The Ministry of Justice Proposals for the Reform of the Personal Injury Compensation System

Agenda Part 1-An overview of the proposals Part 2-The solicitor perspective Part 3-The Insurer perspective Part 4-Questions

The legal background Pre Woolf-10 year old claims –‘Liability is denied’ Post Woolf-Improvements –Pre Action Protocol-Justified denials –Pre Action Protocols-Timescales reduced –Average elapsed time paid claims 550 days Post Woolf-Costs maximisation –CFA’s –Success Fees –Too high a % of value of claim Most parties recognize need for change

Key proposed changes Consultation Process –Available to –Invited responses in a prescribed format on certain points –Started –Ended A. Case Track Limits –Small claims limit for PI to be kept at £1000 –Increase from £15k to £25k for fast track claims

Key Proposed changes contd B. Simplified and accelerated claims process –Letter of claim with minimum information –Very quick liability decision required –General Damages Tariff or Assessment tool for bi-party use –Standardisation of certain Special Damages –Standardisation of Contributory Negligence C. Costs reduction and certainty –Fixed where within new fast track timescales –Limited ATE recoverability –Sanctions where outside of timescales

Claims Process-Proposed Time limits Notification - 5 days of instruction Liability decision-EL/PL 30 wd’s, Motor 15 wd’s Settlement ‘Pack’ with offer-15 days after claimant agrees standardised medical Response-10 wd’s to accept or counter Negotiation-20 wd’s for inward referral Hearing –Accelerated –<£2.5k Court paper decision and/or hearing –>£2,5k Court directions and/or hearing

Non compliance sanctions Fixed (and assumed) lower costs for compliance-No ATE, lower fixed success fee Non fixed (and same or increased) costs for liability or >£2.5k quantum disputes –Higher costs –Higher ATE premiums–(£2500 now £12000) –Higher success fees

Implementation Timescales Consultation period closed 13.7-Results were to be announced September responses Next update now likely to be November Requires secondary legislation October and April windows Fixed fees agreed early 2008 Go live mid 2008-more likely October? EL only?

Opportunities and Threats Opportunity (if timescales are met) to:- –Reduce legal costs –Reduce settlement times –Reduce process costs –Gain a competitive advantage Threats –Increased claims volumes –Increased legal and process costs –Increased overall cost –COR deterioration –Market position altered negatively

Other consequences Policy Wordings amended? Reporting procedures revised? Resources/Processes reviewed? ATE sustainability? Contingency fees? No fault compensation? PIAB UK? Alternative voluntary claims processing schemes? Ostrich’s?