The Annual Insurance Event took place at the Old Library, Lloyd's, on Wednesday 3 December 2014. At the event we reviewed the Jackson reforms and their impact in the 18 months since their implementation, the Insurance Bill and market developments. Our own speakers were joined by key industry figures to discuss these matters and to look forward to the further changes to come and predict what may happen following the general election. Topics include: • the squeeze on fees - how are budgeting and fixed costs changing the market? • trends in liability claims - new procedures, portal and whiplash reforms • case management post Denton – do we have certainty? • adaptation in the claims market - what are the firms and insurers doing? • the impact on end users - policyholders' experience • the Insurance Bill - road to implementation • ‘duty of fair presentation' – what will this mean for insurers, brokers and insureds? • abolition of basis of contract clauses – are insurers ready? • remedies for breach of warranty – a fair balance or an inappropriate downgrading? We used the event as an opportunity to reflect on how far we have come since the Jackson reforms have been introduced, and to assess whether the reforms have been a success or not. We looked into our crystal ball and made predictions as to whether the Insurance Bill will work in practice. With our guests examined what it takes to thrive in the environment which is being fashioned by such fast moving reforms in the litigation and the insurance world.

1. Annual Insurance Event 2014
Lloyds of London
Wednesday 3rd December 2014

2. Introduction
“You can’t connect the dots looking forward; you can only connect them looking backwards”
Steve Jobs
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3. Personal Injury
•“A lot of people are exploiting the opportunity to earn a few pounds by exaggerated or non-existent claims.” Ian Crowder, AA
•475,000 whiplash claims a year (The Association of British Insurers)
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4. 1.Read the question, make your choice, then press key “1”, “2”, “3”
2.If you change your mind, press the C Key then re-enter your answer
3.Press “OK” to validate your answer

5. What trends do you perceive in relation to injury claims?
58
1 - They're a problem and we're getting more of them
2 - They're a problem, but the numbers are the same
3 - They used to be a problem, but things are improving
4 - The 'compensation culture' is a myth
5 - Too early to say
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6. What trends do you perceive in relation to injury claims?
1 - They're a problem and we're getting more of them
2 - They're a problem, but the numbers are the same
3 - They used to be a problem, but things are improving
4 - The 'compensation culture' is a myth
5 - Too early to say
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38%
31%
9%
2%
21%

7. Personal Injury
•“Whiplash capital of Europe”
•“Aviva calls for whiplash 'easy money' to end”
•“Deafness claims increase almost five-fold over four years” (Insurance Times, 26 Nov)
•Claims in the claims portal in August and September were up 15% and 20% respectively on a year on year basis
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8. MedCo
•“a new independent IT hub” (MOJ)
•“ABI deems MedCo software critical in whiplash fraud fight” (Post)
•“The exclusion of LIPs… suggests that the real purpose of these proposals are to increase the control of insurers over the process” (Thompsons)
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9. Further reform?
•“We are making sure we do our bit to help drivers with the cost of running a car… Insurance premiums have fallen by record amounts over the past year”
•“They’re not going to get other things until they prove this change brings down insurance premiums” Chris Grayling
•“Car insurance costs back on the rise as comparison sites face operational overhaul”
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10. Fraudulent claims
•“We are continuing to go after the fraudsters who force up costs for honest drivers.” Chris Grayling
•Court Response:
–Fish v Hillman – ‘fundamentally dishonest’
–Kerley v Coe- C paid Admiral’s costs of £6000.
•IFED: 300 + cases investigated per annum, compared with 114 three years ago. 98 convictions in total.
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11. Fraudulent claims
•“We’ve made a lot of headway on whiplash but other organised fraudsters are emerging… other reforms in the PI space should be encouraged in occupational disease.’ Ben Fletcher, Head of IFB
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12. Court control of cases
•“Costs budgeting not working, say 45% of solicitors” (Gazette)…
•… “Only 45% against? Presumably the rest were either abstentions or defendant solicitors” (Anon)
•NHSLA “accused some firms of front-loading costs and thus avoiding costs management” (Litigation Futures)
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13. Are courts managing costs?
55
1 - Yes - and there will be significant savings as a result
2 - Yes - but savings will be minimal
3 - No - the system does not work
4 - No - because of lack of understanding or knowledge by judges and litigants
5 - No - because legal advisors play the system
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14. Are courts managing costs?
1 - Yes - and there will be significant savings as a result
2 - Yes - but savings will be minimal
3 - No - the system does not work
4 - No - because of lack of understanding or knowledge by judges and litigants
5 - No - because legal advisors play the system
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16%
18%
9%
45%
11%

15. Claimant practices
• APIL Survey of firms:
–94% no longer taking £1,000 - £10,000 motor claims
–98% no longer taking EL disease cases
•“Bigger economies of scale in Claimant PI will be good for client service” (David Johnson FOIL)
•We now have a large industry focused on PI claims and that is not going to go away – you can’t put the genie back into the bottle.” (David Butcher, LV)
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16. Claimant practices
•“Reduced fixed costs in motor personal injury claims have attracted a number of new entrants to the clinical negligence arena as one of the last remaining areas where claimant solicitors can charge an hourly rate.(NHSLA)
•“For every £1 an insurer pays in compensation in industrial deafness claims, £3 is paid for legal fees.” (POST)
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17. Funding
•“If CFA agreements are complex documents, the new DBAs are even more impenetrable to all but the most sophisticated and literate consumer. “ Legal Ombudsman
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18. Which funding option is likely to develop most in 2015
60
1 - CFAs and ATE
2 - CFAs, with claimants or their solicitors paying disbursements
3 - BTE insurance
4 - Damages Based Agreements
5 - Third party funding
6 - Private funding on hourly rates
7 - Private funding on fixed fees
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19. Which funding option is likely to develop most in 2015
1 - CFAs and ATE
2 - CFAs, with claimants or their solicitors paying disbursements
3 - BTE insurance
4 - Damages Based Agreements
5 - Third party funding
6 - Private funding on hourly rates
7 - Private funding on fixed fees
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17%
23%
8%
22%
12%
0%
18%

20. Insurers’ experience
•Motor premiums ‘bounce’ to 1.2% increase (The AA)
•“You could say that in the last two years, insurers will have saved at least £2.85 billion pounds in claims. 2011 figures show claims spend at £9.3 billion. This means premiums should be down over 30%.” (Craig Budsworth, MASS)
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21. Future litigation
•1000 personal injury firms went under within 12 months of reforms
•Only 21% of people now get advice from someone who is a regulated lawyer (19 Nov 2014)
•“McKenzie friends…have become an important part of the civil justice landscape.”
•“An ounce of mediation is worth a pound of arbitration and a ton of litigation!” (Joseph Grynbaum)
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22. Further reform?
•“Regardless of the outcome of the next election, I do not anticipate [reform] coming to a halt” (Nick Parsons, FOIL President)
•“We would like to see a maximum time limit in the UK, similar to that used in Sweden where, typically, claims presented more than three to four days after the accident are usually rejected," Chris Voller, AXA.
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23. Break
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24. Insurance Bill
•“The current law may be certain on paper but it is about as unfavourable as you can get for policyholders anywhere on the planet,” (David Hertzell, UK Law Commissioner for Commercial and Common Law)
•“This government wants the industry to continue to grow and provide better services to customers, which is why we need to bring insurance contract law into the 21st century.” (Andrea Leadsom, MP)
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25. Fair Presentation of Risk
•“Insurers will … need to make sure they ask potential policyholders the right questions at proposal stage …not asking the right questions could make it harder going forward to decline claims” (Alexis Roberts, Pinsent Masons)
•“BIBA is seeking to ensure that no additional responsibilities fall upon the broker in regard to commercial customers’ disclosure requirements that could result in professional indemnity issues” (BIBA)
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26. Is this a significant change?
59
1 - No - we are obliged to act this way already
2 - No - in practise most of the industry behaves in this way
3 - Yes, but not for us - we/our insurers adopt this approach, though many others don't
4 - Yes - but the industry is prepared for it
5 - Yes - and the industry has some way to go before it is prepared
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27. Is this a significant change?
1 - No - we are obliged to act this way already
2 - No - in practise most of the industry behaves in this way
3 - Yes, but not for us - we/our insurers adopt this approach, though many others don't
4 - Yes - but the industry is prepared for it
5 - Yes - and the industry has some way to go before it is prepared
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15%
24%
20%
5%
36%

28. Remedies
•It is hoped that the insurer’s remedies will now be more proportionate to the breach in future, and legal disputes over claims are hoped to be greatly reduced once the Bill is law.” (Brunel Professional Risks)
•“We will implement the principles of the recommendations right away…we’ll be going above and beyond the wording in some of our policies until the paperwork catches up” (Dave Smith, Zurich)
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29. Basis of Contract
•“Airmic’s basis contract clause campaign bolstered by heavy hitters” (Post July 13)
•“ ‘Basis of contract’ clauses and warranties in relation to insurance are enforceable in law and not contrary to law or public policy at least yet” (Mr Justice Akenhead in Genesis v Liberty)
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30. Warranties
•“must be exactly complied with, whether material to the risk or not...If it be not so complied with then …the insurer is discharged from Liability” (Marine Insurance Act 1906)
•“An insurer has no liability under a contract of insurance in respect of any loss…after a warranty …has been breached but before the breach has been remedied (Insurance Bill)
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31. Impact on Fraud - will the bill:
59
1 - Increase insurance fraud, but detection rates will remain the same
2 - Increase fraud and reduce detection rates
3 - Have no impact on fraud
4 - Decrease insurance fraud
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32. Impact on Fraud - will the bill:
1 - Increase insurance fraud, but detection rates will remain the same
2 - Increase fraud and reduce detection rates
3 - Have no impact on fraud
4 - Decrease insurance fraud
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14%
15%
49%
22%

33. Contracting out?
•Will insurers try to contact out?
•What response will they meet from Brokers and proposers
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34. “Underwriter shopping”
•“If a very large and high profile loss is unfairly declined under English law, for example because of a basis clause or a breach of warranty, some clients might start asking their brokers for contracts to be written under more favourable legal jurisdictions.” (David Hertzell)
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35. Further changes?
•Effect of warranties limited to losses to which they relate?
•Remedy for late payment?
•Rules on Contracting out?
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36. What claims related factor will have the greatest effect on the sector in 2015 and beyond:
49
1 - Further whiplash reforms
2 - More rigorous court costs control
3 - Clarity and flexibility in funding options
4 - The duty of 'fair presentation'
5 - Changes to insurers remedies
6 - A crackdown on fraud
7 - Customer expectations
Tweet or text your questions:
#JacksonReforms_BJ / 07557 499071

37. What claims related factor will have the greatest effect on the sector in 2015 and beyond:
1 - Further whiplash reforms
2 - More rigorous court costs control
3 - Clarity and flexibility in funding options
4 - The duty of 'fair presentation'
5 - Changes to insurers remedies
6 - A crackdown on fraud
7 - Customer expectations
Tweet or text your questions:
#JacksonReforms_BJ / 07557 499071
14%
24%
10%
18%
16%
8%
8%