I Love Claims: Whiplash Reform

1. I Love Claims: Whiplash Reform Mark Savill: Managing Director Lyons Davidson Date: 3rd May 2012

2. Portal extension • Change Control improvements • Release 1: minor amendments and exit process • Release 2: in testing, release to be delayed • Civil court consultation response • Vertical extension: £25,000 • Horizontal development: EL/PL • Development requirements • Hardcoded linear process • Long lead in time for delivery • Additional medical reports for increased value • Extended existing framework for new claim area

3. Average: 65% Trend:

5. Portal lite? • Potential future development • agreed data templates • document transfer • remove detailed rule management • Rules and MI relies on parties own systems • Provides • Data and document efficiency • More flexibility in future development • Continued relevance for “complex” claims • Easier applicability to other claim areas

6. Referral fees • Legal Aid Sentencing and Punishment of Offenders Act 2012 • Royal Assent 1st May 2012 (implementation likely April 2013): • Wide definition including any consideration • Extended to ancillary claims and payments to third parties • Includes legal process supply chain (eg medico legal) • Offset of referral fees with other services likely to be caught • Makes ABS most likely route to maintain income stream • Still confusion on impact of reform • Uncertainty on enforcement • Doubts around extent of “service” exception to allow payment • Applicability to ancillary services?

7. Referral fees: LASPO 57 Rules against referral fees (1) A regulated person is in breach of this section if (a) the regulated person refers prescribed legal business to another person and is paid or has been paid for the referral, or (b) prescribed legal business is referred to the regulated person, and the regulated person pays or has paid for the referral. (2) A regulated person is also in breach of this section if in providing legal services in the course of prescribed legal business the regulated person (a) arranges for another person to provide services to the client, and (b) is paid or has been paid for making the arrangement.

8. Referral fees: LASPO (4) “Prescribed legal business” means business that involves the provision of legal services to a client, where— (a) the legal services relate to a claim or potential claim for damages for personal injury or death, the legal services relate to any other claim or potential claim for damages arising out of circumstances involving personal injury or death, or (b) the business is of a description specified in regulations made by the Lord Chancellor. (8) Payment includes any form of consideration whether any benefit is received by the regulated person or by a third party (but does not include the provision of hospitality that is reasonable in the circumstances).

9. Referral fees: enforcement • Multiple enforcement agencies • Regulatory matter, not criminal or breach of statute • No appetite for enforcement • low risk relative to other issues • political pressure and statutory obligation • Difficulty in interpretation of arrangements • referral fee or payment for a service? • payments to third parties • including payments by own suppliers • distinguishing commercial/discounted prices • Impact on sourcing teams?

10. Where are we now: ABS? • Legal Services Act 2007 live October 2011 • SRA licence granted December 2011 • Applications open from 3rd January 2012 • Early stated interests: • Insurance brands: Das Legal Expenses • Consumer brands: Co-op Law • Law firms seeking external capital • First ABS granted • Co-op Legal Services • John Welsh & Stammers, Lawbridge Solicitors

11. ABS positioning Assumptions about insurer goals: • Enhance customer journey • Earn profit from legal services (including injury) • “Own” legal services supplied to customers • Develop other legal services • Develop brand

12. All images in are entirely fictional and not intended to represent real people or organisations! CMC £ s57(1) £ s57(2)/(4) £ £ £ £ £ £ £ s57(2) £ s57(8)

13. All images in are entirely fictional and not intended to represent real people or organisations! ABS £ £ £ £ ABS £ S58(8)?

14. Pressure for reform • Various government responsibility/interest • MOJ, MOT, No10 • Multiple claimant interests • APIL, Law Society, MASS, CMC • AJAG, TUC, CJA, BRC • Multiple insurer interests • ABI, FOIL, Downing Street attendees • Portal Co • Wide range of organisation interests • Government focus on insurance premium cost

16. Transport Committee Report Response • Calling for objective evidence of whiplash • DFT: we are reviewing this • Transparent referral fees extended to credit hire/repair • DFT: LASPO/OFT • Portal fees need to be reviewed • DFT: this is being done. • Stricter enforcement of DPA and penalties • DFT: The ICO has got strong powers already • All cold calling needs to be reviewed • DFT: this is already covered • Real-time access to the DVLA database • DFT: target of January 2014. • The penalties on uninsured driving need to be reviewed • DFT: we will consult on this soon

17. 2nd Insurance Summit Wednesday 2nd May 2012 Next steps towards reform: • Independent medical experts • Examination of bio-mechanical evidence • Potential speed minimum for whiplash claims • Increase in P.I. Small Claims Limit to £5,000

18. Portal fees • Current £1200 • APIL • no “deal or no deal” • evidence based • Guardian Law (Legal Futures): £800 • Govt (1st insurance summit) £300-400 • ABI • Higher salaries £350 • Paralegal salaries £150

19. Future reform • Reduction of profit elements essential • avoids difficulties of enforcement • portal costs/ancillary services • Re-focus on customer • role of legal expenses post LASPO • customer service competition • rehabilitation needs • integrated one stop process (at risk from ban!) • Redefine claims process • initial rehabilitation assessment/treatment • “Jackson” tariff valuation on rehab report if resolved • limit medical process to on-going injuries • limit legal process to complex assessment/liability issues