issues without removing the claim from the process altogether. The Behaviour Committee, while lacking regulatory teeth, offers one possible solution. It has already issued some guidance and could act as a conduit through which the industry can engage with the claimant community and resolve differences.

The spiralling cost of personal injury claims is a critical issue for insurers and government alike. The government is to address disproportionate legal costs through its Legal Aid, Sentencing and Punishment of Offenders Bill, which implements Lord Justice Jackson’s recommendations to reform the civil litigation and funding costs, including the banning of referral fees. Alongside the Bill, the government is also considering changes to the rules for fixed legal costs, which could see a welcome reduction in the fixed costs allowed through the portal.

Against this backdrop, the portal has demonstrated the potential to settle mainstream personal injury claims in a timely and cost efficient manner.

Extension of the process cannot be anything other than good news for insurers and claimants alike – though perhaps not their lawyers. Insurers will need to improve their MI if they are to be able to formulate targeted strategies to reduce their indemnity spend and meet the challenge of increasingly savvy and technologically sophisticated claimant solicitors. This challenge may be perpetuated with the arrival of new Alternative Business Structures. Those insurers that are able to link claims management systems to the portal have a proven competitive advantage.

8 9

Source

8 Number of months the NHSLA is allowing to introduce a version of the RTA online claims scheme

NHS

15 Number of days the defendant has to send its Claims Notification Form (CNF) response under Stage 1 of the protocol

Pre-Action Protocol for Low Value Personal Injury Claims in Road Traffic Accidents, Ministry of Justice

132 Average claims settlement lifecycle (in days) post-protocol

ABI [analysis of 58,557 motor claims of £1K – £10K settled between April 2010 & July 2011]

294 Average claims settlement lifecycle (in days) pre-protocol

ABI [analysis of more than 50,000 motor claims of £1K – £10K settled between Sept 2009 & Mar 2010]

1,000 Current lower limit (in £) of the estimated value of RTA PI claims covered by the protocol

MOJ

2,097 Average legal cost (in £) per motor claim pre-protocol ABI [analysis of more than 50,000 motor claims of £1K – £10K settled between Sept 2009 & Mar 2010]

3,000 Amount (in £) the NHS hopes to save per case by introducing a version of the RTA online claim scheme.

NHS

4,066 Average motor claim cost (in £) pre-protocol ABI [analysis of more than 50,000 motor claims of £1K – £10K settled between Sept 2009 & Mar 2010]

10,000 Current upper limit (in £) of the estimated value of RTA PI claims covered by the protocol

MOJ

12,229 Average cost (in £) of a successful claim against the NHS

National Patient Safety Agency [incidents reported May 2007 – April 2010]

25,000 Current Fast Track limit and possible upper limit (in £) of the estimated value of RTA PI claims covered by the protocol

MOJ

81,470 Annual number of employer's liability claims 2010/11 Compensation Recovery Unit [1 April 2010 – 31 March 2011]

94,872 Annual number of public liability claims 2010/11 Compensation Recovery Unit [1 April 2010 – 31 March 2011]

100,000 Maximum value (in £) of specific case types proposed to be included in a new dispute management process and fixed recoverable costs

MOJ

401,757 Annual number of motor claims 2000/01 Compensation Recovery Unit [1 April 2000 – 31 March 2001]

790,999 Annual number of motor claims 2010/11 Compensation Recovery Unit [1 April 2010 – 31 March 2011]

2,900,000 Number of NHS patient safety incidents reported over 3 years

National Patient Safety Agency [incidents reported May 2007 – April 2010]

RTA process in figures Road to successRTA portal shows its potential

Almost all companies surveyed (90%) were broadly satisfied with the operation and outcomes of the portal and pre-action protocol in its first 18 months of existence. However, there have been glitches and the process has yet to meet its full potential.

It was notable that most participants said that the RTA portal and pre-action protocol had met, or even exceeded, their initial expectations – especially given the limited time for development and implementation.

How satisfied are you with the way the portal is operating?

Not at all satisfied

Not very satisfied

Satisfied

50%

40%

10% Very satisfied

Extremely satisfied

Satisfied customers

10 11

“The process reduces the time it takes to determine liability and encourages a basic-offer approach. We ultimately spend less time haggling. ... We are finding that 50% of claims are settling within 6 months of the notification date – which reflects greater levels of cooperation with claimant solicitors and a more efficient process for dealing with claims.”

A senior figure at a large UK motor insurer

However, many respondents highlighted IT teething problems and some ‘game playing’ by claimant solicitors as reasons for not giving a higher score. Participants described initial problems with the application-to-application (A2A) software, updates and IT systems. They also noted issues early on with some claimant solicitors’ lack of preparedness and unfamiliarity with the system and protocol.

“The portal had what I would describe as a troubled birth – but it is improving. Building a system in just four months and whilst the protocol rules were being written was never a good place to start.”

Graham Gibson, Director, Claims, Allianz

Teething problems in the first few months led to a slow start for the portal. Participants in the survey said that volumes of claims in the first few months were lower than would have been expected. However, issues were mostly ironed out and as claimant solicitors grew familiar with the process, volumes have risen and are now stable.

“Claims volumes in the portal during the first three months were lower than expected, through a combination of implementation issues on the claimant solicitors’ side and problems with application-to-application software. However there has since been a rapid acceleration in cases per month, and volumes have now stabilised.”

Matthew Scott, Chief Claims Manager, NFU Mutual

“I was generally satisfied with the IT, although it is far from state of the art and has minimal functionality, but in terms of the pre-action protocol, it has performed much better than expected.”

Derek McCann, UK Motor Technical Claims Manager, Zurich

Participants were generally complimentary about the pre-action protocol. However some expressed disappointment with the behaviour of claimant solicitors and their ability to bend the rules or act in a way that was not in the spirit of the process.

The behaviour of a minority of claimant firms marred the overall success of the portal for some participants.

“I am disappointed with some of the behaviours of a small minority of claimant solicitors in neutralising some of the intended benefits of the portal. It is frustrating that a law firm can deliberately use gaps in the portal rules.”

Geoffrey Leeks, Head of Bodily Injury, Motor Claims, RBS Insurance

How are claims volumes at your organisation, following the introduction of the new process?

Higher

Same

Lower60%

30%

10%

12 13

Has the process achieved a lower cost of settlement to insurers?

Responses were mixed when participants were asked whether the portal had resulted in faster settlement of claims and lower legal costs. However, the majority of participating insurers said that the portal was, on balance, meeting its objectives.

Most survey participants (80%) said that claims settlement times had reduced as a result of the MOJ process, with the remaining 20% saying it was too early to say.

When it came to costs they were more cautious – almost two thirds (60%) said that legal costs were lower under the process. This reflected concern over rising litigation for claims that fall outside the portal, as well as a general lack of adequate data and management information (MI) spanning the range of claims values.

Meeting objectives – early indicators

Several participants qualified their responses, highlighting the relative infancy of the portal. More complex and higher value claims – which have a life cycle of up to three years or more – have yet to work their way through the process.

“Overall indemnity spend is slightly lower, and it comes back to the fact that the predictable costs are lower. The average saving we are seeing is around £220 per claim – the fixed costs in the process are £1,200 compared with the average market cost outside the portal of £1,420.”


This led many participants to warn against concluding prematurely that the portal and pre-action protocol had resulted in faster payment of claims and at a lower cost to insurers overall. However, they said that the portal had demonstrated the potential to achieve faster settlement of claims and lower costs, but only time will tell if this becomes reality.

60%

30%

10% Too early

No

Yes

14 15

Although still early days, participants found that claims that stayed in the process were being settled faster. The pre-action protocol was said to help both parties focus on settling claims within the strict and challenging deadlines.

The process, which sees claimant solicitors earn fixed fees at pre-agreed stages, was also encouraging firms to bring cases to settlement as quickly as possible. Some participants said that claimant solicitors were incentivised to resolve cases quickly in order to earn fees, and this had resulted in earlier claims notification, as well as timely production of medical reports and settlement packs.

However, participants said that it would take several years to conclude settlement times were shorter, at least until a greater volume of higher-value claims had been processed. Some participants also noted that the reduction in settlement times was offset to some degree by claims stuck between Stage 1 and Stage 2. A significant number of claims failed to proceed after insurers had agreed liability and paid Stage 1 fees.

Faster settlement of claims, but only time will tell

No

Yes

“Fixed costs under the pre-action protocol were reducing the claims lifecycle, but also because solicitors now appear to be more willing and reasonable in their expectations.”

A spokesman, Aviva

“Smaller claims of up to £2,500 that stay in the process are settling quicker, but when we have three years’ worth of data, I suspect we may find that the overall lifecycle is not that much shorter than pre-MOJ.”


“The timescales inherent in the protocols drive the expedient turnaround of claims while the cash flow from Stage 1 payments is an incentive for law firms to notify claims very quickly.”


Inside the portal, the process is driving the right behaviours. The incentive is now to find the middle ground and settle quickly. Claimant lawyers simply won’t get paid for dragging out the process.

“In spite of the introduction of the Civil Procedure Rules (CPR) in 1999, costs have remained wholly disproportionate to damages in low-value attritional claims,” says Peter Allchorne, National Head of Motor claims at DAC Beachcroft. “Predictable costs in low-value motor claims went some way to redress that, but the spoils of standard basis costs still remained for those who pressed on to litigation. The RTA process removes that incentive.”

Do you see cases stuck between Stage 1 and Stage 2?

90%

10%

16 17

The fixed cost structure and potentially faster settlement of claims were said to be driving down legal costs, at least for the more straightforward cases. However, some participants said that savings were offset by increasing litigation outside the portal.

A number of participants said that they were seeing the cost of claims outside the portal rising. Speculation was that claimant firms were looking to recoup revenues lost to the portal through a more aggressive approach to claims that pre-dated the portal or that had exited the process.

“For claims that are kept within the process, we have seen a reduction in lifecycle and therefore indemnity spends. However that reduction appears to have been almost eliminated with increased costs of claims that fall outside the process.”

A spokesman, Aviva

“We initially saw an overall drop in litigation at our own company, but we now seem to be seeing litigation picking up for those claims that fall outside of the portal. That could see us back to where we were before the protocols were introduced.”

Tom Helm, Head of Motor Claims, QBE

Allchorne believes that the big players in the claimant personal injury market are inevitably working two separate business models: one designed for RTA portal claims which, as you would expect, is very lean and involves the least number of possible touch points; and the traditional ‘costs building’ model for everything that falls outside of the process.

“The challenge for insurers,” says Allchorne, “is to keep as many claims as possible within the process and where they legitimately fall outside, to make an early Part 36 offer where appropriate.”

Participants also noted that more complex higher value claims had yet to pass through the system in significant volumes – so cost trends were not yet representative of the overall picture.

“Until we can look at the whole three-stage process and say we’ve got a fairly mature set of stats, it would not be wise to say the portal has lowered costs for insurers.”


“My worry is that all we have seen so far is the settlement of easy cheaper claims, and therefore whilst that looks like the costs are coming down, we may not be comparing like with like at an industry level.”


Lower cost to insurers, but litigation rises

Early indications were that as many as one third of cases that entered the portal left the process during Stage 1. Almost all the survey participants (80%) said that this was indeed the experience of their company, and most said that it was to be expected.

The one-in-three drop-out rate was generally down to insurers making a “conscious decision” to remove a claim from the process because of a dispute over liability or an indication of potential fraud. Participants said that relatively few claims left the portal because of a failing on their part – such as a missed deadline.

The proportion of claims where liability was disputed by the insurer were said to be largely in line with pre-portal trends, although some participants noted an increasing number of claims leaving the process because of fraud indicators and better data.

“The proportion of our claims that exit the portal for an accidental reason is less than 2%. The rest is deliberate, and the vast proportion is because we have detected the potential for fraud.”


“The drop-out rate reflects a conscious decision on our part. There is usually something about the circumstances of the accident that will lead us to believe that it isn’t straightforward enough to be able to make an admission of liability.”


“Fraud indicators and liability disputes are the main reasons we see cases leave the MOJ process at Stage 1. We are seeing the same number of liability disputes, but we now see a higher proportion with fraud indicators.”


“Most of the reasons why a claim would leave the process at Stage 1 are legitimate – the process is not all-encompassing. However, some 10% of all claims that we receive through the portal are sent to us in error, misdirected by the claimant solicitor.”


Drop-out rate – cause for concern?

18 19

“We are still seeing what I regard to be utterly inappropriate after-the-event insurance premiums. It is a minority, but we have got a body of cases where we are not able to fully finalise our settlement because we have not agreed to what we regard as unreasonable ATE premium of over £400. Given the admission of liability at Stage 1, the premium is just irreconcilable with the level of risk. In these cases we have paid the agreed damages and other legal costs within the required time-scales, and a level of ATE premium we feel is commensurate with the risk involved.”


While there have been some unfavourable reported decisions at first instance, those providers still seeking premiums in the region of £400 are few and far between. With the momentum in government for implementation of the Jackson reforms, this is unlikely to cause insurers a headache moving forwards. “Inevitably a minority of ATE providers still seek to make hay while the sun shines,” says Andrew Parker, Partner and Head of DAC Beachcroft’s Strategic Litigation Unit. “Implementation of Lord Justice Jackson’s report will soon see an end to that.”

One side-effect of the portal and pre-action protocol may be lower costs for insurers through lower after-the-event (ATE) premiums – insurance some claimants take out to cover legal costs should they lose a legal action. At present, ATE premiums can be recovered from the defendant.

One participant in the survey said that by insurers admitting liability at an early stage in a claim, much of the risk was removed for ATE insurance removing the need for ATE insurance in many cases.

“The process is looking very positive from a legal costs point of view, compared with what we previously were seeing, and we have seen a very dramatic fall off in the number of claims for ATE insurance premium. Where there were a lot of cases with claims of £400 for ATE in the old regime, now we are seeing a lot of our cases come through with no ATE premium at all, or for just a £100 or so.”

Chris Voller, Head of Commercial Motor & Liability Claims, AXA Insurance

Another participant said that ATE premium claims were still too high, given the low risk to claimants. In some cases, this was causing a delay in the settlement of claims.

Shaping strategiesImplications of the portal

Most participating insurers (70%) used the introduction of the portal and pre-action protocol to update their claims handling strategies, although this ranged from a complete overhaul of processes to slight adjustments to parts of the business, such as investigations, fraud detection etc.

All insurers interviewed said they were increasingly capturing early accident information from insureds. The driving force behind this is the need to reduce exposure to fraud.

Generally, insurers developed their own claims strategies, with the portal and pre-action protocol being just one influencing factor. A few participating insurers set up specific teams to handle claims in the portal – including teams to cover each of the three stages. However, at least one large insurer had since absorbed them back into wider claims management as part of strategic restructuring.

“We now have to take a more pragmatic view. For example, where historically we may have carried out investigations that have a small percentage result, the MOJ process has forced us to re-consider the way we make our liability decisions and investigations because of the fairly limited timescale for admitting liability.”

A spokesman, Aviva

“We had anticipated the MOJ developments and put together a process for all of our personal injury claims, and this by and large fitted very neatly with the portal process. No specific restructuring was required as a result of the arrival of the MOJ process.”


Changing claims systemsATE premium

20 21

A number of participants (30%) had also changed how they handled claims outside the portal. One large insurer was concerned with how claims outside the portal were developing and was looking to put in place a new process to help keep increasing costs under control.

“We are in the process of reviewing cases outside the MOJ process. If they have fallen outside the process the likelihood of litigation increases quite dramatically and the view is that we feel we need to be more proactive in handling these cases.”

A spokesman, Aviva

Most firms had made changes to their claims management, although strategies were dictated by wider trends in the main, rather than a direct response to the portal. Generally, the portal and pre-action protocol was just one consideration for a wider claims strategy.

“We are introducing a whole new claims system and operating model as part of a far broader strategy, and as a consequence we will no longer differentiate MOJ from non-MOJ cases. Unlike 18 months ago, the portal is not influencing our overall strategy.”


“We are maintaining the same proactive approach for the management of claims that fall outside the scheme. We have tried to apply the same principle of early liability decisions, and press forward to agree as many components of the claims as possible quickly.”


Participants were unanimous in their views that there had been no reduction in skill at their companies as a result of the portal and pre-action protocol. None of the participants reported a reduction in staff levels, and several said that they had increased resources.

Common areas for additional resource were fraud and administrative functions to manage workflow and bridge the gap between the portal and in-house claims management systems.

“The process does produce more standardisation, but we are not employing less skilled resource to do the work. We have carried out minor re-organisation as part of the implementation and have created MOJ specific teams that are familiar with the processes and all the potential complexities of the interpretation of the new laws.”


“We have restructured specifically to deal with the Stage 1 process. Nobody on that team has any personal injury claims handling experience. The skill set has changed completely. Quantum assessment is still important, but decisions now have to be made quickly. The speed at which you make the right decision is an economic, rather than technical one. You now need decision makers at an earlier stage of the claim.”


Skill sets

“We have actually increased our resources – our claims handlers are now handling far fewer claimants than they would have done in the past. We want to maximise the skill and resource aligned to a claim – it will cost more operationally but it will save on indemnity spend.”


All insurers confirmed an increase in training, but this was limited to the workings of the RTA portal and process.

“We established new MOJ teams and processes as well as intensive training – some 16,000 hours of training in preparation for the technical elements and the MOJ process.”

Chris Bowers, Motor Technical Claims Manager, Zurich

Most participants in the survey said that the portal and pre-action protocol did not require new skills, although a couple of insurers highlighted the need for strong negotiation and telephone skills.

“We have the same claims team with the same skills profile. The workflow and timeline has changed, but it is still the same skills from a technical point of view – a decision on liability, valuing damages, negotiating the settlement – those are still the same.”


22 23

There are two methods of accessing the portal – through a secure web-browser or using application-to-application (A2A) software. Despite the promise of greater efficiency and accuracy, as well as access to MI, few insurers have opted for A2A.

Many participants that chose not to invest in A2A said they had wanted to wait to see how the portal and pre-action protocol panned out. They also noted the considerable cost of investing in A2A, both in terms of funds and IT resources.

“We decided not to embrace A2A on ‘day one’ because the portal system was still being built as the rules were going live. But we are aiming for a much more efficient process. At the moment we do everything twice – we take the information from the portal and move it onto our system, make a decision and then manually move it onto the portal.”


“We knew there had been some wrinkles in the technology, so we thought we would be better off running it separately to start with. So if there are any major changes in the system we don’t have to make a load of system changes ourselves.”


Has your organisation embraced A2A software?

If not, does your organisation expect to introduce it in the future?

If not, does it remain a future possibility?

No

No

No

Yes

Yes

Yes

N/A

N/A

80%

50%

50% 50%

30%20%

20%

Low A2A take-up

24 25

A2A enables the claims management and workflow systems of insurers and claimant law firms to communicate directly through the portal, allowing them to organise and monitor the progress of claims in the portal, as well as gather MI. By contrast, the MOJ’s web browser is limited to delivering messages, with no data repository, audit or MI functions.

“The portal was not given sufficient time to develop, so it is far from easy to navigate and it doesn’t have any search functionality. It just does not replicate my idea of a modern day internet portal.”


“The portal works just like a post box. Once you have gone to the post box and collected the mail, it is gone from the system, so you can’t go back to the portal a few weeks later and expect to find the document or an audit trail.”


Only two insurers participating in the survey opted for A2A software from the outset. Both firms said they were pleased with the benefits of A2A, noting the competitive advantages of better workflow management and MI. One firm believed, given the large size of its motor portfolio, it would have struggled to cope without A2A.

“We think that adopting A2A at the start was competitive advantage. It has given us better management information and the functionality has given us a more efficient process with greater accuracy.”


“We could not have operated without A2A – it would have severely impacted our ability to function. It has reduced duplicative keying and data entry and we have got better management information – there are huge benefits from the availability of the MI on our case management system.”


Participants that used the MOJ web-browser expressed disappointment at the lack of functionality, which in some instances led to inaccuracies, missed deadlines, and therefore additional costs. Several insurers said that they had had to resource administrative functions to allocate and track claims from the portal.

“I know from bitter talks with handlers that the portal was time consuming – it was slow and caused a lot of mistakes. It caused us to miss deadlines. We only missed 1% of claims in terms of responding, but in a non-A2A environment that probably would be 3-4% higher. Other insurers that decided not to use the A2A functionality would probably regret that decision.”


However, most of the insurers that did not pursue the A2A route did invest in bolt-on IT systems to interact with the portal – namely to aid workflow, track claims and gather some MI.

Even with such adaptations to in-house claims management systems, none of the participating insurers said they had closed the door on the future adoption of A2A software. Some 30% of insurers that had not already done so, said that they were looking to use A2A in the near future. The remainder of participants said that they were waiting for the portal and IT updates to settle down, as well as intending to carry out cost benefit analysis.

“A2A would reduce the amount of re-keying and it will help us with our management information. It makes the collection of data a lot more robust and less time consuming because it is automated, as opposed to having been mainly captured on a spreadsheet.”


“We are undecided and are waiting for the process to settle down, when we will look to see if it is cost effective. We have coped well without it so far and we made changes to our own system.”


Benefits of A2A Competitive edge A2A remains goalLacking functionality

26 27

Understandably, the market was waiting with bated breath for the release of statistical MI from the RTA Portal Co about the performance of the new process: that MI has never materialised, and insurers have only had their own, often limited MI to work with.

“Insurers with better MI should have a competitive advantage over their peers,” suggests Allchorne,

“and will be better equipped to deal with claimant solicitors.” The portal is an effective conduit through which to communicate, but it is basic and without bells and whistles. “Only by investing in a bolt-on system or A2A software will insurers realise the full benefit of the process

– the eradication of duplicate keying will provide operational efficiency savings, and better data analytics will provide a strategic advantage.”

“The limited functionality of the portal and the general lack of management information has been a real disappointment. However, progress has been made, and we now have a massive opportunity to take it forward and build from this position. To get a really high-quality portal that is very user-friendly and produces management information, we would need to address that as a market or invest in application-to-application software as an individual firm – which we are currently considering at the moment.”


“While we did not initially go for A2A, we did add front end systems to pick up the portal deficiencies in management information and claims tracking. The lack of management information from the portal was a real disappointment for us.”


“I can tell you everything about every single claim we have had because we’ve have the MI built into our system. It is ours and we control it, and it is a big advantage for us we’ve got all that information.”


Some solicitors are known to be using management information gathered from their claims management systems to tailor their strategies and offers to specific insurers. Some of the participants noted that some claimant solicitors were already using intelligent MI to approach different insurers with different strategies.

“The big firms with large volumes – the savvy ones – are using better analysis in how they make offers. They will be looking at it and working out how to get the best out of different insurers based on the evidence they have got on how those cases have progressed. Some claimant lawyers can monitor how many offers each insurer makes on the claim notified on the portal and that would vary from 0.2 to 3.4. So for every claim notified some insurers are clearly accepting the offer put in by the lawyers, others are arguing 3 or 4 times before it gets resolved. I think the lawyers will use that information for their advantage.”


Spirit of co-operationSome firms still playing the system

Most participants in the survey said that the portal had generally led to a better working relationship between claimant solicitors and insurers, with 70% seeing greater levels of co-operation. However, most (80%) said that co-operation was only slightly better or the same as pre-portal.

There were few specific examples of greater co-operation, although some participants suggested that initial problems with the portal, plus the creation of the Behaviour Committee, have brought the two sides closer together.

“At a strategic level there has been a lot more co-operation between insurers and claimant solicitors, especially for those using A2A software from day one. Teething problems with the portal provided a common focus that helped form a few good relationships with claimant firms. As those problems have ironed themselves out I have had less contact but I still would be comfortable picking up the phone to sort out issues.”


“The interaction between claimants and defendants – who jointly administer the portal

– is now significantly better than it has been historically. We have had to work as one and get agreement on some pretty tricky subjects, and we have had to forget about our own stakeholders and do what is right for the portal.”


Portal improves relations

Management information

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“Over time we would expect costs to be lower, mainly because the process lends itself to less interaction between the parties to get a claim settled. It is the interactions that really add to the costs from an expense point of view.”


“There is some evidence of more co-operation. For example, where a claim falls out of the scheme because of contributory negligence, some claimant lawyers will rush to litigation. But with some others we have managed to keep the consensual dialogue going to produce an effective settlement in the predictive costs regime rather than just going back into our adversarial trenches.”


Participants also noted that the portal and pre-action protocol, by their nature, were encouraging a less adversarial approach. In particular, it seems that both parties have a shared interest in resolving claims as quickly and efficiently as possible, without resorting to litigation.

“Those that have embraced the process have changed their strategy and now focus on volume and turnover rather than on the litigation. But not all firms have changed their spots and continue to litigate.”


As the process beds down, so claimant solicitors will increasingly look to find ways of stripping back their processes to increase margins as against the fixed fees available. The likely reduction in portal fees will only accelerate this trend. This won’t impact directly upon the issue of co-operation, but is likely to reduce communication outside of the portal.

Little appetite for Stage 3

The volume of cases proceeding to Stage 3 (litigation) is much lower than anticipated. Whether or not this will change as both claimant solicitors and insurers build up more MI remains to be seen, but this seems unlikely, particularly if fixed costs within the process are reduced.

“One has to ask the question, is it worth the effort in proceeding to litigation for the sake of a couple of hundred pounds in damages?” says Allchorne. “From the claimant’s point of view the answer has always been ‘no’. But until now it’s not been about the claimant’s damages, but rather his solicitor’s costs. MOJ quite rightly puts the claimant back at the heart of the process.”

The majority of participants (70%) said that they had noticed a shift in claimant solicitors’ strategies as a result of the introduction of the portal and pre-action protocol. For simple low-value claims, most claimant solicitors had embraced the portal and pre-action protocol. In particular, business models at most firms are now focussing on generating revenues from fees earned from the process, which lends itself to a speedy resolution of claims within Stage 2, and without the need to litigate at Stage 3

“From a claimant solicitor’s perspective, the last thing you want to do is get embroiled in a complex court case for this type of work. It is better to get a quick decision on liability, get it settled, get your fee, and move on to the next one.”


“The settlement pack creates a ‘cards on the table’ approach rather than the old horse-trading scenario. That has created a more open approach. In our view, it all comes down to cost. There is no mileage in claimant solicitors dragging things out.”

A spokesman, Aviva

“We are not seeing the volume of litigation (Stage 3) that we saw pre-MOJ. We are better able to determine the right value and offer the right amount so that solicitors not choosing to litigate. There is also less incentive to litigate because the returns that can be had are so much smaller.”


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Almost all participants (80%) had experienced ‘game playing’ or unco-operative behaviour by claimant solicitors, but this was said to have been in the minority of cases. However, the activities of some claimant firms and apparent loop-holes in the system were a problem for some insurers.

Common problems were a refusal by some claimant solicitors to communicate outside the portal and the unauthorised or duplicate submission of claims. Also of concern, participants are seeing some firms looking to push claims out of the process and into litigation.

“I do see inefficiency and a general lack of proactivity, although most claimant lawyers are not doing anything consciously to play the system. But there is an unfortunate significant minority who are. And they are at risk of corrupting the perception of the scheme for the majority. I am concerned that some claimant lawyers are just focused on acquiring the Stage 1 fee and are not looking after their clients or indeed following the scheme by pressing on to get the case resolved.”


“There are a few claimant firms out there who have decided not to communicate outside the portal, possibly because they believe they may be getting a better cost result.”


However, a small, but substantial number were not always acting within the spirit of the portal, and were playing the system to their advantage. Some participants also noted that some firms continue to pursue litigation aggressively.

“There was an improvement in behaviour in the early stages with firms that had previously been adversarial, but we now see a few solicitors refusing to negotiate or communicate over the telephone.”


“We were in the honeymoon period where solicitors had been getting to grips with the process and with the rules. Most firms have embraced the rules but some, though less than before, continue to act out with the spirit of the new process.”


“For cases that stay in the MOJ process, claimant solicitors are amenable to what would appear to be a reasonable settlement in a fairly quick timescale. But if it’s outside of the process it appears to adopt a more aggressive attitude.”

A spokesman, Aviva

“The MOJ process is designed to be non-adversarial, but we continue to have daily battles with some of the same firms as before. We will pick up the phone and talk about a claim and try to get it, but a lot of solicitors won’t do that. They say you have to talk to us through the portal and they use that as a push back.”


“There are always exceptions. There is one firm that we deal with that insists on sending claims forms by fax. This is certainly not what was intended and it’s hard to understand why they would want to deviate from the agreed process on something like this.”


“We have seen more than one solicitor become involved – a sort of feeding frenzy. There are so many people trying to capture the claimant that the claimant ends up being captured a couple of times and we end up with one or more solicitors purporting to represent the claimant.”


Playing the system

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The objective of the Behaviour Committee is to assist, in a non-partisan way, in the resolution of behavioural issues arising from the use of the portal. The Committee, which is comprised of claimant and compensator representation, meets on a monthly basis to review behavioural issues. At its own discretion, it will issue guidance on what it considers the appropriate behaviour for users.

All participating insurers say that they were aware of the Committee, but few had any first-hand experience of the body, which was piloted from March to April 2011 and has since gone live.

“The Behaviour Committee is a formal mechanism to resolve behavioural issues, or at least understand why these things are happening. If nothing else it will ‘out’ firms in public that are not doing the right thing and bring pressure to bear.”


There is no mechanism within the process itself to address behavioural issues or settle disputes. However, the RTA Portal Company, the collaboration of representatives from the insurance and legal industries that oversee the portal, launched a Behaviour Committee to provide guidance and mediate in instances where the portal is being used inappropriately.

The Committee has no true regulatory powers and its guidance is non-binding, although the Committee can refer issues to relevant regulators, including the Solicitors Regulation Authority (SRA) and the Financial Services Authority (FSA). It also has the option to ‘name and shame’ companies.

“The Committee does not have any power, but it will publish guidance. It is hoped that the Solicitors Regulation Authority – or the relevant regulator – will pay attention to its view.”

Graham Gibson, Director, Claims, Allianz and member of the Behaviour Committee

“There are claims which are in between Stage 1 and 2, but they are there legitimately in accordance with the rules, whether we like it or not. The evidence that solicitors get in at Stage 1 and deliberately go no further is not really there.”


“We have got cases on our books that are one year old, which is a reasonable time to expect them to progress to Stage 2. We will start to go back to the firms that haven’t progressed to Stage 2 and say – we haven’t got any instructions so we want our £400 back please.”


“We are tracking claims stuck between Stages 1 and 2 and look for trends. It has always been a concern – that we commit to pay a £400 fee up front, but then the claim is not followed through. The volume is material, so we are watching the situation very closely.”


“To what extent the ‘400 club’ is just an urban myth remains to be seen,” says Parker. “If it is, the perception is still damaging to the credibility of the process. In the event that it is not, then insurers need to devise strategies to combat such behaviour. Allchorne says, “Either way, cogent MI is a prerequisite to resolving the problem.”

Almost all participants in the survey (90%) said that a significant number of claims in the portal were getting stuck between Stages 1 and 2. It is said that in a substantial number of cases claimant solicitors are taking the £400 Stage 1 fee, but those cases are not showing any progress six months or even one year later.

The exact cause of the breakdown in the process is not known, although participants said there were possible legitimate reasons, such as waiting for medical reports. Participants also expressed suspicions that some solicitors may deliberately submit speculative claims to get the £400 Stage 1 fee with little intention of pursuing the claim further – in what is known as the ‘400 club’.

Several participants said that they are monitoring claims stuck between Stage 1 and 2, and several were considering whether to take action, such as asking for the fee to be returned.

Apparent breakdown Behaviour Committee

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RTA portalA fraudster’s charter?

The majority of participating insurers (70%) said that they were, in general, detecting more fraudulent claims. However, most thought this was as much a reflection of wider trends as a result of the portal, although some suggested that while the portal potentially increases insurers’ exposure to fraud, it was also helping identify it earlier.

“What we have seen is a huge increase in fraud – claims passed to the fraud team have risen from 7% to 15% – and 80% of that 15% immediately walk away at the first serious challenge.”


“We have been detecting more fraud, but that reflects our improved processes and we can’t say if the MOJ process has affected volumes.”


“We already had a good fraud strategy, but the MOJ process highlights potential cases early. We look at fraud indicators from day one, and our management information allows us to be smarter about the claims we query.”


However, according to Lorraine Carolan, Partner and National Head of Claims Validation at DAC Beachcroft, early indications do suggest that the improved Claim Notification Form (CNF) does have a limited benefit in case validation, although the quality and accuracy of CNF completion is patchy at best. “We have also seen a mixed reaction to CNFs by the judiciary with many viewing inaccuracies and inconsistencies in the claimant’s favour rather than applying an adverse inference.”

Fraud detection rising

Most participants welcomed a mechanism to settle disputes and provide some clarity to interpreting the rules. The Committee could act as a conduit to raise awareness and propose solutions that regulators such as the SRA could take forward.

According to Graham Gibson, Director, Claims at Allianz, and a member of the Behaviour Committee, the two issues that have occupied the Behaviour Committee in its first months were submissions of claims for the same injury from multiple claimant representatives, and insurers contacting claimants directly.

It is very apparent that the feeding frenzy of referrals and third-party capture (the concept of trying to get to the claimant first) initially led to instances of solicitors jumping the gun and acting without proper instructions. This led to duplicate claims through the portal.

In October the Behaviour Committee published guidance on these, and other, areas. On the issue of insurers directly contacting claimants already represented by solicitors, the Behaviour Committee said it will raise the matter with the appropriate authorities and regulators, including the FSA and the Information Commissioner’s Office, unless assurance is received that such activity will cease. The Committee also said that it will consider other actions, such as naming companies.

On the issue of multiple solicitors submitting a Claim Notification Form (CNF) via the portal for the same injury, the Committee said that the solicitor who believes that the single contact rests with them should complain to their regulator, as well as seek to resolve the issue with the other solicitor claiming to act. It also said that RTA Portal Co has raised this behaviour with the regulators and the Ministry of Justice, as well as considering other ways to eradicate this problem, which is occurring far too often.

According to Gibson the Behaviour Committee has also considered the phenomenon of the so-called ‘400 club’. The Committee has not seen any real evidence that claimant firms were deliberately taking the Stage 1 fee and not pursuing the claim, he says.

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Carolan also has a very real concern that the ability to attract fees purely through the acceptance of a case into the portal removes from claimant solicitors the duty to validate their own cases and may result in wholly contrived cases being intimated just to attract Stage 1 fees. “Once liability is denied the claim disappears because they either had no intention of litigating or the third party does not exist,” she says. “Coupled with minimal regulation of alternative business models we run the risk that a new type of fraud will be born stemming from contrived intimation of cases.”

The portal is also an easy opportunity for fraudsters to push more induced accidents through – on the face of it there appears to be a rear end shunt with 100% liability. It takes a clued up insurer or policyholder/broker to pick up on this early enough to take the decision to investigate further within the relevant timescale or let the matter drop out of the portal scheme.

The proposed extension of the process to include employers’ and public liability (EL/PL) insurance reinforces the need for insurers to adopt robust anti-fraud strategies outside of the motor arena.

A new type of fraud?

“We have definitely seen a migration from motor towards casualty business from a fraud perspective as insurers have become very capable around motor fraud. Especially around PL, it is sometimes very difficult to know where the incident actually took place and what actually happened.”


Changing fraud strategies

Most insurers (70%) participating in the survey believe that the sector’s exposure to fraud had increased as a result of the portal and pre-action protocol. However, only 20% thought the increased exposure was significant, while the remainder felt it was either the same or only slightly increased.

Under the pre-action protocol, insurers have just 15 days to make a decision on liability, which some argue is not enough time to detect some fraud. However, some insurers noted that adequate detection processes and systems should offset an increased exposure to fraud.

“I don’t believe that having less time to investigate liability – which is all that’s happened – has increased our exposure to fraud. It is the same. It just depends whether you are any good at spotting it or not.”


There is no doubt that the need to make early decisions on liability leads to reduced front-end investigations, according to Carolan, and the risk that fraud leakage will increase. “This has not stopped cases from falling out of the portal post-admission, but impacts significantly on the ability to maintain a defence and on overall litigation costs. In reality, however, it is too early to truly assess the impact on fraud capture. Tactically a large percentage of fraud claims are intimated late in an attempt to prejudice meaningful investigations. As such it will take at least three years of comparison data to assess the true effect on fraud.”

Although the majority of participants said that the portal had increased exposure, only 50% said that they had adjusted their fraud strategy in light of the RTA process. Changes included increased resource, training, as well as work on low impact accidents, investigations and fraud screening.

“We have changed the triage criteria that we use in new cases and we’ve invested more in data analytics to try and identify patterns of fraud involving similar parties.”


“We have certainly upped our game in terms of training and working with our suppliers to tease out those cases that we want to investigate further – such as low-speed-vehicle-impact claims.”


Fraud is such a significant and growing problem for insurers, it appears that the RTA process is just one of many considerations for insurers’ fraud strategies.

“We have adjusted our approach to fraud to a degree, but we probably would have done that anyway had it not been for the portal.”


“We already had a rigorous strategy in place, so we haven’t specifically gone out and designed an anti-fraud process for the MOJ process.”


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“We are currently looking at technical solutions like telematics. We already have a lot of clients that have on-board technology at the moment, but there is nothing necessarily off-the-shelf that supports the early reporting of accidents. It is in development, and we are looking at whether this is something we can get up and running as a pilot.”


“We were already working on early notification of claims, and the MOJ process is an added reason to do so. Non-broker personal lines claims are already notified by and large within 24 hours, but we are working particularly with commercial brokers and larger clients.”


“We ensure all our first notification of loss handlers ask the right questions to help us meet the 15-day deadline, be it on fraud or liability. We also work with customers to help them understand the reasons why they have to report claims as early as possible and provide the right information.”


All of the insurers surveyed said that they were taking steps to encourage the early notification of claims. In particular, participants are keen to improve notification of commercial fleet motor claims.

This included working closely with brokers, improving data capture, encouraging the direct reporting of accidents by fleet drivers, and policyholder education. A few insurers were also considering the use of technology such as telematics and phone apps.

Portal encourages early reporting

While the clear intention of the RTA process was to exclude credit hire (assuming that the majority of claims will be dealt with under industry protocols between insurers and credit hire organisations (CHOs)) a number of attempted abuses of the system have appeared.

In particular, the use of credit hire by fraudsters to ‘sanitise’ their spurious claims intended to be pushed into the process is an emerging tactic. This is a scenario where a fraudster will submit a credit hire claim through a genuine credit hire company, understanding that most insurers have accelerated processes to deal with such claims, to obtain a payment and/or admission of liability that they subsequently can rely on. Once in place, numerous fabricated claims will be submitted for personal injury through the portal with the expectation that less scrutiny will be applied to them by insurers.

Perhaps driven by lack of opportunity to secure enhanced costs, a further trend that Craig Dickson, a Director at DAC Beachcroft and National Head of Credit Hire has observed is the export of the typical personal injury fraud ‘model’, such as induced or contrived accidents, into claims where personal injury does not feature and are therefore not confined to the MOJ fixed costs regime. “For example, DAC Beachcroft saw an increase of over 400% in suspected staged accidents involving credit hire, storage or recovery, but no injury, since the rules came into effect.”

“While insurers invested significant time and effort into implementing efficient process and understanding of the new rules before they came into being,” he continues, “it is obvious that organised, entrepreneurial, fraudsters were doing the same. We have seen a number of creative attempts to take advantage of perceived gaps in the new process with many of these being led by the murkier end of the CHO fraternity.”

Credit hire fraud

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Some participating insurers suggested that lessons learnt from the development of the RTA portal should help inform the extension of the process to other casualty lines.

It is widely accepted that the electronic portal is an effective means of communication, but that it could be improved by additional functionality. Most felt that a more sophisticated interface was a prerequisite to extending the process.

Assuming the government decides to extend the process, some participating insurers indicated that they would give serious consideration to taking advantage of the benefits of A2A software from day one.

“There are a lot of lessons learned from the portal, probably the biggest being that it is worth taking more time to develop the technical solution and the processes.”


“There is no reason why the portal should not be mandatory – which would avoid the arguments around tactics that we see at present.”


Participants generally indicated that they would support a proposal in principle to include extending the portal and pre-action protocol to RTA personal injury claims valued above the current limit of £10,000.

“In principle there should not be any issue of RTA claims moving up to £25,000. They might involve a little bit more activity around loss of earnings, and you might need two medical reports rather than one, but they are fundamentally the same thing.”


“The vast majority of claims between £10,000 and £25,000 involve straightforward soft-tissue injury, and occasionally simple fractures,” says Allchorne. “In this tranche of claims substantive financial losses are usually limited to past loss of earnings and perhaps some care and assistance. It’s not until you get over the £25,000, and perhaps even the £50,000 mark that you start to encounter more complicated injuries and financial loss calculations”.

However, there would need to be some allowances for the more complex nature of higher-value claims. For example, participants said that they would need more generous deadlines throughout the process, as well as flexibility around the number of medical reports allowed by the protocol.

Learning curve Higher-value RTA

All of the participants in the survey were broadly supportive of extending the portal and pre-action protocol to both higher value RTA and casualty claims. It was felt that the potential benefits of faster settlement and lower legal fees could also be applied to casualty lines, employers’ liability claims in particular.

“There is justification for rolling out the process for other personal injury claims. I can’t see any rationale as to why you wouldn’t and absolutely the objectives would be the same: a more efficient, faster, and cost effective process.”


“I don’t actually see any fundamental difference to a liability-admitted RTA claim under £10,000 and a liability-admitted EL or PL claim under £10,000. Claimants’ solicitors will argue that there are differences because they want to see a more complicated process, but I don’t agree.”


“Given the absence of a predictable costs regime in respect of pre-litigated liability claims,” says Allchorne,

“the potential net gains in terms of costs reduction are even more tangible than in the motor arena.”

“The process of getting an injured claimant compensated should be a similar process regardless of EL, PL or RTA. The extension of the process ought to make a significant difference to the amount of legal fees we have to pay for EL and PL, although it is early days.”


Extending the processInsurers give the green light

The government’s response in March 2011 to the Jackson recommendations said: “It cannot be right that, regardless of the extreme weakness of a claim, the sensible thing for the defendant to do is to settle, and get out before the legal costs start running up. This is precisely what has happened and it is one of the worst instances of this country’s compensation culture.”

Ken Clarke, Lord Chancellor and Secretary of State for Justice, has insisted that the changes to the ‘no win, no fee’ system will not prevent access to justice. He said: “We are not stopping the actions; we are getting the costs in proportion to the claim. All those disputes about legal aid and ‘no win, no fee’ are not about access to justice; they are about the profitability of the lawyers.”

It must be right that the portal should be extended to EL/PL claims, believes Tom Baker, a Partner and National Head of Casualty claims at DAC Beachcroft. “There is no substantive reason not to. The disproportionate nature of claimant costs, and the lack of financial interest in the outcomes of claims is as prevalent in EL/PL as it was in motor. There are good arguments for requiring the use of the portal for claims up to £25,000, which would capture over 80% of claims made, with a far greater application of fixed fees, combined with the proposed abolition of recovery of ATE premium and success fees, which in EL/PL are much less restricted than in motor.”

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Generally participants in the survey thought that the portal and pre-action protocol would lend themselves to other classes of liability insurance, and EL in particular.

Like motor insurance, EL insurance in the UK is compulsory. The employer will usually receive notice of the potential loss immediately, making these claims ripe for early investigation and valuation.

“I can see a pretty easy extension to employers’ liability because there is a relationship between the claimant and the insured, so there will be much greater information. Most employers will keep quite good records and it should be relatively easy for most insureds to say whether the accident occurred and the circumstances in which it occurred, and from that a skilled handler can form a view on liability.”


However, there are some tweaks to the pre-action protocol that would be required for EL. Owing to the more complex nature of these claims, most said that they would require more time than the 15 days allowed for motor liability responses to decide liability and the opportunity to obtain more than one medical report.

Employers’ liability

“Extending the process would require a more generous timeframe because investigations are more complex and time consuming – instead of being 15 days it could be 30 or 45 days.”


Early identification of EL insurers for accident claims should now be straightforward. The Employers’ Liability Tracing Office (ELTO) will make it easier to search for EL insurance policies using a central database: containing all new and renewed EL insurance policies from April 2011, as well as policies from before April 2011 that have new claims made against them and policies that were identified through the previous ABI tracing service. “Since EL insurance is compulsory as with motor insurance there is no reason why an EL portal could not work like the motor portal,” suggests Baker.

Response times on liability are always going to be longer than motor because the nature of the incidents varies so greatly, and will tend to require more detailed and subjective assessment. Baker explains, “The likelihood is that liability response times will be 30 or 45 working days. This sounds very tight, but then so is 15 working days for motor. With the right processes in place 30 or 45 working days should be achievable. ”

“Liability contribution is more important for higher-value claims, so I suspect we will need more time in order to make the right decisions.”


“The RTA process is restrictive on medical evidence, but higher-value claims will require the flexibility for defendants to obtain medical evidence of their own, which isn’t possible in the current process.”


Insurers also indicated that they would need to increase resources and skills if they are to settle higher-value claims within a tighter timeframe. Several participants also noted that consideration would also need to be given to levels of claimant solicitors fixed fees, which are likely to be higher than for low value claims.

“It is the extra losses that take the skill of negotiation. It takes a skilled negotiator to settle a significant loss of earnings claim in 35 days – otherwise you will get to this complex question and the claim will fall out of the process.”


“The important thing is to have an appropriate level of fixed costs for each of the product types and for each stage of the process.”


“There is no reason why the process couldn’t be extended to RTA claims of up to £25,000. But the challenge would be around costs – I suspect that the claimant solicitors’ market would want a different stage or tier cost process for a claim.”

A spokesman, Aviva

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PL claims inevitably throw up a few more challenges, but the underlying principles and approach to handling such claims remain the same and don’t justify their exclusion from a streamlined process.

“I personally don’t see any reason why the process wouldn’t … be expanded to EL claims and PL claims, but I suspect it would need considerably longer to investigate a public liability claim than an employers’ liability claim. There will have to be clear guidelines and a two-stage process, one for EL claims and one for PL claims.”

A spokesman, Aviva

Unlike motor or EL, many PL policy holders will not immediately be aware that an accident has occurred.

“PL claims are a lot more complicated than EL and would probably require differential time limits. Sometimes our PL customers don’t even know that the accident happened.”


It is harder to identify the appropriate PL insurer, says Baker, who sees no reason why the process should not be extended to include such claims, although he says “response times on liability for PL will need to be longer perhaps, because of the extra difficulties encountered collating evidence, which is often in the public domain, rather than more readily available in the workplace.”

Also because PL insurance is not compulsory in the UK, insurers will not always be involved in a personal injury claim. Potentially liable parties in PL cases may well be individuals or small organisations that are not geared up to respond. A portal process for PL claims would weed out the very straightforward claims against shops and councils, whose contact details will be obvious and for whom insurance is incidental to the need to deal with the claim. But it may be difficult for self-insured and partly self-insured defendants to adjust to the portal process, as they will currently be unfamiliar with it and it is built for insurers. In that respect there may need to be some user guidance so that lay defendants can manage the portal process when the claim is first initiated.

Public liability

EL claims often involve a degree of contributory negligence – where the actions of the claimant may have contributed to the claim. Several participants in the survey said that a more flexible approach was required to avoid too many claims dropping out of the process.

“We will need to come up with a way of addressing how the process deals with the issue of contributory negligence. Currently, in a motor claim if you suggest that there is contributory negligence the case will drop out of the process. In EL it is common to negotiate some form of contributory negligence, which would mean too many cases exit the process.”


A streamlined process will work in those cases where liability is not an issue at all. If contributory negligence is an issue the claim falls out of the process because the claimant’s solicitor has to investigate and deal with the liability evidence. Whilst the merits of pursuing contributory negligence arguments will diminish because of the additional costs incurred as a result, the overall savings should be greater because of the reduced costs overall. Too often there is an argument over 10% or 20% contributory negligence in a low-value claim which does not justify the further costs expended in respect of liability investigations and negotiations.

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First notification of loss is not as easy to track with EL/PL incidents as motor. Baker warns that organisations need to be more pro-active in notifying and investigating incidents than at present, to prepare for the likely implementation of the reforms to liability claims. “We know approximately 8 out of 10 accidents at work that are recorded in accident books results in a claim.”

Contemporaneous investigation of these accidents would cut down cycle time for responding on liability drastically. For PL claims, by embracing incident management systems and finding better ways of electronically collating evidence, organisations will be able to make faster, informed decisions on liability.

Some 60% of participants said that they are taking steps in anticipation of an extension of the process. Several insurers said that they were now beginning discussions internally, and a small number were already aligning claims processes with the approach of the portal and pre-action protocol as part of a wider strategy.

“We have already changed our operating structure in our liability teams to help resolve the cases where there is no dispute on liability. With liability we actually have teams who are now dedicated to resolving claims where there is no liability dispute. We are ready for this when it comes, as we anticipate it will just be a matter of time.”


“We have a claims management philosophy for all our injury claims that makes ‘proactivity’ the main watch-word, and this will get everybody in the right mind set if it comes to an extension of the scheme. In terms of looking at our systems or guidelines for our teams we haven’t gone there yet because it is just far too early, particularly with all the other components of Jackson reforms in the mix.”


Andrew Parker concludes, “Of course there will always be teething problems, but the idea behind the RTA process is right. At a time when there is real pressure on insurers to keep cover affordable for all those who need it, we have to grasp the nettle.”

“This process can and must work equally well for all injury claims within the Fast Track limit of £25,000. Such disputes are essentially simple; it only suits claimant lawyers and claims farmers to make them appear complicated, so as to justify expensive services. For claimants, for insurers and their policyholders, the simpler the better.”

Anticipating change

Contacts

David Pollitt

Partner and Sector Head, Financial Institutions T +44 (0) 117 918 2226 E [email protected]

David is Head of DAC Beachcroft’s Financial Institutions sector. He has been advising financial institutions for a number of years on contentious and regulatory matters. He combines his practice of advising financial institutions with his role as sector head, which involves him spending time speaking to clients about their business and their legal requirements, so as to ensure that our service delivery is perfectly aligned.

His commitment to clients’ businesses is unquestioned; “I genuinely think he knows my business better than I do,” observed one.

Andrew Parker

Partner T +44 (0) 20 7894 6232 E [email protected]

Andrew has been at the forefront of strategic litigation since 2001 and advises insurers on a range of emerging issues affecting injury claims. He represented the defendants in the leading CFA case of Callery v Gray and successfully defended the Claims Direct and The Accident Group Test Cases in the Court of Appeal. He defeated claimant solicitors’ attempts to challenge the Discount Rate set by the Lord Chancellor for future loss claims: Warriner v Warriner in 2002 and Cooke v UBHT and others in 2003; and ran the first appeal case for insurers on indexation of periodical payments, Singh Flora v Wakom, in 2006.

As a former President of FOIL and a member of the Civil Procedure Rule Committee until 2009, Andrew has played a leading role in monitoring such issues as the effect of compensation system reforms in the USA, the EU and the Commonwealth. Andrew was a member of the sub-committee which drafted the rules and protocol for the RTA process in 2009/10 and was also one of the assessors to Lord Justice Jackson’s Review of Civil Litigation Costs.

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Peter Allchorne

Senior Associate T +44 (0) 844 980 3418 E [email protected]

Peter leads DAC Beachcroft’s motor service line, and is responsible for both service delivery and product development. He has been with the practice since 1999 and has a wealth of experience in advising insurers in the defence of wide ranging motor litigation.

Peter has a keen interest in developments in the motor claims industry, and has written articles on industry relevant topics. He sits on the Forum of Insurance Lawyers’ Motor Sector Focus team.

Craig Dickson

Director T +44 (0) 121 698 5270 E [email protected]

Craig heads DAC Beachcroft’s Credit Hire Team. He regularly advises clients in negotiating agreements with Credit Hire Organisations, alternative resolution models, strategy and works closely with insurers to develop effective credit hire and fraud strategies.

Craig is well known in the industry for his credit hire and fraud expertise. He has written articles, participated in industry debates and frequently presents on the subjects at industry events.

Lorraine Carolan


Lorraine specialises in defendant personal injury and deals with very high value multi track claims – both motor and liability which had grossly exaggerated elements to them. Since 2004 she has led what is now DAC Beachcroft’s National Claims Validation team. This team acts for the firm’s major insurance clients, and is responsible for all aspects of fraud work to include motor, EL and PL. In her work, Lorraine has established close links with the Solicitors Regulatory Authority, General Medical Council and SOCA.

Paul Parke


Paul has dealt with injury claims since 1986. He has extensive experience of all types of injury litigation, particularly those claims involving catastrophic injuries. He was closely involved in Lord Woolf’s reform of the civil justice system and was a member of the working party that drafted the Personal Injury Protocol.

Paul, as technical Director, has overall responsibility for the technical delivery of legal services within Claims Solutions.

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Tom Baker


Tom is a Partner and is Casualty Technical and Business Development Manager. He specialises in defending public sector casualty claims. Tom is also responsible for advising clients on their claims portfolios, risk management and how to react to trends and market pressures. He has developed iBAT (Intelligence and Behavioural analysis toolkit) which reports and analyses claims data, particularly addressing the behaviour of claimant solicitors and how defendant claims handling behaviours affect cycle times and overall claims cost.

Clients have described Tom as “forthright, a listener and someone who always has an eye on the need of the customer.”

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DAC Beachcroft is a leading international legal business with more than 2,000 people and coverage across the UK, Europe, Asia-Pacific, Latin America and North America.

We use the word ‘partner’ to refer to a member of the LLP, or an employee or consultant with equivalent standing and qualifications. DAC Beachcroft LLP is a limited liability partnership registered in England and Wales (registered number OC317852) which is regulated by the Solicitors Regulation Authority. A list of the names of our members is available for inspection at our registered office, 100 Fetter Lane London EC4A 1BN.

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