Ministry Of Justice Reforms 2013

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The 65th update by the Ministry of Justice came into force on the 31st July 2013 and relates to Employers & Public Liability and Road Traffic Accident Personal Injury claims occurring on or after the 31st July 2013 with a value between £1,000 and £25,000.

The reforms, known as the Low Value Personal Injury Protocol for Employers’ Liability and Public Liability claims will have a significant effect on how insurers handle claims which in turn will impact on our Clients.

The reforms impose much stricter timeframes in which to deal with claims which will mean immediate investigation and swift decision making by Insurers to ensure that claims do not unnecessarily drop out of the portal.

These reforms represent the largest changes to the personal injuries legal framework in England and Wales in over a decade and are intended to address the disproportionate costs that have been seen in civil litigation in recent years.

It is our aim as your Insurance Broker to guide you through these changes and assist in making the claims process as hassle free as possible to ensure that your business does not feel an impact.

The Main Changes

Timescales for decisions on liability – the current number of working days allowed by Insurers to carry out their investigations and conclude on liability is 90 however this has been significantly reduced to 30 business days for Employers Liability and 40 business days for Public Liability claims.

This is where our Client’s will see the biggest change in Insurer attitudes as they will require a slick claims process which allows them to carry out the necessary site investigations and collation of documentation as quickly as possible in order that a decision on liability can be made without delay.

There will be claims that our Client’s want to defend that Insurers will no doubt wish to settle if they do not feel that the prospects at the outset are good. In order to ensure that your Insurers are defending the right claims and settling those that do not have reasonable prospects we must provide all relevant documentation as early as possible.

We understand that you will not want your insurers to “roll over” and just pay claims however there are serious cost implications where claims drop out of the portal. The legal costs can be as much as 6 times as much.

Fixed and reduced solicitors fees – the reforms introduce revised fixed costs under a two tier approach for claims that settle within the portal.

 

Claim Value £1,000 – £10,000

Cover ClassStage 1Stage 2Stage 3
RTA (Motor)£200£300£250/£500*
EL/PL£300£600£250/£500*

 

Claim Value £10,000 – £25,000

Cover ClassStage 1Stage 2Stage 3
RTA (Motor)£200£600£250/£500*
EL/PL£300£1,300£250/£500*

 

*£250 applies to paper hearing, £500 applies to oral hearing.

Introduction of Qualified One Way Cost Shifting (QOCS) – Defendants will now have to pay their own costs whether they win or lose at trial with the exception of claims that are found to be fraudulent, where there is found to be no reasonable cause of action and where the Claimant fails to beat the Defendants pre-trial settlement offer. In the past if a claim made it to trial and the Defendant won the case their legal costs were recoverable from the Claimant.

Banning of success fees – Success fees are an uplift in the Claimant’s solicitors costs (which could be anything up to 100%) in cases that are successfully pursued against a Defendant and prior to the changes were paid by the Defendant and/or their Insurers. The changes now mean that the success fee will have to be paid to the solicitor from the amount awarded to the Claimant in damages but this will be capped at 25%.

After the Event Insurance premiums no longer recoverable – ATE policies are usually taken out by solicitors on behalf of their client’s in relation to personal injury claims and cover the costs a Claimant must pay to a Defendant when a claim is unsuccessful. The premiums for these types of policies are no longer recoverable from Defendants however this matter has now been addressed by the introduction of QOCS and ATE policies are likely to become redundant.

Banning of referral fees – Solicitors will no longer be able to pay claims management companies, insurance firms and trade unions etc., for personal injury details.

10% increase on general damages awards – general awards for pain and suffering will be increased by 10% in order to compensate for the banning of success fees.

Claims Process

  • Claims will be notified via the portal by way of a Claims Notification Form (CNF).
  • Under the new protocols the CNF must be acknowledged within 1 business day.
  • If for any reason a CNF is submitted to you directly you must acknowledge receipt and we have attached a basic template email for your use and would request that you copy us in in order that we are aware of the notification. The acknowledgment should be brief and contain very little information so as not to prejudice your Insurers position.
  • Following this a copy of the CNF should be submitted to us to be passed on to your Insurers. Please bear in mind that your Insurers will only have a maximum of 40 business days to carry out their investigations and give their liability decision to the Claimant’s solicitors and this clock starts ticking from the date that the CNF is acknowledged.
  • Your Insurers will then proceed to investigate the alleged incident in the normal way which will more than likely involve a Claims Investigator being appointed to carry out a site visit. At this stage you should have any relevant documents available to pass to the Investigator. The new protocols do not allow a great deal of time for these to be provided after the visit and we do not want to run the risk of the claim dropping out of the portal.
  • Upon completion of their investigations and no later than the 30-40 day timeframes, your Insurers will give their decision on liability to the Claimant’s solicitors. If liability is denied at this stage the claim will drop out of the portal.
  • Where liability is admitted your Insurers will have 20 business days to submit the Claimant’s earnings information to the solicitors.
  • Insurers will then wait for the Claimant’s solicitors to submit the Stage 2 Settlement Pack which will contain a medical report* and a settlement offer.
  • Upon receipt of the Stage 2 Settlement Pack your Insurers will have 10 business days to pay the Stage 1 costs.
  • Also upon receipt of the Stage 2 Settlement Pack your Insurers will have 15 business days to accept the settlement offer or make a counter offer.
  • If a counter offer is made by your Insurers a further 20 business days will be allowed to conclude the negotiations. If settlement has still not been reached after this additional 20 days the matter will proceed to a hearing either paper or oral, and the claim will be subject to the Stage 3 costs.

*There are no timeframes stipulated for the Stage 2 Settlement Pack to be submitted but this will depend upon the Claimant’s recovery and rehabilitation.

If for any reason the timeframes are not met the claim will automatically drop out of the portal and the legal costs will begin to increase.

Claims excluded from the portal

  • Public Liability claims against an individual.
  • Claims under £1,000 and over £25,000.
  • Employers Liability disease claims with more than one defendant.
  • Claims where the Defendant or Claimant is deceased or is a protected party.
  • Any accident or breach of duty outside England and Wales.
  • Abuse, mesothelioma and clinical negligence claims.
  • Claims where the Claimant is bankrupt.
  • Claims where the Defendant is insolvent and uninsured.
  • We hope that you have found this information to be of benefit however if you require any further clarification or additional details please do not hesitate to contact us.

Regards,

Gemma Roche
Claims Manager

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