Motor claims Zurich UK Commercial Claims market overview • Rising claims cost. • Falling claim volumes. 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? (continued) • 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 Protocol 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 rehabilitation. *with exception of claims covered by the Clinical Disputes and Disease and Illness Protocol 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 (continued) • 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 (continued) • 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 (continued) • 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 (continued) • 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 award. - 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 (continued) • 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 retirement. - Future care claims. - Cases involving a dispute over expectation of life.