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CLAIMSMANAGEMENTTHE MAGAZINE FOR CLAIMS MANAGEMENT PROFESSIONALS
ISSUE 20 AUGUST 2009
ISSN 1753-6537
LYNCHPINCMCs get the recognition
they deserve
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CLAIMSMANAGEMENTTHE MAGAZINE FOR CLAIMS MANAGEMENT PROFESSIONALS
“In comparison with the Costs Review, the design and construction of the Tower of Babel seems to have been a harmonious and straightforward project.”
Lord Justice Jackson tells it like it is
“If a CMC’s viability depends on being able to offer more to its clients, the broader the range and the greater the simplicity of its services, the better.”
Patricia Scully on the importance of flexibility
“If a claimant does reject the defendant’s offer then he does not forfeit his claim for damages (hire charges) but is entitled to recover at least what it costs the defendant to provide a replacement vehicle.”
Liz Adams on the decisions in Copley and Maden
“Unlike the more traditional claims handling methods employed by insurers, whereby the claimant’s profile or postcode was the determinant of risk, insurers should actually focus on the claim, first and foremost.”
Jon Day on the effectiveness of cognitive interviewing
“If a CMC’s viability depends on being able to offer more to its clients, the broader the range and the greater the simplicity of its services, the better.”
Patricia Scully on the importance of flexibility
Planning aheadHow CMCs should prepare for the future
22
FraudThe role of accident investigators
27
31
18The unenviable taskJackson Review analysis
21Introcucing ARCLaunch of a new trade body
Military compensation in the spotlight
07
ISSUE TWENTY AUGUST 2009
21 and ON THE COVER
NEWS
FEATURES
03
Crackdown on payment protection
11
Call to ban complex money products
13
Medical reportingHandling unsatisfactory reports
25
18
22
31
33
ProductionEditorS-in-cHiEF neil Beck Bippon Vinayak Simon cottrell Melanie Summers
Editor James ratcliff [email protected]
EditoriAL coMMittEE Mark Butterwick ian Fulton Pamela Gellatly Ham Harper Paul Manning Patricia Scully russell Smart Janet tilley
dESiGn Lucy taylor [email protected]
AdVErtiSinG SALES John Margett [email protected] t: +44 (0)1423 851150
SPonSorSHiP Kate McKittrick [email protected] t: +44 (0)1423 851150
SuBScriPtionS Jonathan crawley [email protected] t: +44 (0)1423 851150
Subscriptions are available to claims Management magazine at £90 for one calendar year (6 issues).unless requested otherwise, your subscription will start with the issue following receipt of your payment.
contAct tHE Editorthe editor welcomes articles, letters and other forms of contribution for publication in claims Management and reserves the right to amend them. Email: [email protected]
PrintBuxton Presswww.buxtonpress.co.uk
PuBLiSHEr chief ExecutiveLucy [email protected]
Barker Brooks Media Ltd,Barker Brooks House,4 Greengate, cardale Park,Harrogate, HG3 1GYt: +44(0)1423 851150e: [email protected]: www.barkerbrooks.co.uk
© 2009 Barker Brooks Media Ltd. All rights reserved in and relating to this publication are expressly reserved. no part of this publication may be reproduced without written permission from the publisher.
Con
tent
Credit hireCopley v Lawn and Maden v Haller
Household claims Cognitive interviewing
33
Claim 2 GainNew software product
35
www.claimsmagazine.co.uk
Death by indifferenceClinical negligence uncovered
37
Forensic accountingIts role in insurance claims
38
Claims_Management:Claims Management Advert 31/07/2009 10:49 Page 1
Comment
COMMENT
The landscape for claims management companies (CMCs) continues to change. Lord Jackson’s Report is hardly full of praise, but there does seem to be a recognition of the fact that they play a key role in delivering access to justice, and their position is of vital importance going forward.
The regulator is doing an effective job of weeding out the shysters and giving the reputable businesses room to breathe. And that is having an enormous effect on the market, encouraging consolidation
and growth. More importantly, perhaps, as Patricia Scully writes on page 22, it is changing the way solicitors view their relationship with CMCs. Increasingly, law firms are realising that they need close working relationships with CMCs, to the point where many are moving into the market themselves. If this trend continues, we will see further huge changes to the way the industry operates. The emphasis solicitors are placing on marketing will also put pressure on “traditional” CMCs to offer
more, and better services to their clients. The industry is a long way from settling on a working model, and in the meantime being versatile and open to new ideas is the only sensible way forward.
James Ratcliff
If you would like to share your views on any of the issues
covered in Claims Management magazine, email the editor
IN THe RIgHT PLACe?
05
PAY JUST £75 FOR A YEAR’S SUBSCRIPTIONCLAIMSMANAGEMENT magazine is a
publication that acts as a knowledge-sharing
vehicle for claims managers in the UK. It is a
forum for debate and a resource that readers
can rely on for the most up-to-date news and
information across the industry.
Our subscribers include solicitors, car hire
companies, collision damage repair companies,
and insurance brokers.
Subscribers to CLAIMSMANAGEMENT magazine benefit from:
• Access to articles written by some of the
industry’s leading figures
• Industry news updates, and compliance
information
• Histories and updates on ground-breaking cases.
To subscribe: simply fill in the online form at www.claims-management.net/subscribe-to-claims-management call Jonathan Crawley on 01423 851150, or email [email protected]
News07
NEWS
Army families angry over will debacleThe grieving families of soldiers killed in Afghanistan face further upset as the wills of fallen loved ones become lost amid the labyrinthine bureaucracy of the services.
The last wishes of four Royal Marines are still missing, despite an urgent investigation by the Ministry of Defence (MoD). And the figure is expected to be higher across the entire Armed Services.
As well as having to cope with the death of a loved one, the dead men’s grieving families are also having to deal with rifts between bereaved family members due to the mistakes of the MoD.
A broader inquiry has now been urged, with one MP accusing the Government of “bureaucratic incompetence bordering on cruelty”.
The wills controversy is the latest levelled at the MoD, which has already faced angry claims that it sent servicemen to fight with inadequate equipment, poor reconnaissance vehicles and a lack of helicopters.
Now the Government stands accused of failing its duty to soldiers even after their death.
Twenty British soldiers were killed in Afghanistan in July alone, bringing the total number of British servicemen and women killed in the country to 189.
Fifth of builders ‘forego insurance’The Construction Products Association (CPA) has strongly criticised the government’s credit insurance top-up scheme, arguing that one in five firms are now trading without cover.
In a survey of 100 companies, the CPA found only one company had taken advantage of the scheme since it was launched in April’s Budget.
Under the plan, the government will match private sector trade credit insurance for a temporary period, if insurers reduce cover of a business.
However, the company in question said it was “very expensive with very limited cover”. Others were unable to take advantage of the scheme because cover had been reduced to zero.
Michael Ankers, the CPA’s chief executive, said: “Along with other representative bodies, we fought hard to persuade government to introduce a top-up scheme, but it is clear that by the time this was announced in the April Budget, much of the damage had already been done.”
The survey found 95% of companies had seen credit insurance totally withdrawn from at least some of the companies they supply, and where insurance has been maintained, the average reduction in cover is more than 30%.
Mr Ankers added: “As a result of this, nearly one third of companies have closed or reduced accounts, while 20% are having to trade without credit insurance with all the risks that this brings. For smaller companies the problems are particularly severe and they have been forced to stop supplying customers if credit insurance is not available for fear that one bad debt would bring the company down.”
Fraudster admits £11,000 liabilityA man whose home was burgled has been forced to pay £11,000 back to his insurance company after he falsely claimed for items that had not been stolen.
A total of £6,000 in cash was stolen in the genuine burglary at the 58-year-old’s home in Beeston, Leeds. A ring worth £2,000 also went missing and £3,000 of damage was caused.
But after the insurance company said it would only pay out £500 for stolen cash, the man claimed that a second ring and a watch worth £6,000 had also been taken.
West Yorkshire Police uncovered the fraudulent claim when the burglar was caught. He admitted stealing the ring and the money but denied any knowledge of the additional ring and watch.
The homeowner’s claim was declared null and void when he admitted making the fraudulent claim following a police interrogation.
Detective Sergeant Mark Bray said: “Becoming a victim of burglary is far from a pleasant experience for anyone but some people use it as an opportunity to make a few quid back by falsely adding a few items of property to their claims, or in this case just rake back any losses not covered by insurance.”
Insurance ‘could replace welfare’Radical welfare plans could see £17 billion worth of benefits a year replaced by private sector insurance, it has been revealed.
Proposals from a group co-chaired by Chancellor Alistair Darling would mean that some sickness and unemployment benefits would be contracted out to the private sector in an apparent bid to cut the burden on taxpayers.
The move would be a massive reworking of the 1945 Labour government’s cradle-to-grave welfare reforms. It could see life insurance used to fund long-term care for the elderly, rather than money from the public purse.
A more controversial aspect of the plan – backed by an industry working group co-chaired by the Chancellor and Andrew Moss, chief executive of insurance group Aviva – would mean compulsory insurance for safety nets such as unemployment benefit.
Mr Moss said: “We are saying there is a debate to be had. The industry does have the capacity to take on more of these risks.”
He argued that the public already accepts compulsory insurance when driving their car.
If you have any news to include, please contact [email protected]
CORRECTIONIn the last issue of Claims Management we ran the wrong advertisement for The Injury Care Clinics. The contact details included in issue 19 were incorrect. The correct details can be found at www.ticcs.co.uk
NewsIf you have any news to include, please contact [email protected]
NEWS
Protection insurance beneficial for consumersA major agreement between insurers has resulted in a significant drop in complaints on critical illness insurance, according to the latest Financial Ombudsman Service (FOS) Annual Report.
The ABI Code of Practice on long-term protection forms part of the ABI’s Consumer Strategy, which puts consumer interests at the heart of what we do. The Code guarantees that all ABI members treat customers fairly when dealing with claims where they had unintentionally failed to tell their insurer a relevant piece of information when they applied for their policy.
As well as the FOS reporting fewer complaints on critical illness insurance, of the complaints that do go to the FOS, they are now finding that the insurer has acted fairly in more cases.
Nick Starling, the ABI’s Director of General Insurance and Health, said:“This drop in complaints is a direct result of the ABI’s Code of Practice. The Code looks at the way claims are dealt with where people failed to tell their insurer about a relevant piece of information when they applied for their policy.
“This is good news for consumers. It means people can be confident that when they buy a critical illness policy, they know it will pay out if it is needed.”
Insurance Fraud Bureau research shows halt in ‘Crash for Cash’ growthThe Insurance Fraud Bureau (IFB) today releases statistics pinpointing the top twenty areas of the UK affected by ‘Crash for Cash’ crimes, showing insurers halting the growth of the problem. The IFB employs state of the art technology and utilises data pooled from across the insurance industry to identify criminal networks putting innocent motorists’ lives at risk with ‘Crash for Cash’ activities and proactively stop them growing.
Working with its membership to engage Police forces in joint investigations, the Bureau has over the last two years successfully disrupted the actions of criminal gangs, stemming and reducing the growth of ‘Crash for Cash’ on the UK’s roads. Nationally, organised ‘Crash for Cash’ network sizes have reduced by 11% over two years, at a time when crime is widely forecast to be on the increase due to the recession. The IFB’s regional statistics show the power of its disruptive activity. Drawing on two years of insurance claims and policy data, the IFB can demonstrate that hotspots where there has been joint Police and IFB activity are experiencing less ‘Crash for Cash’ claims over the last three months.
Particular areas where this is the case include Luton, East London, Harrow and Walsall. Other areas have seen ‘Crash for Cash’ levels stabilise including Birmingham, Uxbridge and London North-West. Conversely, where the Police have yet to engage with the IFB, ‘Crash for Cash’ activity is increasing, most notably in Liverpool, Halifax and Ilford & Barking.
Chimney manufacturer compensates asbestos victimGraham Dancer, 63, from Barnstaple, Devon has received the damages after being diagnosed with the fatal asbestos cancer mesothelioma caused by exposure to asbestos while working for Selkirk Flue Limited, now owned by Powrmatic.
He worked for the chimney manufacturer, based in Pottington Trading Estate Barnstaple, from 1969 until he was diagnosed with the disease in 2007.
He was exposed to asbestos on a daily basis in the early years of his employment. He started work in the warehouse where pipes insulated with asbestos were brought into the factory. He later moved to the production department where he applied asbestos to pipes.
He remembered: “There was so much asbestos dust that you could see a thick layer of it on your tool box. You could also see it floating in the air. My overalls and hair would be covered in it.”
Mr Dancer, who has a wife, Wendy, and no children, was told by doctors he has just months to live. He has retired and said he is now taking each day as it comes.
There is no cure for mesothelioma which is caused only by asbestos.Following his diagnosis Mr Dancer contacted his union, UNITE,
which instructed asbestos claims experts Thompsons Solicitors to advise him about compensation.
The claim was settled out of court within 17 months.Mr Dancer said: “I was told by the hospital that there was
08
ON THE MOVE
Karl Fischer has joined PR Scully & Co in St Helens as New Business and Client Development Manager.
Karl joins PR Scully from Merseyside firm Carpenters Solicitors.Senior partner Patricia Scully said: “We are delighted to
welcome Karl to the firm. He has a wealth of experience in personal injury and claims management and we look forward to working with him as we continue to expand our business.”
Steve Molloy has been appointed as Marketing Manager at Manchester firm Antony Hodari & Co.
Steve was previously Head of Marketing at Alexander Samuel & Co.
The firm’s Senior Partner, Antony Hodari, said: “I am delighted to welcome Steve to our senior management team. Steve’s industry knowledge, fresh marketing initiatives and operational expertise will prove a huge asset in driving our short and long term growth plans forward.”
News
NEWS
If you have any news to include, please contact [email protected]
09
nothing they could do for me but the union put me in touch with Thompsons Solicitors who have dealt with me with compassion and efficiency.
“I am relieved that my case has been resolved so quickly. I can now get on and enjoy the time I have left.”
Lawrence Faircloth from UNITE added: “Asbestos has affected the lives of many of our members who were unwittingly exposed to the dangerous dust by negligent employers.
“We are pleased to have supported this member with his claim for compensation. The swift settlement means he can enjoy peace of mind that his family will be provided for in the future.”
Amanda Jones from Thompsons Solicitors said: “Mesothelioma is a devastating disease caused by exposure to asbestos. It was our aim to enable Mr Dancer to receive compensation during his lifetime which is what he wanted. While it will not bring back his health we understand the importance to him of knowing that his wife is financially secure and that the formalities of the claim have been resolved quickly and successfully. The backing of his union was instrumental in bringing about the successful conclusion of the claim within his lifetime.”
Insurance fraud PCs found guilty
Two lesbian policewomen have been convicted of defrauding an insurance company after a crash by lying about which one of them was driving.
Diane Reeves-Emery, 38, claimed she was at the wheel when her lover, Charlotte Eccles, 23, hit the kerb in her car, causing £3,000-worth of damage.
The intention was to cut the excess charge to £250 from the £500 that Eccles would otherwise have had to pay because of her youth and inexperience.
At Stafford Crown Court, both women, who were employed by Derbyshire Constabulary, were found guilty of obtaining a
financial advantage by deception.Eccles claimed that she only went along with it because she
was “petrified” of Reeves-Emery, who she claimed had been emotionally and physically abusive.
The court heard how they at first told insurers that Reeves-Emery had been driving, but that Eccles had later confessed that she had been at the wheel.
Reeves-Emery was also convicted of a second count of deception for not notifying her own insurers of the crash when she renewed her policy just days later.
The pair will be sentenced later.
Genetic test warning for insurers
Insurance companies have been told not to use genetic test results, increasingly used by people to check for inherited diseases, to hike premiums.
A House of Lords committee wants to see the European Union place tougher regulations on the industry, including a voluntary code of conduct that would ensure insurance companies do not use the test results for their own gains.
The Lords’ science and technology committee led an inquiry into the tests which found that claims about identifying an individual’s risk of developing diseases were rarely “substantiated by scientific evidence”.
The committee warned that insurance companies could get hold of the results and use them to increase premiums, or even refuse cover altogether.
The inquiry was chaired by Lord Patel, who added: “We have concerns about the growth of ‘at home’ direct-to-consumer tests.
“Without proper qualified interpretation, results of genetic and genomic tests could cause people to worry unnecessarily and place new demands on NHS services. It is time firms offering these tests were required to provide counselling and guidance on interpreting the raw results they provide.”
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NEWS
11
Crackdown on payment protection
Moves aimed at cracking down on the sale of payment protection insurance (PPI) are going ahead despite an appeal by banking giant Barclays.
PPI covers debt repayments if a policyholder is unable to work due to an accident or illness, or if they lose their job.
The Competition Commission heavily criticised the PPI market when it released a report in January, saying single premium cover caused considerable concern as it required the entire cost of the policy to be paid upfront, often adding to the debt that is being taken out.
This can lead to people paying considerably more interest on their debt, while in some cases consumers claimed the premiums were added to the loan without them even knowing about it.
The watchdog has now launched a consultation on recommendations in the hope of avoiding any delay caused by the ongoing appeal.
The sale of single premium PPI has now been banned after the Financial Services Authority (FSA) decided to bring forward the Commission’s recommendation.
An appeal of the commission’s decisions was filed by Barclays in March, in particular in protest at the ban. The hearing is set to take place on September 10.
Peter Davis, Competition Commission deputy chairman and inquiry chairman, said: “Taking these steps now will help ensure there is no unnecessary delay in resolving the significant competition issues that we found in this market and in delivering a better outcome for consumers.”
Banks’ efforts having little effect
Despite more than £100 billion being pumped into the UK economy through quantitative easing (QE), little seems to have changed in the credit markets.
Four months on from the Bank of England’s efforts to boost the money supply, figures show lending to private firms fell by £4.5 billion between March and April and by a further £300 million between April and May, while growth in lending to households was also reduced.
Since the Bank launched its quantitative easing programme – effectively printing money – in March, the Monetary Policy Committee (MPC) has authorised £125 billion in QE purchases.
However, it is likely to press on with the remaining £25 billion of its £150 billion mandate after the latest assessment of the current financial crisis placed the economy in its biggest slump in more than 50 years during the first quarter of 2009 – a far worse than expected 2.4% decline.
The initial idea behind QE was inject money into the system so as to underpin bank balance sheets and encourage lending in the wider economy.
However, the Bank is also charged with keeping CPI inflation at 2% and its forecasts show it undershooting this target with interest rates at 0.5% and £125 billion of QE.
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News
Book your table nowNominations have closed for this year’s awards, and judging process is in full swing. The Awards will culminate in a prestigious ceremony and dinner at the The London Marriott Hotel, Grosvenor Square on Tuesday 10th November 2009, and we want to see you there.
Tickets for the event are priced £160 +VAT with tables of 10 at £1,600 + VATFor full details and to book your tickets, visit www.personalinjuryawards.co.uk; alternatively, please contact Claire Winstanley on 01423 851157 or email [email protected]
The Awards Categories• Personal Injury Lawyer of the Year (claimant)• Personal Injury Lawyer of the Year (defendant)• Young Achiever of the Year• Personal Injury Team of the Year• Claims Management Company of the Year• ATE Insurance Provider of the Year• Medical Agency of the Year• Rehab Provider of the Year• Barrister of the Year• Barristers’ Chambers of the Year• Outstanding Case of the Year• Mediation Achiever of the Year• Independent Expert Witness of the Year• Outstanding Achievement of the Year
For further sponsorship opportunities, please contact Kate McKittrick on 01423 851150 or email [email protected]
Confirmed sponsors
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NEWS
13
Call to ban complex money productsA judge at Birmingham County Court has told a couple from Shrewsbury that they can remain in their family home indefinitely after exchanging it in a sale and rent back scheme.
Paul and Amanda Jackson were forced into entering the scheme with Repossessions Stopped after falling behind on their mortgage payments. They were told by the firm that they could remain in the property indefinitely.
However, just two years after the agreement, the firm issued the couple with an eviction notice after falling behind on its own mortgage payments on the property, prompting the family to take legal action.
Mr Jackson said: “We took that option (sale and rent back) to provide security but we felt as if everything was being stolen from us.”
The case was brought to the court by the housing charity Shelter who celebrated the landmark case as the first of its kind.
Shelter’s principal solicitor John Gallagher said: “This is a huge and important victory for not only the Jackson family but everyone who is tempted by these sale and rent back schemes.”
Societies Bill clears key hurdleThe Co-operative and Community Benefit Societies and Credit Unions Bill proposed by Labour’s Lord Tomlinson is said to represent the “re-branding” of societies necessary at a time when the sector is undergoing a “renaissance”.
Lord Tomlinson told the Lords: “We are at the end of a period where there has been a decline in the significance of co-operation and we are now in the era of a resurgence, a renaissance, of co-operation and of mutuality.”
The Bill aims to help mutuals flourish by introducing requirements which would ensure they could be supervised by the Financial Services Authority.
Under the proposals, laws on credit unions will also be brought into line with those for building societies.
Liberal Democrat spokesman Lord Newby backed the “eminently sensible” Bill, which has already cleared the Commons, as a “tidying-up and modernising measure”.
He praised the “timely and good Bill” for focusing on objectives of modernising legislation and increasing confidence in societies.
MoJ names rogue claims firmsThe Ministry of Justice has now listed on its website all the claims management companies that have had their authorisations suspended or cancelled.
The MoJ, which regulates the sector, says that specific reasons for enforcement action will not be published. Firms in this sector arrange the entire process of claiming compensation.
Officials says that publishing the names and the status of their authorisations “is simply making this information easier for consumers to check”.
Says spokesman Jan Farenden: “The claims management regulator suspends or cancels a person’s authorisation in accordance with the enforcement policy and the procedures in the Claims Management Services (Regulations) 2006 if conditions of authorisation have not been complied with and it is necessary to take this action to protect the public.
“If a business is suspended or cancelled they have 28 days from the date of the decision to appeal to the Claims Management Services Tribunal.”
Serious Fraud Office budget cutIt is now investigating 88 cases, up from 65 last year, even though a “management shake-up” saw 90% of its senior staff leave the organisation over the past year.
High-profile cases include the UK operation of US fraudster Bernard Madoff, financial products offered by collapsed US insurer AIG and the failure of UK carmaker MG Rover.
This year its conviction rate was boosted after 78% of individuals who had cases brought against them either pleaded guilty or were convicted by a jury.
Of 18 cases brought to court, 17 of them saw at least one defendant convicted. The exception was Operation Holbein, the inquiry into alleged price-fixing by drug companies.
As a footnote, the SFO mistakenly claimed in its annual report that its budget for the last year was around £50 billion instead of £50 million. In fact, all budget figures in the accounts are out by a factor of 1,000.
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Untitled-1 1 5/8/08 15:55:17
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NEWS
15
Insolvencies ‘will continue to rise’
The number of companies in financial difficulty will continue to rise despite any upswing in the economy, insolvency company Begbies Traynor has predicted.
It reports pre-tax profits up from £5.7 million to £7.2 million, and predicts that industrial dark clouds will continue to provide silver linings even after the economy recovers.
It said there were nearly 22,000 corporate insolvencies in 2008, a 38% increase on the previous year.
High-profile cases included Southampton Leisure Holdings, the parent company of Southampton Football Club, which helped boost revenues by 29% to £62.1 million for an insolvency operation reckoned to be the biggest in the UK.
The Manchester-based firm says that it handled 1,800 corporate cases in the year to April 30, an increase of around 38% on the same period last year.
Says a spokesman: “We believe that the volumes of corporate and personal insolvencies, as with levels of unemployment, tend to be indicators that lag any change in economic activity and are therefore likely to continue to rise after the commencement of economic recovery.”
Claims management companies bannedFour claims management companies have been banned from operating in a Government bid to protect the public from exploitation by rogue operators.
Claimwise Legal Services and Momentum Network have had their authorisations cancelled, while GloVista Red and Ezee Claims have been suspended.
Damages-based contingency fee agreements, generally used in employment tribunals, were previously free to charge what they wished before regulation was introduced in 2007.
Says Justice Secretary Jack Straw: “Unregulated contingency-fee arrangements expose claimants to unfair terms and
conditions being imposed by those representing them, which could lead to huge slices being taken out of their damages.
“These arrangements - unlike, for example, conditional fee agreements - have until now been without statutory regulation because of a long-standing legal anomaly.”
New proposals yet to be implemented aim to make sure consumers know, before they sign anything, how much any claim is likely to cost.
Says Carl Wright, boss of claims management company Cartel Client Review: “Consumers must be very wary of firms that make misleading claims of buying up debt. It may appear an attractive notion, but their lack of legal experience with unenforceable credit agreements will only leave consumers in deeper financial trouble, and potentially even in court.”
Firms to publish complaint details
The Financial Services Authority (FSA) has announced plans to “name and shame” companies that receive high levels of complaints from customers.
The watchdog wants companies that receive in excess of 500 complaints every six months to publish details on their websites.
Under the new proposals, firms would be required to reveal how many complaints had been opened and closed during the past six months as well as the proportion of cases that were dealt with within eight weeks.
Firms would also be required to illustrate how many complaints they received per thousand customers so that potential clients could compare between large scale and small scale companies.
The announcements come in response to a rise in the overall number of complaints that were upheld by the Financial Ombudsman Service during the last financial year.
The FSA hopes the exposing of poor practice will encourage companies to focus more on customer satisfaction and how they deal with complaints.
If you have any news to include, please contact [email protected]
News
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NEWS
17
Retired policeman’s widow receives compensation for asbestos death
The widow of a former policeman has received a substantial sum in compensation after he died from an asbestos related disease.
Stuart Brown from Swansea died from mesothelioma after he was exposed to asbestos as a 16-year-old apprentice while working for Millers Insulation & Engineering Company.
He was employed as a lagger’s mate and worked on the construction of BP’s Petrochemical plant at Baglan Bay, Port Talbot from 1963 to 1964.
Mesothelioma is caused by exposure to asbestos. It can take 40 years or more to develop and many sufferers die within months of diagnosis.
He was exposed to asbestos used to insulate pipe work. Before he died he remembered: “You could see the asbestos dust falling to the ground and sparkling when it fell through shafts of light. There would be lots of asbestos dust and debris on the floor which would be kicked around. We had no idea it could be so dangerous.”
Stuart became a police officer with South Wales Police in 1974 and retired in 2001 after 25 years on the beat. He was working as a part time parking attendant when he was diagnosed with mesothelioma in November 2005. Sadly he died just two months later in December 2005.
He was just 59 and left behind his wife Christine, and a son. Asbestos claims specialists Thompsons Solicitors obtained
substantial compensation for his wife. She said: “When we found out the cancer had been caused by
asbestos Stuart was determined to take action. He had always been a very practical and caring man. I was unable to work and he wanted to make sure that I was provided for. Sadly he died just two weeks after he contacted Thompsons so I carried on with the claim on his behalf.”
Eamonn McDonough from Thompsons Solicitors added: “Mesothelioma is a devastating disease which ended Mr Brown’s life at a relatively young age when he was preparing to enjoy his retirement. We are only too pleased to have helped his family to obtain compensation and to raise awareness about the dangers .
Fraud cases hit 21-year recordThe number of fraud cases going through the UK’s courts hit a 21-year record high in the first six months of this year, a top accountancy firm has said.
KPMG said there were 163 charges of serious fraud – where more than £100,000 is embezzled – in the first half of this year, with a combined value of £636 million.
If the figure is matched in the second half of the year, it will exceed the highest annual total of £1.2 billion, recorded in 1995.
Investors were the worst hit, suffering losses of £321 million – more than half the total money in just 17 cases – KPMG’s fraud barometer found.
The Government was the next biggest victim, with almost £153 million taken in 38 cases. It lost out mostly through tax and duty evasion or fraudulent benefit claims.
Financial institutions suffered 44 cases of fraud, totalling more than £111 million.
Insurance fraud on rise: report
Approximately £5.2 million of fraudulent insurance claims go undetected every day – a 24% increase on two years ago – a report has found.
The Association of British Insurers (ABI) said that insurance fraud had soared to an estimated £1.9 billion a year.
Popular scams, which cost the average household £44 a year in higher premiums, included withholding information about a speeding conviction, listing the wrong address for a motor insurance policy or listing a parent as the main driver of a vehicle that was used most by a newly qualified driver.
But the ABI said that firms were getting better at detecting fraud, with suspect claims worth £730 million rejected last year.
The association reported a 35% increase in claims involving the damage or loss of LCD televisions, high value watches and laptops.
The ABI said that more people had also deliberately damaged furnishings or electrical goods so their insurer would pay for new ones.
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FEATURE
18
The unenviable taskRichard Smyth summarises the wide variety of views on Justice Jackson’s report
O ne might imagine that the report published in May by Lord Justice Jackson’s civil litigation costs
review team constitutes the authoritative last word on the subject. At 663 pages (12 parts, 64 chapters, 30 appendices, three annexes and a glossary) the report is certainly comprehensive, touching on issues that range from after-the-event insurance and one-way cost shifting to the use of IT in the courtroom and the costs regime in place in the Eastern Caribbean.
Authoritative, then – but by no means the last word. For a start, the report covers only Phase One of Justice Jackson’s review (after the conclusion on July 31 of Phase 2, the consultation process, one further Phase remains, with a final report due in December). What’s more, the review is independent of the Ministry of Justice’s faltering steps towards reform of the personal injury sector, which have seemed to many to have been edging tantalisingly towards implementation for years without ever quite getting there – and the last word, if ever there is to be a last word, will surely come from the MoJ, rather than from Justice Jackson.
The reality is that the Jackson review, while garnering rave reviews from many quarters for its rigour and independence, represents yet another round of discussion for a sector growing increasingly prone to consultation fatigue. There is widespread agreement that civil litigation costs – inflated by spiralling ATE premiums and the use of Conditional Fee Agreements (CFAs) – need to be brought under control; satisfactory consensus on the question of how this is to be done seems as remote a prospect as ever.
Justice Jackson himself has been quick to acknowledge the polarised nature of the debate.
“In the last four months I have been
caught up in a maelstrom of conflicting arguments,” he said at the launch of the May report, demonstrating a dry line in weary apercus. “Indeed, in comparison with the present Costs Review, the design and construction of the Tower of Babel seems to have been quite a harmonious and straightforward project.
“One thing is inevitable,” he added. “My final report will generate protest from at least some directions and quite possibly from all directions.”
Justice Jackson acted astutely in heading off the anti-regulatory uproar that is certain to accompany his conclusions: his assertion in the preliminary report that “one size does not fit all” is a reliable palliative in these circumstances and prompted sighs of relief from across the profession. The phrase appears to promise that regulatory measures will not be heavy-handed and inappropriate; when echoed by practitioners in, for instance, the commercial courts, it can often be roughly translated as: “good luck, but leave us out of it”.
Frustration persists among practitioners regarding the slow pace of reform. The line between consultation and procrastination often seems like a fine one.
“It is a little difficult at present to be preparing for reforms when you don’t know what they are likely to be,” commented Anthony Hughes, the chief executive of Horwich Farrelly Solicitors and president of the Forum of Insurance Lawyers (FOIL).
There is also doubt regarding the likely efficacy of any new MoJ regulations; many maintain that consistent and effective case management by the judiciary – as promised by the landmark 1999 Woolf reforms – would represent a better way of limiting litigation costs.
“Ultimately, however many new rules are introduced, it always comes back to the
judge’s ability to manage a case effectively,” David Allen of Mayer Brown London told The Lawyer.
John McQuater, the president of the Association of Personal Injury Lawyers (APIL), agreed.
“We do think effective case management would be an extremely useful tool in helping to control costs, with procedural judges taking a robust stance on issues raised,” he said. McQuater singled out the conduct of Master Whitaker in cases of mesothelioma as an outstanding example of good practice.
But Anthony Hughes suggested that any attempts to improve case management would be hampered by the low levels of funding available.
“The Woolf reforms were quite clear in that they suggested that there would be no local practice directions and that we would get the same sort of judicial intervention and indeed consistent case management on all cases,” he said. “Unfortunately that has not been the case.
“Sadly, the court service is woefully under-funded and, as a result, I am not sure that we can expect [the lack of consistency] to change.”
Fixed costsOne measure that does appear likely to be implemented in the not-too-distant future is the introduction of fixed costs to the civil litigation fast track. Justice Jackson described the measure as “an essential part of Lord Woolf’s proposals”; however, for reasons characterised by Jackson as “in part political”, implementation was stalled. Similar proposals drawn up in 2007 by the now-defunct Department for Constitutional Affairs were also shelved.
The Jackson review’s Fixed Costs Sub-committee is unequivocal in recommending that the measure now be revived, and
FEATURE
19
THE JACKSON REPORT
proposes a cost matrix that establishes fixed costs in cases involving Road Traffic Accidents, Employer’s Liability, Public Liability, and Occupational Disease. Justice Jackson noted that a fixed-cost regime would provide court users with a greater degree of certainty – “a commodity that many litigants crave and which is singularly lacking in civil litigation”.
Such a regime – if implemented – could be complemented by MoJ-backed plans for streamlining the fast-track claims process.
Also on Justice Jackson’s agenda is the somewhat muddy issue of “middlemen”. The report suggests that the removal of redundant “layers of activity” from the personal injury litigation process would be “desirable”; however, reformers in this field might be wise to choose their targets carefully. Anthony Hughes cautioned against indiscriminate scapegoating.
“‘Middlemen’ is an unfortunate term,” he said. “While I would very much support the removal of people who do not add value to the process, you also have to bear in mind that there are many brokers within various processes that can be of genuine value.”
After-the-event (ATE) insurance – a key plank of the Government’s strategy for promoting access to justice following the withdrawal of legal-aid provision – is thought to be a particular target for some in the reform programme. The Jackson report raises the possibility of introducing one-way cost shifting in personal injury cases; under this system, a defeated defendant pays the claimant’s costs, but a defeated claimant does not pay the defendant’s costs.
“One-way cost shifting could see the removal of ATE [provision] but it is Government policy that ATE insurance should exist,” Hughes explained. “As such I am not sure that there would be support for any recommendation to remove it.”
The fact remains that the Jackson report – in common with much of the material produced on the subject by the MoJ – is long on discussion and relatively short on concrete conclusions, and the future of the personal injury market remains indistinct. Hughes counsels a common-sense approach.
“Inevitably, efficiencies will have to be achieved and it is quite simply good business practice to continually review your processes and procedures to ensure that they are as efficient as they possibly can be,” he advises. “Have realistic conversations with clients in terms of the levels of service that can be provided and,
indeed, their own expectations.”The realistic bottom line is, of course, that
any solution to the sector’s costs problems has to acknowledge that, firstly, high-quality legal services are never going to come cheap and that, secondly, whatever reforms are implemented could end up, like any good compromise, leaving everybody mad.
Everyone seems to agree, at least, that decisive and effective action by policy-makers in Government – as well as by judges in the courtroom – is required in order to ensure equitable access to civil justice; if consensus has to be reached before such action can be taken, we could be in for a long wait.
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Introducing ARCThe trade body looking to lead with integrity
T he Association of Regulated Claims Management Companies (ARC), is a newly-launched trade association
offering support and guidance to small and medium claims management businesses.
Established in 2009, it offers clear paths of communication between the Regulators and its members in a climate where the representation on offer to businesses in the claims management sector is minimal.
ARC’s aim is to provide efficient, professional and regulated services throughout the industry while keeping its promise to support, promote and enhance the image and general welfare of the claims management sector.
ARC provides information to the public by ensuring that claims management companies (CMCs) meet high standards, and are fully compliant with the regulations. For this to happen, they offer their members training and expert advice in all aspects of the claims
management sector, so that they meet the standards set by the regulator.
Becoming a member of ARC brings with it professional recognition and a wide range of support services that aid the development of claims management businesses, forging new professional links between their associate members and providing advice on the industry to the general public. Membership is offered on an annual basis to organisations rather than individuals.
Offering three different levels of membership, ARC can provide firms with many benefits, including a free Ministry of Justice health check and access to contractual, IT, marketing/media, funding and insurance advice, membership to Casepool – a web portal for the sale and acquisition of legal cases – to name just a few.
The ARC Executive Board comprises of industry experts from legal, insurance, medical and claims management fields.
The Members Area within the ARC website offers a wealth of information, covering the latest news topics and articles, posting documents for download and offering an ‘Ask the Expert’ service whereby questions from members can be answered by a relevant expert.
ARC also offers training and development, which is a highly effective way of increasing your knowledge of current government legislation and developing staff knowledge of the claims management sector.
With ARC’s unique and effective delivery, it makes firms more knowledgeable, potentially profitable and easier to manage. It offers a wide range of training solutions, backed by innovative thinking and a varied choice of delivery. All training is specifically designed to keep you and your firm in line with regulatory policy and procedures. Upon successful completion of your chosen training programme, participants will gain an official ARC Certificate.
FEATURE
22
Dimond v Lovell, predictable costs, third party capture, challenges to CFAs – the last ten years
have been relentless with challenges to claimant lawyers and CMCs alike. One problem is solved, a brief respite, then along comes the next. With the new profit costs figures for streamlining still firmly under wraps, we wait to see what April 2010 will hold for CMCs. It will perhaps be the greatest challenge yet. A general election may postpone any reforms but that will only delay the inevitable. Lord Jackson’s unease about commissions paid to ‘middlemen’ is evident. Discussing referral fees in his preliminary report, he says that there appears to be a general view amongst solicitors on both sides of the fence that the fees are “an unwelcome addition to personal injury costs which bring little benefit to either clients or lawyers”. Cost cutting is on the agenda and CMCs need to plan for the reality that they are very much the focus of his attention.
With the commissions currently on offer, inefficient CMCs can, for now, muddle on. Not for much longer. If the change in costs rules brings about the seismic change we expect, only those CMCs that recognise the needs of their clients and offer a valuable and timely service to both clients and business partners will survive.
Lord Jackson’s tide may be turning against CMCs but that has been tempered by the abolition of legal aid for personal injury claims. The government has to recognise the rights of the ordinary individual and will be keen to avoid any suggestion that access to justice is being denied. Aggressive third party capture is the perfect demonstration
Planning aheadPatricia Scully considers the changing role of the CMC
23
COVER FEATUREFEATURE
of the danger of the balance tipping away from the individual. CMCs provide a valuable frontline service to a client who otherwise would be deterred from claiming. Whilst the MOJ registration process may have been an anxious and uncertain wait for many, those companies that have successfully registered and then renewed have the respectability that accompanies the recognition that they provide a service.
Where is the value?At the APIL annual conference in 2009, it was evident from a show of hands that the vast majority of solicitors were not in favour of referral fees. That view may however change when it falls to solicitors to attract work of their own volition and they are faced with the attendant rise in costs of advertising and marketing.
CMCs need therefore to remember their worth. The value of the service provided may be evident but that will not help if commissions are squeezed to the extent that smaller CMCs who do not benefit from efficiencies of scale can survive. If they are not to merge, how can smaller to medium sized CMCs shift their position in the market and thrive? More thought about the client’s needs (and rights) is required. For example, why should the victim of a non-fault accident claim the cost of repair against their comprehensive policy? That is
a matter of principle that will always appeal to a client. Clients should be aware that they are not limited to an insurer’s choice of repairer – that will come as a surprise to many who just assume that they have to do as they are told. The availability of credit repair should always be considered. If a CMC’s viability depends on being able to offer more to its clients, the broader the range and the greater the simplicity of its services, the better. A
credit repair scheme has to operate to the satisfaction of repairer and client alike. The legal enforceability of a credit repair scheme has been well tested. Clarke v Ardington saw an end to uncertainty on that front. Run efficiently, a credit repair scheme is a wonderful tool both in terms of service and marketing. Do not confuse an authorised repair scheme dressed up as a credit repair scheme. Any such scheme needs to operate ethically. Clients will appreciate freedom of choice and repairers a realistic market rate.
Charlotte Harrison, of Principal Claims, has seen a significant increase in business
by being able to offer clients and repairers the benefit of a flexible credit repair scheme. “Clients appreciate freedom of choice and repairers are grateful to retain work that they would otherwise lose to larger approved repairers. Speed of payment to repairers, particularly in times of recession when cashflow is crucial, makes all the difference”.
Does your panel solicitor have the same mindset in terms of how much they want to do for their client? They should view a CMC as a business partner and not just a referrer of work. Your panel solicitor may pay referral fees promptly but they need also to provide a range and quality of service that reflects the needs of the clients, the aspirations of the CMC and a long-term view of solicitor and CMC relationships needs to be taken in that regard.
The extra effort in the early stages will result in rewards to the client and, ultimately, to the CMC. The facility to offer credit repair is just one example of how a CMC is likely to retain its client base. Given some careful thought and planning, other areas of benefit to the client can be explored. Change will bring opportunity and, if the new regime does launch in April 2010, those who embrace new ideas will still be around to face the next challenge that comes along.
Patricia Scully is Senior Partner at PR Scully & Co Solicitors
“CMCs provide a valuable frontline service to a client who otherwise would be deterred from claiming”
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25
MEDICAL EVIDENCEFEATURE
Making the most of medical evidence Part Two: How to handle unsatisfactory reports
On receipt you should read a medical report carefully, and if the expert was instructed by you,
check she has answered all the questions you asked, and has complied in particular with her obligations under CPR 35.10 read with paragraph 2.2 of Practice Direction 35. You will need to send a copy to the client for their comments, and in larger cases, to counsel for their suggestions for questions or amendments.
amending reports:Paragraph 15 of the Protocol for the instruction of experts states that ‘experts should not be asked to, and should not, amend, expand or alter, any parts of reports in a manner which distorts their true opinion, but may be invited to amend or expand reports to ensure accuracy, internal consistency, completeness and relevance to the issues at hand’.
If the expert was solely instructed by you, and the report has not yet been disclosed then you have a fairly wide scope to consider revisions and/or amendments. In Jackson v Marley Davenport [2004] EWCA Civ 1225 the Court of Appeal confirmed that where a party unilaterally instructed an expert to provide a preliminary report to be discussed at a conference with a view to a final report being prepared, the earlier report was not disclosable to the other parties. You should bear in mind that the final report will be the basis of your expert’s evidence at trial and will be most persuasive if it is transparently the independent product of an expert uninfluenced by the pressures
of litigation. For this reason IT is almost always preferable to allow the expert to draft her own amendments following the conference. Also remember that under CPR 35.10(3) she is required to disclose the substance of all material instructions, so take care not to withhold or provide material or ask questions in such a way as to undermine the objectivity of the report, or provide cross examination material for your opponent. If you doubt the costs of a conference would be recoverable in your case, you could seek amendments by telephone or in writing.
You can put questions to joint experts or experts instructed by your opponent once, within 28 days of receiving the report, and only for the purpose of clarification (CPR35.6): the responses to such questions will be treated as part of the report. In practice it is very common to put detailed questions which either raise new matters or ask the expert to address issues which have been omitted (there is some support for this in the Court of Appeal case of Mutch v Allen [2001] EWCA Civ 76), and although responses to questions asked outside this procedure can only be relied on with the court’s permission, it may be granted where the responses address omissions or issues in a useful and proportionate way.
rejecting a report If the report was written by single joint expert instructed by both parties under CPR 35.7 then a copy will already have been sent to your opponent and can be relied on by them. The fact that a party
has agreed to adopt a joint expert does not prevent that party being allowed facilities to obtain a report from another expert, or if appropriate to rely on the evidence of another expert (Daniels v Walker [2000] 1 WLR 1382), but you will need make an application to the court for permission to instruct a further expert, which should be supported by cogent reasons demonstrating by reference to what is at stake in your case why it would be useful and proportionate for you to be allowed to instruct your own expert. You should exhaust the questions procedure first. It will often be worth risking the costs involved in instructing a second expert to report before you make the application, because you will be so much better armed to argue the application.
If the expert was jointly selected under the Personal Injury Pre Action Protocol and you have not yet served the report, the Court of Appeal has confirmed that a claimant can legitimately withhold disclosure and seek permission to rely on a further report (Carlson v Townsend [2001] EWCA Civ 511). If you had originally proposed a number of experts some of whom had not been objected to by the defendant, there would be nothing to prevent you instructing one of the others without the court or the defendant ever being on notice that you had received an unfavourable first report, but you will obviously be unable to recover the costs of the discarded report.
Hannah Tucker is a Barrister at Cloisters Chambers in
London
In the last issue Hannah Tucker offered some advice on how to effectively select and instruct a medical expert. She now considers what practical options are available to a claims solicitor on receipt of a medical report that is less than satisfactory.
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27
FRAUDFEATURE
Fighting fraudAccident investigators are the key to combating the rise in fraudulent insurance claims, explains Jenni Marsh
Much has been lost during the recession: jobs, homes and faith in the banking system in which
we entrust money. Now it seems the economic crisis has put another resource under strain: honesty.
According to the Association of British Insurers (ABI), £5.2 million of fraudulent claims are going undetected every day – a 24 percent increase on two years ago; in 2008 alone more than £730 million worth of suspect claims were rejected.
The body reports that as insurers become more alert to fraudsters’ tactics claimants are adopting more subtle approaches, primarily being economical with the truth.
A YouGov Financial Services survey commissioned by the ABI, which interviewed 3,031 people, found that 16 percent of those asked would not rule out making an exaggerated insurance claim.
The ABI cites one woman who claimed for the theft of a camper van that had been written off beyond repair 10 years earlier; another policy-holder was rebuffed when he claimed for a 42-inch LCD TV he reported buying before it had even been on the market, investigators found.
While household insurance policies are being claimed on most frequently, it is the motoring industry which still has the highest levels of fraud in terms of value, and still suffers from staged accidents.
amateur operationsWill Gaskill, a director at Robertson and Co, a surveillance and fraud investigation firm that helps government departments and insurance brokers ward off bogus claims, says the problem is exacerbated by the credit crunch.
“Everyone we speak to has experienced increased levels of fraud and exaggeration across all lines of their business,” he explains.
“Motor accidents are no exception with more opportunistic fraud emerging, for example, a genuine accident has occurred but the injuries sustained or number of passengers in the vehicle becomes exaggerated.”
His company recorded a 100 percent rise in instructions in the seven months between 2 June 2008 and 31 December 2008, a figure which has risen again by a further 22 percent since the beginning of this year.
This comes at a time when, according to the AA British Insurance Premium Index, car insurance premiums are increasing at their most rapid rate in a decade, with the legal fees involved in personal injury claims placing a growing strain on brokers.
Douglas Boulton, managing director of forensic accident investigator firm D & HB Associates, says that insurance firms have physics on their side.
He explains that in many accident fraud cases the ramifications of the collision are exaggerated to secure a more fruitful payout.
When performed by amateurs, Boulton says this is relatively easy to spot. He cites one case where the policyholder claimed a vehicle ploughed into theirs at 25 mph as they waited at a junction, pushing them along the road.
However, he explains the damage incurred did not support that scenario. “I looked at
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FEATURE FRAUD
the car and there was no movement in the damage – it had to start at the front and then move towards the back.
“They don’t realise that people like me exist,” the accident investigator and expert witness notes.
“They think the garage will have a look at the car and recognise the damage. They expect to claim. The pitfalls are at each stage when things have happened we get physics involved.” a necessary costBoulton concedes, however, that his services can be expensive. Accident investigators charge an hourly rate and often their work entails long journeys across the UK to inspect vehicles. In the current climate, is it a cost that insurance brokers can afford to pay?
It is one they cannot afford to forsake, Boulton would argue, noting that he has never come across a bogus accident investigator.
Carol Snowden, of private investigation agency Surelock, advocates prudence on the part of insurance companies, noting that there are normally trigger points that highlight the possibility of fraud taking place.
Firms can then cross-reference this information with a database of previous or identical claims. If such checks flag up more questions then a private investigator should
be hired, says Snowden. She advises brokers to use a reputable
private investigation firm, noting that Surelock has investigators who are retired and ex police officers, thus having experience in “all manner of investigations and surveillance.”
crash For cashHowever, it is not only amateurs that insurance firms have to contend with. Gaskill says the problem is not one limited to the consumer market.
“Commercial/fleet (and often sign-written) vehicles have been targeted by organised gangs who brake hard in front for no apparent reason (‘slam-ons’), or pull away from the kerb or suddenly change lane on a roundabout in order to collide with the target commercial vehicle,” he explains.
“Once the collision has occurred, every possible facet of the claim is then grossly exaggerated: the cost of repairs to the
‘innocent’ vehicle, injuries sustained by the driver, number of passengers and their resultant injuries.”
However, the Insurance Fraud Bureau says that organised ‘crash for cash’ network sizes have decreased by 11 percent over the last two years nationally. But the organisation does concede that in areas such as Liverpool, Halifax and Ilford the problem is still escalating – a concern not only for the industry but also motorists caught up in the unexpected and often dangerous stunt accidents.
John Beadle, chairman of the IFB, explains that often the revenue generated from such scams is used to fund other forms of serious crime, including drug trafficking and gun running.
“Insurance fraud is not a victimless crime; criminals must be brought to justice,” he adds.
Nick Starling, director of general insurance and health at the ABI, agrees that in tough economic times there is no room for leniency with accident investigations.
“There is no hiding place for insurance cheats. Honest customers should not have to pay the fraudsters,” he says.
“Getting a criminal record, as well as difficulty in obtaining more expensive insurance and credit problems await anyone who sees insurance as a soft touch.”
“The ABI cites one woman who claimed for the theft of a camper van that had been written off beyond repair 10 years earlier.“
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alternatively email us on [email protected] is one of the country’s leading and a dynamic “One Stop Shop” accident vehicle replacement company specialising in all types of vehicles including, private use, private hire and public hire. We offer a professional and a reliable service. We tend to deliver the replacement vehicle within 24 hours and in most cases same day subject to the insurers approval. For council plated taxis, the delivery time may vary as it depends on area to area. All of our vehicles are from brand new up to two years old. We provide like-for-like vehicles.
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CREDIT HIREFEATURE
Credit crunch timeLiz Adams looks at Copley v Lawn and Maden v Haller
In the two landmark cases of Copley v Lawn and Maden v Haller, the claimants’ cars had been involved in accidents by
drivers insured by KGM, who were at fault. The claimants were contacted by KGM, who offered to provide a “free” replacement car pending repairs to their vehicles. In the case of Maden the offer of a replacement vehicle came before the claimant entered in to a Credit Hire Agreement with Helphire and in Copely the offer from KGM came a few days after he entered into hire agreement with Helphire.
In both cases the offer for a “free” replacement vehicle was declined. The trial involved two questions – did the claimants fail to mitigate their losses by hiring cars from Helphire despite the offer from KGM? If so should their claim for car hire be completely extinguished or reduced to the cost that KGM would have incurred in providing the replacement car?
The Court held that the claimants had failed to mitigate, further stating that the cost to KGM of supplying the vehicles was of no concern of the claimants and irrelevant to the issue of mitigation. In respect of the second question it was upheld the first instance decisions – the credit hire charges fell to be dismissed in Madden and reduced in Copley.
the appealThe key issue in dispute was mitigation of loss in credit hire claims. Upon hearing the appeal, the Court of Appeal overturned the earlier decision and, on the facts of these cases, found in favour of the claimants.
The case is important for a number of reasons. Firstly a claimant can reject the defendant’s offer to provide replacement vehicle where insurer does not make clear the actual cost of the hire, to the defendant,
in order that the claimant can make a realistic comparison with the cost he may
incur if he took up the defendant’s offer.Also, if a claimant does reject defendant’s
offer then he does not forfeit his claim for damages (hire charges) but is entitled to recover at least what it costs the defendant to provide a replacement vehicle.
As a general rule then claimants would be entitled to recover market or spot hire rates unless the defendant could show that they could provide a vehicle at less than the spot hire rate.
The Court of Appeal has given guidance (set out in the box to the right) to assist in minimising the level of claims in future.
This decision finds a balance between the claimant’s duty of mitigation and that of
implications• The best scenario for defendant
insurers remains avoiding a claimant obtaining a credit hire vehicle in the first place.
• Insurers should not make “cold” calls to claimants offering replacement vehicles.
• Any written information provided to claimants should be in clear and simple terms and should make absolutely clear the cost to the insurer of hiring a replacement vehicle.
• Claimants who unreasonably reject offers of replacement vehicles will still be able to recover what would have been the cost to the defendant insurer of the hire.
This decision finds a balance between the claimant’s duty of mitigation and that of the defendant to compensate the innocent party
the Defendant to compensate the innocent party for the cost of a replacement motor vehicle. The key point that claimants and their agents have a duty to take reasonable steps to mitigate and the duty is no longer excessively onerous on the claimant.
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Treatment delivery in accordance with evidence based medicine
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Case Management
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8677 Claims Management Ad.indd 1 4/7/06 14:39:25
Bodycare ClinicsCrown HouseWilliam Street
WindsorBerkshireSL4 1AT
33
FEATURE HOUSEHOLD CLAIMS
W ith fraudulent household claims on the rise, insurers are increasingly looking to
outsource elements of the claims process to help identify honesty and detect fraudulent claims.
Put simply, there are only two types of claims – those you should pay and those you should not. Determining which is which has, and always will be, problematic. In a survey conducted by the Association of British Insurers (ABI), 1 in 10 adults – 5 million people – admitted to having made a fraudulent claim on a general insurance policy. Varying degrees of sophistication have emerged amongst insurers in recent years for combating the significant risk of insurance fraud, with varying levels of success – and the current recession is really putting these skills to the test.
Redundancy, lack of available credit, negative equity or simply greater caution towards the financial future are just some motives for previously honest policyholders to consider making dishonest claims. Why, for example, buy a new carpet or upgrade the television when you can simply make out there has been some form of accident in the home and claim against your insurance? This places an even greater burden on insurers and their agents to ensure that only honest claims are compensated.
One of the most notable and successful additions to the claims handling toolbox in recent years has been that of cognitive interviewing. The premise of cognitive interviewing is simple – every claim has a story to be told surrounding its circumstances and the very clues as to whether a claim is genuine or not lie within that story. So, unlike the more traditional claims handling methods
employed by insurers, whereby the claimant’s profile or postcode was the determinant of risk, insurers should actually focus on the claim, first and foremost.
For many, the term ‘cognitive interviewing’ simply suggests a telephone interview process. However, fraud management skills, customer service skills and cognitive interviewing can be combined into a single streamlined procedure to provide the most effective claims process in terms of cost and the deterrent and detection of fraud.
developing competenciesThe key word here is ‘skill’. It is not simply a case of sending claims handlers on a training course, but engendering a genuine competence. As with all skills, this competence degrades over time unless regularly coached and quality assured, so support mechanisms need to be in place from the outset in order to maintain the high standards expected from clients.
In light of this required commitment to ongoing investment in training and development, it might make sense for insurers to outsource their claims
management process to a company that has the required skills, assumes the burden of finding the right staff, and regularly trains and coaches its people.
The ABI has recently announced new statistics stating that insurance fraud is now costing the industry £1.9 billion per year (previously £1.6 billion) and adding on average £44 (previously £40) to every premium. Even before the gloomy impact of the credit crunch, the ‘consumerist age’ was already upon us, whereby fashions, styles and fads quickly come and go. So, the living room or bathroom that was so painstakingly designed and installed two years ago has been superseded by new ideas or gadgetry and the pressure to change or upgrade through the household insurance policy has certainly become a more prevalent consideration than ever before.
Given that this consumerist mentality still prevails (despite the credit crunch) and we are facing a gloomy 12-month economic forecast in the UK, it is essential insurers employ the best tools available to identify and manage away fraudulent claims. Cognitive interviewing is the sharpest tool in the box!
Jon Day is Head of Operations at TCF Corporate
Thinking it throughJon Day looks at the role of cognitive interviewing in combating the increase in household claims
Proclaim is the market-leading Case Management Software system, in use by over 10,000 individuals. Clients include:
n DLA Piper
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Nick Garner, Managing DirectorMSL Legal Expenses
EclipseProclaimA4AdFinal_CM.indd 1 02/07/2009 09:05
FEATURE
35
C laim 2 Gain offers a specialist claims handling service for victims of mis-sold financial products
and services. The firm deals purely with financial complaints, with focus on endowment policies, bank charges, and PPI (payment protection insurance). Claim 2 Gain implemented Eclipse’s Proclaim Case Management Software in late 2007, as the firm’s existing system, which was not specifically designed for dealing with claims, was beginning to struggle under the weight of new instructions received.
tailor-madeEvery stage of our claims handling procedure has been mapped and translated into an onscreen workflow. The system has an integrated ‘editor’ which means that we can tailor and fine-tune processes to a very exacting degree. We now have a system that automates as much of the case handling process as possible, and this has brought a new level of accuracy to what we do.
When we installed the software, our staff had little or no knowledge of ‘system design’ or business analysis. However, using its inbuilt toolkit, we were able to effectively build a completely bespoke system from scratch. For example, when it was installed we were not dealing with some types of claims and have since had to build these processes from the ground up. The task has always been blissfully simple. By building the system in this manner, we have given ourselves a huge range of freedom. With other software that I’ve used, it’s been a case of ‘make do and mend’… not so in this case: we can get the software to work precisely around our needs – we do not have to compromise.
One of the biggest advantages is that decisions about what can and can’t be done
are not made by disconnected IT people, miles away from us. Our staff – the actual end-users – can have control over what they want the software to do. Just because something looks good on paper, it doesn’t necessarily mean it will work on a computer screen… we have the power to tailor the system and quickly experiment with alternative solutions and ways of tackling procedural issues. day-to-day beneFitsIn short, our staff are working more efficiently, the claims process is speeded up, and our clients are getting a better service! Since implementing the case management system, we have seen clear and dramatic improvements in our day-to-day running of the business. The complete flexibility of the software has meant that if we want the system to do something, we simply work out what we want to happen and then implement it accordingly.
When a claim is started, we can now be assured that actions will be taken once – there is no duplication of effort, and we have a much higher level of accuracy. We no longer have to rely on our claims handlers having individual knowledge of each and every provider and their different procedures. If one type of claim needs to be sent on to one particular address, and another type of claim sent to a different address, the software knows this already and our claims handlers avoid having to choose from a bewildering list of addresses and contacts.
Automated administrative routines mean that we send the correct information, in the correct format, to the correct place the very first time. Gone are the days of to-ing and fro-ing between different departments and then suffering rejection because a tick was put in the wrong box!
strategic FitOur ethos is one of speed, clarity and accuracy. Our case management software has allowed us to give clients more information, more quickly and in a format that they can understand. By building our system in line with our preferred methods of working, we have been able to fine-tune the way in which we relay information, and retain the flexibility to make fast, reliable changes to our service offering. As new lines of claim opportunities have presented themselves (such as PPI), so we have been able to grow our system and maintain impeccable standards of accuracy and client communication.
We are now more confident than ever that any new claims process – whatever this may be – can be dealt with, and we can move forward with the confidence that our system will keep pace with the market.
Future plansIn the short-term we want to take more advantage of the software’s online facilities, and plan to implement the ‘FileView’ online case-tracking tool. This will enable our clients to view automated updates on the progress of their claims via the internet, whenever they want, rather than just when we are available.
Our long-term plans are always evolving, and we will always be investigating likely claims developments. We envisage the case management system being at the very core of what we do for as long as we are managing claims – the system will grow and develop with us.
Choosing and installing any type of core software system is a daunting task. However, had I known what the benefits would be, I would have done it years ago!
Matt Whiting is director of Claim 2 Gain.
Claim 2 GainForward-thinking claims organisation stays one step ahead using case management software, says Matt Whiting
PROMOTIONAL FEATURE
fineos.indd 1 12/2/09 09:42:51
FEATURE TITLEFEATURE
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fineos.indd 1 12/2/09 09:42:51
CLINICAL NEGLIGENCEFEATURE
Death by indifferenceRita Pal reports on the poor standards of treatment for the vulnerable
In 2007, Mencap released a report on institutional discrimination in the NHS.
Death by Indifference showed how six people with learning disabilities died unnecessarily. The report revealed appalling levels of discrimination, abuse and neglect. Prior to this, the 2004 Treat Me Right campaign exposed unequal healthcare. In 2006, the Disability Rights Commission (DRC) released a formal investigation into the physical health inequalities experienced. The investigation showed that people with a learning disability receive fewer screening tests and fewer health investigations. The overall conclusion was that people with disabilities were less likely to obtain the care they required.
Following these cumulative findings, the government requested a detailed investigation into to the six cases via the Parliamentary and Health Ombudsmen. In March 2009, they published a damning indictment of appalling care. The report makes recommendations aimed at ‘changing underlying attitudes on a lasting basis’. These include actions for the NHS and social care organisations in England and for those responsible for the regulation and inspection of health and care services.
An independent inquiry into the health care of people with learning disabilities was also commissioned. Sir Jonathan Michael, chair of the inquiry, published his findings in July 2008 in a report called Healthcare for all (www.iahpld.org.uk). He said, “It was shocking to discover that the experiences of the families described in Mencap’s report are by no means isolated, despite a clear framework of legislation against discrimination.”
An additional study – The Human Rights Act – Changing Lives (2008) conducted by
the British Institute of Human Rights (www.bihr.org.uk) showed that vulnerable people continued to suffer inhumane treatment in social care and health services.
In February 2009, the UK government signed up to the United Nations Protocol on the Rights of Disabled People. Disabled people will now have the opportunity to take their case to the UN if they feel their rights have been breached. Covering all aspects of life, including health, education, employment and access to justice, the UN Convention on the Rights of Persons with Disabilities (UNCRPD) reaffirms that disabled people have – and should be able to enjoy – human rights on an equal basis with non-disabled people.
links – the main reports
Death by Indifferencewww.mencap.org.uk/case.asp?id=52&menuId=53&pagenoTreat Me Right Report www.mencap.org.uk/document.asp?id=316Health Inequalities. DRC Investigation 83.137.212.42/sitearchive/DRC/library/health_investigation.htmlOmbudsman’s Reports – Six Lives www.ombudsman.org.uk/improving_services/special_reports/hsc/six_lives/overview_report.htmlHuman Rights Act – Changing Lives www.bihr.org.uk/sites/default/files/The%20Human%20Rights%20Act%20-%20Changing%20Lives.pdfHealthcare For All – The Inquiry www.iahpld.org.uk
“Disabled people will now have the opportunity to take their case to the UN if they feel their rights have been breached”
THE LAST WORD…
38
Eyes of the PharaohVitek Frenkel explains how forensic accountancy can play a vital role in litigation and insurance claims
W hat is a forensic accountant? To a fan of the television programme CSI, the term
‘forensic accountant’ may conjure up an image of a person in a suit carefully making their way around a crime scene in a disused warehouse, inputting numbers into a calculator.
While our job isn’t quite as flashy as those investigations in CSI, the services that forensic accountants provide to the claims management industry are often crucial in helping litigation and insurance claims reach a satisfactory conclusion.
Forensic accountancy is not a new profession. In ancient Egypt, the financiers who accounted for all of the Pharaoh’s assets were known as the “eyes and ears of the Pharaoh”. The first time a forensic accountant appeared in court was in Scotland in the early 1800s, when an accountant was required to give evidence at a bankruptcy hearing. Forensic accountants played a major role in bringing down Chicago mobster Al Capone for tax fraud and more recently have been at the fore of corporate scandals such as Enron and Madoff.
investigative accountingThe word ‘forensic’ is defined in the dictionary as ‘used or applied in the investigation and establishment of facts or evidence in a court of law.’
We use a combination of accounting, investigative and legal skills to provide an accounting analysis that is suitable to the court, and will form the basis for discussion, debate and ultimately dispute resolution. Forensic accountants provide services in the following areas: contractual disputes, commercial disputes, fraud and divorce.
One of the key areas of forensic accountancy is personal injury. While much of the personal injury work relates to road traffic accidents, it also includes clinical and medical
negligence; harassment and racial and sexual discrimination in the workplace; and industrial diseases. Pension losses are a key head of damage and we advise on these cases regularly, often on a joint instructions basis.
de-mystiFying FiguresIt is the role of a forensic accountant to understand that the claims management industry is not as accustomed to dealing with numbers as we are. Terms like ‘multipliers’, ‘pension losses’ or ‘lost years’ claims’ can be overwhelming and confusing.
In our work, it is essential that we get to the heart of the matter and set out a clear report of our findings. We present complex financial and business-related issues in a manner that is both readily understandable and properly supported.
Our brief is the same for each case: understand the numbers, and then make them understandable to those who have instructed us.
case studyThe following case highlights the way in which a forensic accountant can provide the expertise to assist the claims management industry.
We were instructed on a joint basis to assess the loss of earnings of a builder and supplier of materials who had been off work for several months following a fall. He was the sole shareholder of a successful company that turned over some £1,500,000 per annum.
A claim had been prepared on behalf of the claimant by his own accountant in the sum of £45,000. The defendant did not accept the level of quantum as set out and was concerned about the lack of independence of the accountants who had set out the loss.
There were various factors that needed to be investigated. There was clear evidence that the gross profit of the business had
declined over the affected financial year. However, some of the costs claimed related to an employee who allegedly ran the company in the claimant’s absence, but the position was unclear as she had been paid by the company prior to the accident and she subsequently married the claimant during the affected period.
Also, the accountants hadn’t made full provision for tax as the claimant operated through a limited company and full account needed to be taken of corporation tax and higher rates of income tax on the lost dividends.
On detailed analysis we concluded that the claimant had lost some £17,000 by way of loss of earnings.
When we called a few days after reporting to see if the parties had received our report we were advised that the matter had already settled – at the £17,000 that we advised. Both parties were pleased to have had a prompt and independent assessment of all of the issues and with this information they were able to conclude a speedy and satisfactory settlement.
behind the numbersForensic accountancy may have taken on different guises since the times of the Pharaohs, but our job has essentially always been the same. It is up to us to understand the facts behind the figures and use our experience and expertise to make your job as simple as possible.
Vitek Frenkel is forensic manager at Frenkels Chartered
Accountants.
CoNTACT DeTAILSVitek Frenkel, Churchill House, 137 Brent Street, London NW4 4DJ
Telephone: 020 8457 2929email: [email protected]: www.frenkels.com
