Earlier this month, the Ministry of Justice (MoJ) opened the consultation period on the proposed reforms to the handling of mesothelioma claims. Interested parties have until 2 October 2013 to comment on the proposals and a consultation response is expected to be published in Winter 2013. The consultation runs alongside the establishment of a scheme to make payments where a compensator cannot be found.
Mesothelioma has a typical latency period of between 30 and 40 years. This can result in difficulties for a claimant attempting to trace insurers where the liable employer is no longer trading. At present those sufferers have gone without compensation, something the insurance industry is now attempting to rectify.
The Mesothelioma Bill was introduced in May 2013 by the Department for Works and Pensions (DWP), creating a compulsory payment scheme. The scheme will pay mesothelioma sufferers who have been unable to trace a solvent liable employer or insurers to pursue for compensation. An estimated annual levy of £339 million will be contributed to by active employers liability insurers. The scheme will be available for individuals diagnosed with mesothelioma after 25 July 2012.
The aim of the MoJ consultation is to compliment this new avenue for compensation with a faster, more efficient claims handling process where a compensator can be traced. Life expectancy following diagnosis can commonly be as short as six months, the proposals aim to attempt to deal with claims and make payments for compensation within the sufferer's lifetime.
A dedicated Mesothelioma Pre Action Protocol (MPAP) has been proposed by the Association of British Insurers.
The protocol sets up a standard process to be applied to mesothelioma claims. It encourages front loaded disclosure so claims can be investigated and settled within shorter timescales. It aims to reserve the Court's time for those complicated cases most requiring the resource. The draft Protocol includes a letter of intimation setting out key information so the defendant can begin investigations prior to receipt of a formal letter of claim.
Once the letter of claim is received it will need to be protocol compliant and include enough information so that the defendant may investigate and provide a formal response in a shorter time period. If the defendant does not respond within the specified Protocol period the claimant can proceed to litigate the claim without criticism.
Running alongside the protocol is the Secure Mesothelioma Claims Gateway (SMCG). This will present a secure information-sharing structure between the parties and it will be through the SMCG that untraced claims will be handled. This is not an RTA style portal, but a tool to assist the protocol's wider purposes. With an aim to achieve overall economic efficiency for all parties, a fixed recoverable costs regime has been suggested in line with the recent Jackson reforms.
The proposals have been subject to both acclaim and criticism in the media. The insurance industry has been praised for its attempt to rectify an unjust situation faced by those who would normally go uncompensated, whilst claimant solicitors feel the reforms fall short and accuse the insurers of being the 'only winners', in a scheme presenting lower legal costs and settlements.
Whilst it is easy to criticise a scheme offering compensation based at 75%, it must not be forgotten that the scheme is being funded by a levy from insurers who may not have received premiums from the liable employers in the first place. The current industry already pays, through the FSCS, for claims made against insolvent insurers.
It is a misconception that insurers will see huge savings by entering into the scheme. It was recently suggested by a national newspaper that the Insurance industry saved approximately £60 million pounds a year due to untraced policies in mesothelioma claims. Those same insurers are now paying into an annual levy of £339 million.
Proposals to introduce a fixed cost regime will save the insurance industry money. However, the aim of the protocol needs to be kept in mind, it is not to save or make money for lawyers but to create an efficient claims handling process for claimants. Their legal representatives must play their own part in those improvements.
One suggestion has been to provide a higher fixed fee in cases with higher levels of damages. The value of a claim does not necessarily dictate its complexity and I fear this may create an unethical incentive. Solicitors should always be acting in their client's best interest in achieving a settlement representative of the loss. Legal costs need to be proportionate on both sides.
The consultation period will allow all sides to air their views on the reforms and make proposal for amendment.
Forgetting what the insurers or claimant's representatives want, what do the victims’ families require?
I have some personal insight into this question having lost my Grandfather to Mesothelioma less than 12 months ago. For my family we wanted justice and compensation to ensure my Grandmother had financial security. It was equally, if not more important to us, that the claim was handled quickly and efficiently with the least stress. In my view this is what the proposed Protocol provides.
There will be inevitable discussion between the various parties over the next few months. Either way the reforms in my view make claimants and specifically the previously uncompensated claimant 'an offer they cannot refuse.'
The service you deliver is integral to the success of your business. With the right technology, we can help you to heighten your customer experience, improve underwriting performance, and streamline processes.