Rob Smith-Wright  Claims Manager, SIU Mike Barraclough  Senior Risk Manager

1. Is Deafness the New Whiplash? Are opportunists exploiting long tail claims over traditional sources of compensation Rob Smith-Wright  Claims Manager, SIU Mike Barraclough  Senior Risk Manager 17June 2014

2. Poll In which category does your current role lie? Customer/Buyer Broker Insurer Lawyer Do you believe a Compensation Culture exists in the UK? Yes No Not Sure Since the introduction of LASPO do you believe that Whiplash claims have: Increased Decreased Since the Introduction of LASPO do you believe that Noise Induced Hearing Loss claims have: Increased Decreased Do you believe that the industry does enough to tackle “opportunist” claims? Yes No Do you believe that the industry is ably supported by Government to tackle “opportunist” claims? Yes No

3. Whiplash: So what was the problem? • Counterproductive arrangements of rewards for referral of personal injury claims between CMC’s, Lawyers, Insurers etc. • “Ambulance Chasing” tactics deployed to capture business • Phone calls • Text messages • TV & Radio Advertising • Incentivising claimants with pre claim rewards in return for pursuit of claim for injury • Dysfunctional system of pre medical offers without subjective tests for injury • Disproportionate costs of defending frivolous claims for personal injury excessively high, preventing Insurers from challenging • Abuse of “Access to Justice” reforms by opportunist claimants seeking compensation from a small incident

4. Evolution of claims • . 2012 IFED Goes Live Insurance Summit at 10 Downing street to tackle rise of insurance premiumsLASPO enacted • Transport select committee Report Published • Investigation into link between legal and regulatory lines and rise in Personal Injury claims • Support Police and Insurers to tackle more fraud (IFED) • Clamp down on uninsured driving • Review driving test • 2011 • Transport Select Committee Report on Whiplash • Better MI on Whiplash & Fraud • End to Pre medical offers • Accredited Scheme for Practitioners • Government Response • Accredited scheme for Practitioners to be implemented • Creation of a subjective test for Injury. • 2013 • Jackson Report called for: • End to referral fees • Prevent recovery of ATE Premiums & Success fees • 2009 Woolf reforms 1999 2010 MOJ Portal for RTA Claims Goes Live • Claims below £10,000 only • Fixed staged costs 2003 Access to Justice

5. So what is LASPO • Legal Aid, Sentencing & Punishment of Offenders sought to: • Ban referral fees in personal injury cases after 1st April 2013 • Stop recovery of success fees and after the event insurance premiums after 1st April 2013 • Damages Based Agreements between claimants and their lawyer allowed to a maximum of 25% where pursuit of compensation is successful • New fixed recoverable costs regime After 1st April 2013 • Extension of the current RTA personal injury scheme to £25,000 and ultimately all types of injury • Qualified One Way Costs Shifting introduced (QOCS) in personal injury cases. Defendants unable to recover costs in successful actions* • Increase in General Damages of 10% • Sanctions upon defendants to encourage earlier settlement of claims Source: Legal Aid and Sentencing punishment of Offenders Act 2012 *Except in cases where fundamental dishonesty is found

6. The LASPO effect Slight reduction in RTA portal claims, but sporadic increases are noticeable prior to each change effected by LASPO Stage 3 Implementation Stage 1 & 2 Implementation Source: Claims Portal Data

7. Cause & Effect – Where there's a Ying there's a Yang

8. The LASPO effect (disease claims) – Mark II Steady increase in industrial deafness claims over a sustained period, although more prominent spikes before LASPO came into effect Stage 3 Implementation Stage 1 & 2 Implementation Is Deafness The New Whiplash?

9. Industrial Deafness– Deja Vu? • Haven’t we been here before? • Influx in the 90’s • Noise at Work Regulations1989 • Deafness scheme • Increase in the 00’s • Access to Justice • Increase in CMC’s & regulation thereof • Increase in lawyers fighting for a “piece of the action” • The remedy? • Control of Noise Regulations 2005 • Part of the problem - not the solution • Introduction of the portal • Is it really working?

10. So why the sudden spikes in Industrial Deafness claims now? • New “Ambulance Chasing” tactics deployed to capture business (similar to Whiplash) in advance of reform • Phone calls • Text messages • TV & Radio Advertising • The rush to beat LASPO (similar to pre LASPO spikes in RTA claims) • Maintain referral fees from CMC’s • Maintain Success Fees and staged ATE premiums • ELTO • More visibility of insurers and therefore targets for compensation • Business model changes • Historically “motor” based legal practices extending into disease claims as alternative sources of fee generation.

11. Fraud: Where do the issues lie? • Duplicate Claims • Duplication of claims by claimants who have already been compensated. • NIHL from benign noise environments • Claims from individuals from environments that are not usually associated with noisy conditions • Denial of safety provisions • Claimants who deny hearing protection was available but contemporaneous records prove otherwise • Exaggeration/Fabrication • Little or no hearing loss but claimant alleges difficulties in day to day activities • Pre existing conditions that would affect the outcome of a medical examination

12. 5mph v 5dB – the similarities continue • Whiplash • Commonly held view that injury cannot occur below 5mph • Test conducted in 2006 and 2009 suggested * • 0-3mph there is minimal risk of injury • 3-5mph some risk of limited injury • +5mph high risk of injury • Sporadic decisions at county court level on low speed impacts • Courts rely more on witness evidence as opposed to forensic evidence • Little or no subjective testing for whiplash leaves the courts no real basis in which to weight decisions in favour of forensic/objective evidence • Industrial Deafness • The principle of de minimisis being applied in courts as per Rothwell • H v Rhondda Cynon Taff County Borough Council 2012 (unreported) • 4kHz-6kHz hearing loss • Court dismissed claim, stating that the de minimis principle applied • United States low fence for bringing NIHL actions • 25db-30dB ** • DWP level for which someone can bring a benefits claim for hearing loss • 50dB De Minimis: The law does not concern itself with trifles *tests conducted by GBB Group ltd **State Dependent

13. A Market Response? • NIHL claims currently running at repudiation rates of 60–70 % • To what extent are these claims speculative, or even fraudulent?Coordinated response from the ABI – lobby for change before it becomes too late • Introduce the “low fence” like other countries. Stop the claims at source • Extend fixed costs: • To all Industrial deafness cases, not just single defendant • Increase compulsory documentation through the portal. • Increase timelines in the portal. 30 days is not enough • Remove the temptation to “game” the PortalShare information & intelligence for a coordinated industry response • Share statistics and experiences between insurers

14. Hierarchy of control – Helping clients help themselves • 80 – 85dba – too big a step? • Noise survey • Individual dose monitoring • Eliminate the noise • Substitute the noise • Isolate the noise • Engineer out the noise • Provide PPE

15. 19th century acoustic conditions … it doesn’t have to be like this! Is Deafness the new Whiplash?

16. Buy Quiet website Is Deafness the new Whiplash?

17. Document Retention..............and retrieval • Building a defence • Now and in the future • Know your hazards • Plan a strategy • Evidence

18. What’s the Message? • Two very different areas of compensation • Whiplash not subject to subjective testing, NIHL claims are. • Its not a new phenomenon = Not the new Whiplash • Claims in 90’s and early 2000 increased significantly. The same trends are seen today • However the facts are, NIHL claims are increasing • Evident more so leading up to LASPO. • Future remains unclear what impact LASPO will have on numbers • However subjective testing is disproving a vast majority of claims, unlike in Whiplash. Insurers reporting between 60-70% repudiation • Reform the Portal • Increase range to keep costs down • Increase compulsory documentation to assist narrowing issues • Risk Management & Health & Safety is helping eliminate NIHL form the workplace • However more risk assessment needed to ensure all preventative measures are in place to manage. Hierarchy of control overhaul? • More industry collaboration needed at both Industry and Insurer level. • Introduce the “low fence”?

19. Questions and answers

20. Thank you Rob Smith-Wright Claims Manager, SIU Robert.Smith-Wright@uk.qbe.com www.qbe.com/lorem Mike Barraclough Senior Risk Manager Michael.Barraclough@uk.qbe.com www.qbe.com/lorem