Motor claims by jolinmilioncherie


									Motor claims
Zurich UK Commercial
Claims market overview

•   Rising claims cost.
•   Falling claim volumes.
                                             Total number of motor claims v Total claims cost
                          4,300,000                                                                              £2,500


                                                                                                                          Average Cost Per Cl ai m
    Cl ai m s V ol um e




                                                               Motor Claims Frequency   Average Cost Per Claim   £500

                          3,950,000                                                                              £-
                                      1998        1999        2000          2001         2002           2003
What are our current topics in the claims market?

•   Claims inflation
•   frequency of PI claims level, cost of all claims increasing:
    - cost of vehicle repair
    - Judicial Studies Board seventh edition, higher awards for damages
    - fifth edition Ogden tables.
What are our current topics in the claims market?

•   Compensation culture

•   debate whether it exists:
    - yes, government and insurers
    - no, claimant solicitors
    - statistics can be used to support either side.

•   Rehabilitation
    - amendment to pre-action protocol.

•   The current repair market…
…is a challenging environment

•   The current repair market is characterised by fragmentation and decline:
    - narrow insurer focus on labour rate
    - adversarial relationship with insurers
    - increasing construction complexity
    - reduced claims incidence
    - low profitability
    - poor performance
    - compliance issues.
Approved repairers

•   Approved repair network offers an effective solution to getting customers back
    on the road, including:
    - extensive UK coverage
    - repair quality and warranty in line with manufacturer
    - delegated authority
    - free collection and delivery
    - courtesy vehicle available
    - management of repair costs
    - complaint resolution.
How does early notification benefit customer,
broker and insurer?
•   Accurate and correct information can be obtained at earliest opportunity.

•   Key to claim management:
    - liability

    -   potential injury

    -   repairs.

•   Efficiency of service on AD repair.
How does early notification benefit customer,
broker and insurer? (continued)
•   Proactive management of third party claims costs:
    - early cash settlements

    -   low rate hire

    -   approved repairers /courtesy cars

    -   whiplash treatment / rehabilitation.

•   Customer ‘hidden costs’:
    - business capacity issues, e.g. a van out of action for a period

    -   loss of revenue e.g. being unable to fulfil deliveries.
Pre-action protocol for personal injury claims
(Woolf Reforms)
•   Recommendation of the development of pre-action protocols:

         “To build on and increase the benefits of
         early and well informed settlement which
         genuinely satisfy both parties to dispute.”
•   Lord Woolf (1996) Access to Justice Report
Pre-action protocol for personal injury claims
(Woolf Reforms) (continued)
•   Why?
    - more open pre-action contact between parties
    - better and earlier exchange of information
    - better pre-action investigation by both sides
    - to put the parties in a position where they may be able to settle cases fairly
      and early without litigation
    - to enable proceedings to run to the court’s timetable and efficiently, if
      litigation does become necessary
    - to promote the provision of medical or rehabilitation treatment (not just in
      high value cases) to address the needs of the claimant.
Rehabilitation code

•   From 1st April 2005 the following is applicable to all personal injury claims:

           “At as early stage as possible either
        party (or both) should consider whether
          the reasonable needs of the claimant
       could be met (2005) Insurance Litigation Alert
• Beachcroft Wansbroughsby rehabilitation, not just in
                     high value claims.”

                       *with exception of claims covered by the Clinical Disputes and Disease and Illness
Rehabilitation code (cont)

•   What does this essentially mean?

    -   injured person makes the best and quickest possible medical, social and
        psychological recovery

    -   rehabilitation code provides a framework for UK insurers and personal
        injury lawyers.

•   Case law has been reported where claimants have been penalised for failure
    to mitigate losses when they have refused reasonable offers of early

                      *with exception of claims covered by the Clinical Disputes and Disease and Illness
Catastrophic personal injury case example

•   Vehicle accident in 2003 involving our insured and a passenger.

•   Driver lost control of the car and rolled over, injuring the young female
    passenger who subsequently sued our insured for damages.

•   Accident circumstances investigated by Zurich Commercial, interviewing
    attending police officers, ambulance crew, witnesses present.
Catastrophic personal injury case example
•   Investigation revealed passenger was not wearing a seat belt, application of
    contributory negligence following Froom v Butcher 1976 enabling negotiation
    for a 15-25 % reduction in final settlement.
•   Photos were from our motor engineers unit as part of the accident
    investigations as well as for vehicle repair assessment.
Catastrophic personal injury case example
•   In concurrence with investigations into accident circumstances, calculations
    over the quantum are calculated:

    -   appointment of medical experts

    -   rehabilitation if appropriate

    -   selection of independent

    -   rehabilitation expert to

    -   undertake immediate

    -   needs assessment.
Catastrophic personal injury case example
•   Claimant was found to have physical injury and a moderate brain injury:

    -   provision of ramps for access

    -   supervision of patient.
Catastrophic personal injury case example -
Ogden Tables (continued)
•   Claims for future losses are calculated using Ogden Tables.

•   Multiplier x multiplicand = future loss.

•   Issued by the Government’s Actuary Department.
Catastrophic personal injury case example -
Ogden Tables (continued)
•   Recently revised fifth edition takes into account increased life expectancy and
    decreased interest rates.

•   Zurich Commercial Actuaries take into account changes in reserving and
    settlements that will result from future Ogden Table adjustments.
Catastrophic personal injury case example
•   Claimant had planned to enter a career requiring physical activity.

•   As part of quantum investigation we obtained:
    - claimants school records
    - college records
    - medical records
    - expert medical opinion:
       -   Neurologist (reports on physical damage to brain).
       -   Neuro-psychologist (reports on how damage affects behaviour).

•   We sought a settlement meeting for all parties to discuss and negotiate a
    mutually acceptable outcome.
The factors influencing reserve changes

•   Reasons for the difference from initial reserve to final settlement:

    -   Time value of money.

    -   Liability / contributory negligence developments.

    -   Variation in insurance company and claimant lawyers expectation.

    -   Claimant recovery.

    -   Anticipated future care costs.

    -   Claimant future career prospects.
New developments - periodic payments

•   What are they?

    -   An award for payment of damages for a future pecuniary loss to be made
        on a period (annual) basis as opposed to the traditional one off lump sum

    -   Payments are linked to the Retail Price Index (RPI), thus increase each
        year in line with inflation.

    -   Periodic payments may not take into account the whole future pecuniary
        loss and may be in the form of partial annual payment combined with a
        lump sum award.
New developments - periodic payments
•   What claims will be considered by the court for periodic payments?

    -   A patient of the Court of Protection.

    -   Minors / Infant.

    -   Claims for future loss of earnings / reduction in earnings capacity to

    -   Future care claims.

    -   Cases involving a dispute over expectation of life.

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