Jackson Reforms – a guide

From August, we will witness the biggest reforms to the civil compensation process this century when the government launches a new protocol to govern the handling of low-value personal injury claims using an electronic portal. Peter Wilson of Garwyn offers a practical guide for risk managers.

Most Employers’ and Public Liability injury claims in England and Wales valued up to £25,000 will be affected, therefore much is at stake.  The public and private sector stands to benefit from a substantial reduction of third party costs, as much as 60% on smaller claims.  However, to maximise rewards, risk managers will need to work closely with their insurers and claims service providers to comply with new processes and shorter timescales, whilst ensuring that only valid claims are compensated.

How soon?

After months of uncertainty the Government has announced that 31 July 2013 is the revised implementation date.  The new protocol will apply to claims arising from accidents occurring from 1 August onwards.  On 1 March the High Court rejected a judicial review by claimant solicitors’ bodies which threatened to delay implementation.  While there is the possibility of an appeal, further delay is unlikely.  The company which administers the portal is working on the necessary software updates: a manual web access is likely to be ready in April, and an application-to-application interface in October.

Opportunity or threat?

Under the new rules, timescales for both liability response and claim settlement will be fixed. If defendants can meet all deadlines and do not dispute liability, thus ensuring that claims stay within the portal, claimant costs will be limited to a new, fixed scale. A higher costs tariff will apply to cases which exit the portal, but still lower than current, variable rates.

This will create both opportunity and threat. The opportunity is the potential to reduce the total cost of risk through faster resolution of claims, taking best advantage of the new costs regime. The threat will be to those who fail to maintain safeguards against unmeritorious claims, thus allowing speculative volumes to escalate.

To assess the potential savings, we have analysed Garwyn’s extensive database of claims payments.  For non-litigated injury claims in the compensation range of £1k-£10k, claimant legal costs currently average almost £5,000 plus expert fees. In the £10-25k range, this rises to over £8,500.  Under the proposed new rates, the equivalent costs will reduce to just £1,080 and £1,920 (incl. VAT) when cases are settled within the portal, or £1,800 to £4,800 outside the portal. In all, we calculate that the collective impact of the new protocol could reduce attritional cost of risk by 25%.

Challenges

So what challenges will organisations face? Firstly, only 1 working day (currently 3 weeks) to acknowledge an electronic Claim Notification Form (CNF). This will require a robust and failsafe process in order to guarantee a timely response. 

Defendants will then have 30 working days for EL and 40 for PL (both currently 3 months) to make a decision on liability. The way in which this critical part of the process is managed will directly impact your overall claims spend.

Time will be crucial, and early availability of key evidence will enhance a rapid response. Organisations with many divisions and/or diverse locations will need to ensure that all notifiable incidents are reported promptly and in sufficient detail to a central point, for review or transmission to claims service providers.

Expertise not automation

Claims managers will need to act fast to identify claims which are valid and should stay within the portal.  With shorter timescales, key decisions may have to be based on limited information.

This is not a time for technology and processes to replace human skills. Automation cannot replicate expertise, or the ability to ‘read between the lines’, and liability admissions will be generally binding whatever the ultimate value is revealed to be. Also, too many purely ‘commercial’ admissions of liability could open the ‘flood gates’. 

We recommend that the right approach is to deploy expert resources to conduct an early examination of each claim.  No two claims are exactly alike, and experienced professionals will quickly recognise the key differences that determine the appropriate handling strategy.

How to prepare?

Start by considering the following issues:

• Reporting data capture
• Notification efficiency
• Triage
• Streamlined decision making
• Alignment of strategies with new protocol
• Quality of claims management
• Internal resources
• Payment speed and funding capacity
• Performance monitoring and MI
• IT investment

Change is coming and risk and claims managers need to act now to ensure that they can face the new protocol with confidence.

Peter Wilson is technical director at specialist liability adjuster Garwyn.