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Keoghs Insight

We keep you up-to-date on emerging market issues and their impact on the insurance sector, through a variety of publications, events and our leading market initiatives.


Ben Leech

Ben Leech


T: 01204 672320

Counting the (wasted) cost of LNC


With the Government’s proposed Civil Liabilities Bill shrouded in uncertainty and no further information likely to be forthcoming prior to October, Late Notified Claims (LNC) continue to plague insurers.

The latest MoJ figures highlight that volumes of LNCs have not fallen away, perhaps in part due to the stay of execution granted to claimant solicitors and claims management companies following the general election announcement.

Nevertheless, there is a clear strategy to be employed when dealing with such claims, and the key to this is often the relationship between claimant and professional adviser. With a claimant required to fully engage in the process, disrupting this association can often yield highly successful resolutions for insurers, whilst embedding these strategies within your claims handling team can provide optimal results.

In terms of support, there is no doubt that judicial attitude in this area is clearly hardening which can only aid the defence of such cases. Indeed, HHJ Gregory recently stated when dismissing one late notified claim, “I regard the more venal conduct to be that of the solicitors”; a clear indication, if one was needed, that the judiciary understand the real abusive behaviours can emanate from the professional enablers rather than the claimants themselves.

This stance can be utilised in conjunction with an important but often overlooked legal tool; the ‘wasted costs’ provisions within the Civil Procedure Rules. These costs arise from unreasonable or improper conduct and can be used as a powerful weapon against professional enablers, hitting them hard in the pocket and impacting heavily on their profit margins.

In one particularly pertinent case, the judge commented that an application by claimant solicitors to debar the defendant from relying on call recording evidence was “preposterous” and “totally without merit”. The judge agreed that the application was “lawyer led” and the claimant’s solicitors were forced to pay a five figure sum in respect of wasted costs.  

In a more recent instance, the claimant’s solicitors were removed from the court record on the day of trial, resulting in an adjourned trial and a show cause application outlining why the solicitors ought not to pay the costs of the trial. A further example saw five claims struck out by the court following the claimant solicitor’s failure to comply with the court rules correctly; the judge providing a strong indication, once again by ordering a show cause application, that the costs associated with the claim ought to be paid by the solicitors.

All in all, this strategy has seen some excellent outcomes for insurers with the figures to back up trial wins. By attacking the behaviours of enablers, both directly through wasted costs and indirectly with continued success in defeating such claims, one insurer has seen a 30% reduction in the number of LNC presented on a like for like basis over a 12 month period.

When implementing all facets of LNC strategy and utilising in-house to provide a holistic approach, the results are compelling. In one recent example, Keoghs helped buck the trend by applying a robust and consistent strategy within an insurer’s dedicated team. The combination of bespoke scorecard and hands on training meant the insurer was able to readily identify LNC cases worthy of investigation and repudiation. That, in partnership with Keoghs, who dealt with any litigation arising out of those claims, ensured a 77% kick out or ‘nil payment’ was achieved on such litigated files, aligned with an 80% trial success rate.

Whilst it can be tempting to focus on the behaviour of a claimant, it is vital that insurers’ endeavours also take into account the professional enablers who are encouraging and facilitating such abusive and unnecessary late notified claims. Indeed, enablers can be all too ready to cut a claimant loose, whether they have been dishonest or not, leaving them high and dry to deal with the fall out. With casualties on both sides of the fence, it is only when enablers are consistently hit in the pocket that they will change their approach to LNC.