Access to Justice ; The Impact on Insurers Problems and Solutions!!! David Williams, Claims Director, AXA Insurance

2 The Problem; What should our current system do?*  Ensure access to all deserving claimants who need to use the process  Be effective at providing fair compensation and redress.  Deliver timely compensation  Without putting unnecessary barriers or constraints on the deserving, deter the fraudster  Be transparent  Involve proportionate processes which do not involve excessive costs or procedures  Ensure quality of advice or representation  Provide additional redress when the advice and representation is inadequate ‘Timely Compensation’? * - After James Sandbach – No, Win, No Fee, No Chance

3 Who benefits from inefficiency?  Time Costs Money! - Insurers don’t ‘Charge Out’ on an hourly basis  Insurers spread the total cost of claims (including handling expenses) across the premiums of everyone who buys insurance, so its certainly not the man in the street or small businesses that gain  “Lord Woolf wanted Fixed Fees in 1999, but the Claimant Lobby managed to delay their introduction, despite their successful place in the systems of Scotland and Northern Ireland for many Years”  “ Proportionality (of fees compared with compensation amount) - One of the key words contained within the CPR, and yet one that appears incomprehensible to Judges”  Investment Income for Insurers increased by delaying tactics? Are ‘Long Tail Claims’ a good thing? – Clearly not, though some people mistakenly still believe this  Delays in Notification are rife – Blurring of Evidence as memory fades adds nothing to the quest for Justice  How many Medical experts do we really need to establish the extent of an injury?  Referral Fees – Do they encourage more work than is necessary as each letter written adds a profit element? The number of qualified solicitors in private practice has grown from 54,734 in 1990 to 75,079 in 2004

4 Proportionality?

5 A good compensatory system could deliver  Fair compensation….  …delivered at the earliest opportunity  Transparency - builds trust and removes misconceptions  Have clinically driven, independent, cost effective rehab as part of the solution  Have claimant lawyer (if involved) and defendant insurer working to agreed timescales to deliver an agreed outcome  Solicitor involvement should only be where they add value  Insurers Staff should be well trained, empathetic, and looking to settle claims as quickly and fairly as possible  Proportionate costs, facilitated by streamlining the process  No referral fees?  Litigation should be the last resort

6 ABI Proposals New process for resolving claims pre-litigation  Early notification direct to liable party  Universal personal injury claim form  Faster timetable for defendants  Better communication with claimants  Public tariff of damages  Free independent legal advice available  Mediation as the first resort  Penalties for unreasonable behaviour Why do the Claimant Lobby feel these proposals are so unreasonable?

7 ABI proposals Improving the efficiency of the litigation system  Raise small claims track limit for personal injury claims to £5,000  Extension of fixed fee regimes to include more solicitors’ fees, success fees and other claimant services  New financial penalties to reduce legitimate compensation due if claim found to be exaggerated in the civil courts We will get some changes, but will the compromises to appease the claimant side dilute the impact?

8 An emerging consensus?  EEF: “It is unacceptable that the cost of settling claims is in the order of 40-60% of the damages received by the claimant”  Law Alliance: “Claimant lawyer network backs ABI’s proposals”  Citizens Advice: “The ABI’s proposals are a refreshing, welcome initiative”  RoSPA: “RoSPA backs insurers’ care and compensation plans”  Knowsley MBC: “ We support the ABI’s proposals to reform the compensation system”  DCA Select Committee: “the small claims limit is in need of reconsideration”

9 Insurers can be trusted!  Frontier Economics reviewed over 100,000 third-party claims  Included over 2,000 public liability claims  Legal representation made no difference to compensation amounts but extended settlement times  Slightly different picture for public liability claims

Access to Justice ; The Impact on Insurers Solutions? David Williams, Claims Director, AXA Insurance

11 The Future?  The number of qualified solicitors in private practice has grown from 54,734 in 1990 to 75,079 in 2004 BUT…..  General opinion is that at least 2/3rds of claims farmers will exit the market once consolidation bites. Market consolidation amongst solicitors is also likely.  There are said to be 6,714 PI specialist practices; general view is that this will reduce by 1/3rd Imagine a time when …. “We resolve claims quickly (in one go?), rehab opportunities are not missed, settlement times are measured in days, not weeks, months and years” …It can Happen!

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