Liability claims reforms – be prepared

The 1st of August sees the Ministry of Justice Claims Portal extended to include Employers and Public Liability, as well as Motor, personal injury claims where damages claimed are under £25,000.  Whilst this could have a positive impact on claims costs, ultimately improving premiums, the strict timescales applied could also catch a lot of businesses out.  In this article we look at the wider implications of these changes.

 

“Submitting a claim just pushes my premiums up”.  A phrase I’ve heard a lot over the years and of course it isn’t always wrong.  Unfortunately not submitting a claim or delaying can have an even greater impact and recent legal reforms could make matters worse if business owners are not prepared.

 

Legal costs associated with injury claims have steadily increased and by 2009 it was estimated that for every £1 paid in damages a further 86 pence was incurred in costs.  Something had to change and the Lord Justice Jackson Reforms on civil litigation costs started to tackle this.  One result is that from the 31st of July a large proportion of personal injury claims arising from employers, public or road traffic liability incidents will be handled via what is referred to as the MOJ claims portal.    Already in use for smaller motor claims, the system fast tracks and limits costs on claims valued between £1,000 and £25,000.

 

There are some exceptions

Not every personal injury claim will be treated in the portal.  The following are examples of cases that will be taken out of the portal and dealt with the old fashioned way.

  • Claims where the value increases above £25,000 or falls below £1,000
  • Liability is denied or contributory negligece alleged
  • Public Liability claims made against an individual
  • Employers Liability disease claims with more than one defendant
  • All Public Liability disease claims
  • Abuse claims, mesothelioma and clinical negligence claims

 

The good news

Where you are at fault the legal costs associated can be properly contained and thus your claims record protected.  It also helps to combat the compensation culture with lawyers likely to be a little less enthusiastic about pursuing claims where legal cost restrictions apply.  The reduced costs that are being targeted may, hopefully, result in reduced premiums in years to come.

 

The challenge

Strict timescales, measured in days not months, apply to decisions on liability and suitable defences.  In our experience a great number of businesses will fail to meet those deadlines due to late claim reporting or poor supporting paperwork. This could give rise to defendable claims being conceded simply to avoid the risk of increased costs outside of the portal. 2012 saw one claim settled at damages of £12,750 with legal costs at £75,000. Compare that with the costs allowed under the portal of less than £2,000.  It is not difficult to see why insurers will be seeking assurances from business policyholders that accident recording and claims response processes are robust.  Failure to meet the claim portal conditions and deadlines could see business owners losing the support of their  insurers entirely.

 

Strict timescales

The strict timescales that apply include

  • 10 working days for an insurer to pay stage 1 costs after receipt of the claimant’s medical report and offer
  • 15 working days for an insurer to respond to a claimant’s settlement offer
  • 20 working days for an insurer to conclude negotiations on damages
  • 20 working days for you as a defendant to provide earnings information following an admission of liability
  • 30 working days to admit liability for Employers Liability claims
  • 40 working days to admit liability for Public Liability claims

It is also worth remembering that the timeline starts the day after the letter is sent to the defendant or their insurer.  Therefore if the letter arrives on your desk, day 1 has already been lost unless you get it to insurers on that very same day.

 

Some advice

Every business faces its own challenges and we prefer to sit face to face to discuss your needs and the systems needed to protect you.  As a client of Capital & County you get the benefit of access to our own experienced claims team. However, for those needing guidance on dealing with the legal reforms we suggest the following:

 

  • Notify your broker and insurers of potential claims immediately. Late notification could jeopardise your claims record.
  • Don’t hold back.  Failure to notify a claim could have drastic consequences.
  • Working closely with us, put a clear, concise and robust accident and claim reporting system in place.
  • Make sure that accident and investigation documentation and information is retained and stored in an organised manner.
  • Respond promptly to any request for information or supporting documentation made by us or your insurer.
  • Make sure that key staff recognise what a Claims Notification Form (CNF) looks like.  This is the form now used by claimant solicitors to notify you of a claim to be handled via the portal and thus subject to strict timescales.
  • If you do receive a CNF, acknowledge receipt to the solicitor straight away but do not accept or admit liability.  Then, pick up the phone to us and engage our support.
  • Make your insurer and policy details easy to access for those staff potentially receiving claims.
  • Develop a standardised email and mail response to new claims so that time is never lost generating a reply.

 

For any business that handles its own low value personal injury claims, i.e. inside a policy excess / deductible you should register with the portal and arrange for new notifications to be sent to you directly.  If you use claims handling agents then you may wish to check that they have registered.

 

Those wanting to know more about the reforms can go to the MOJ’s own website using the following link.

 

www.justice.gov.uk/civil-justice-reforms/personal-injury-claims/extending-the-road-traffic-accident-personal-injury-scheme

 

 

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