Keoghs Insight

Author

John Gibson

John Gibson

Partner

T:01204 678784

Review of the Quarter - June 2017

AWARE19/07/2017
Credit Hire Aware 12

Industry commentary in the volume motor arena continues to be dominated by the impact of central Government on insurers. This has been exacerbated by the recent General Election. With Cabinet changes and the loss of a Tory majority to push through legislation, what will the implications be on the package of reforms that had been on the table a few weeks ago?  Keoghs’ clients will have already received the update from our Director of Market Affairs, Samantha Ramen, on the widely anticipated change of Justice Secretary from Liz Truss to David Lidington. In addition we now have Dominic Raab in Sir Oliver Heald’s place - retaining Heald would arguably have made the maintaining of the status quo more likely, but now we will have to wait and see what Mr Raab’s view is on specific civil justice issues.

There are opposing views as to the impact of the General Election and specifically the loss of the Government majority (although we now know that a deal has been struck with the DUP which should help to bolster numbers in this regard). In the Queen’s Speech it was announced that reforms to curb whiplash and reduce motor premiums would be included in a Civil Liability Bill.  We already knew the Labour party would oppose some of the proposed changes, and with such a weak Government the opposition will take every opportunity to block legislation of this nature in both the Commons and the Lords.  However it is certainly possible for the Government (in conjunction with the DUP) to push through legislation (see our client alert on the Queen’s Speech here).

At this stage it is therefore not possible to be certain on the inclusion of credit hire within the reforms, although it appears to be unlikely from what we have seen coming out of the MOJ and Downing Street policy unit to date when combined with the Government’s legislative priorities around BREXIT.

Displacement remains the primary concern of the sector from the conversations that I have had with insurers in relation to credit hire. Understanding the role credit hire operators play in the post reform world is of great interest - whether it be moving FNOL outsourcing to CHOs rather than a claimant solicitor; CHOs offering consultative services to injured claimants via a CFA; or damages creep to replace lost revenues.  All these options will create an environment in which efficient claims handling by insurers will be even more critical.

Some solace can be found in the ratification of Stevens v Equity with the Keoghs case of McBride v UKI. We were already seeing consistent application of Stevens in county courts by the judiciary, and we have definitely seen that continue. We have seen an increase in pre-lit settlements accepting Stevens / McBride based offers (for those claims outside the parameters of the GTA), and a notable increase in claimants wanting to settle live litigation without going to trial.  

Bringing finality to this long rumbling issue will be welcomed by insurers who now have far more certainty on claims that were not progressing, and moreover have a benchmark for protocols and processes for handling claims outside of them. Although Keoghs litigation rate is around 3% on the cases outsourced to us by insurers, we anticipate this will decline further consequent to the courts clarification and we know many insurers feel the same.