Poor old low speed impact claims. Once the darling of the counter-fraud world, low speed impact claims (LSI/causation claims/low velocity impact cases or even minor impact soft tissue claims) have had a rough time over the last few years. If we can’t all agree what these cases are called, let alone agree how they should be tackled, then perhaps it is small wonder that many insurers stopped fighting these fraud cases robustly, and instead saw them as cases to mitigate and perhaps fight as an exception rather than a rule.
Of course, not every insurer took this view, and with all generalisations there are exceptions however it is true to say that for the most part, insurers’ enthusiasm for LSI cases was dimmed by costs. In the event that a claimant succeeded when faced with a LSI defence, it was far from unheard of that damages for pain and suffering of under £2,000 were attracting costs awards of £50,000 and more (with ATE insurance cover, uplift, experts’ fees and trial costs). So much for proportionality!
Not everyone will agree with me when I say that, for the most part as an industry, we got a bit carried away with LSI cases. Objectively, spending thousands of pounds on expert forensic engineering evidence and expert medical evidence to challenge a £2,500 personal injury claim seems counter-intuitive. A whole industry of satellite litigation and case-law grew around us. Protocols and special case-management processes were introduced. Before cases were even litigated the financial benefit of defending the claim had all but evaporated.
Of course, there is more to tackling fraud than simply the numbers. Anti-fraud strategies are as much about disruption, TCF, financial crime, and in the case of LSI, shaping the law and changing behaviours. At the risk of being shot down in flames I would have to venture that, generally, LSI behaviours were not changed. Indeed, the old costs regime and differing views across the industry as to how these cases should be tackled - from heavy, expert-driven litigation strategies, to light touch, fight-only-winners - meant claimants (or more accurately their solicitors) won enough to make this a pretty lucrative business.
Of course, insurers who won cases may have got their costs paid by the ATE providers, sometimes creating a windfall for the solicitor under a CFA. So why fix it if it ain’t broke?
Well, regardless of your view of the old world, Lord Justice Jackson had other ideas and the world has changed. If, like me, you see QOCS as an aberration, at least there is comfort in knowing that costs in fast track trials are now proportionate to the issues. And whilst hardly welcome, the effect of the rule changes has driven general damages inflation (due to claimant solicitors’ costs being supplemented by a 25% slice if there is a CFA in place), which perversely means that the average personal injury claim is actually worth defending into litigation, providing that to do so is cost effective.
As you may have gleaned, I am not a fan of the “heavy artillery” approach to LSI cases, principally because these cases are almost always about the small details (medical records and contemporaneous history) and witness credibility. If a judge likes a witness, they are not likely to be swayed by an engineer’s report, particularly on vehicles they have never seen. Expert evidence does have its place but in the new world of low value personal injury litigation, and LSI in particular, expensive expert evidence rather misses the point.
However, the post-LASPO world has created an opportunity to properly and proactively challenge speculative personal injury claims which would otherwise have been too costly to defend. As a result many insurers who had previously handled LSI cases within their bodily injury teams are bringing those cases back into their counter-fraud environments. This is absolutely the right strategy. As with late notified claims (LNC), there are real and cost-effective solutions to claimant-market behaviours. The key difference with LNC cases, however, is that the claims are also often driven by the claimants themselves. As a result, it is as much about educating claimants as it is about changing the behaviours of some claimant firms.
The key to success is speed. Identifying LSI cases within the portal, and ideally at Stage 1 to keep costs contained, puts the insurer on the front foot. To assist our clients we have devised a scorecard which helps to create a pipeline of high quality LSI referrals for triage*. Our aim is to help insurers make an early decision – either decline the claim or await medical evidence.
In the event of litigation, the question of whether to plead fundamental dishonesty is a case-by-case decision which pragmatically depends on whether the claimant has the funds to pay an order for costs. Does a pleading of fundamental dishonesty materially improve an insurer’s positon? The answer is no unless there are genuine prospects of costs recovery. So herein lies the issue: why incur costs which may be either unrecoverable because a claimant claims the protection of QOCS or because, even if QOCS is dis-applied for whatever reason, the claimant has no valid ATE cover or no money to pay them? Going further, it is precisely because costs awards against claimants in the majority of LSI cases are unlikely that courts will be more prepared than ever to find that a claimant has not proven their case.
In the new world, the opportunity for LSI cases to be successfully defended is greater than ever before - provided they are effectively triaged, proactively managed, and defended through litigation proportionately and commercially. Perhaps this marks a coming of age for LSI and an opportunity to challenge such cases in an environment which could almost have been created for them.
It is certainly not common to see credit hire and accident management companies joined into proceedings and the cases discussed above are stark examples of the spotlight being shone upon the true beneficiaries of these claims being justified and proportionate. Of course, when considering whether to embark on this course of action we must be mindful of economics and evidence. However, where the evidence exists, I believe the courts have an increasing appetite to deal with CHOs and AMCs who are brought into proceedings whether it be for costs purposes or to answer allegations of fraud. They certainly won’t appreciate the spotlight being shone upon them and their business practices, but the more it is done, the stronger the message will be to the CHO market – you cannot simply hide behind the claimant, you must stand beside him!
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