The current situation will almost certainly delay the Government’s intended 1 August implementation date for the Whiplash Reforms by at least six months, it is clear that the Reforms will eventually be implemented once the outstanding matters of the necessary Civil Procedure Rules and enabling secondary legislation are resolved.
The Reforms implementation process has been disordered and confused but insurers need to press on with their operational and technical changes to motor claims structuring and delivery to ensure they are in the best possible position to manage the Reforms when they finally come into effect.
This leads me to reflect on which existing personal injury motor claims models could be revisited to reduce claims inflation, control indemnity spend and deliver greater operational efficiencies.
I am reminded of the ancient Chinese military strategist Sun-Tzu writing in his treatise “the Art of War” when he said:
“In the midst of chaos, there is also opportunity”.
And nowhere is this more relevant than in the motor claims area of claimant direct capture.
The ABI Code of Practice states: Third Party Assistance provides guidance for the procedures to be adopted by an insurer when they provide or offer assistance directly to a person who has had a non-fault accident with the insurer’s policyholder and who may be entitled to a compensation payment for personal injury, associated vehicle repair and hire.
A voluntary best practice protocol for insurers to follow is recommended to engage with an unrepresented claimant to ensure that he/she is treated fairly.
Guidance is provided on contacting unrepresented claimants, offers of assistance, managing the relationship, arranging medical treatment, vehicle repair/hire and making offers of financial settlement.
Insurers who have signed up to the Code can be found on the ABI website.
Insurer engagement in claimant direct capture for motor personal injury claims has historically been hampered by the represented claimant model of early claims capture at first notification of loss, delivering immediate rehabilitation and prompt claims notification to insurers.
However there is now an opportunity for insurers to revisit and accelerate existing direct capture processes, on-boarding the success of credit hire and credit repair “Copley” intervention models in motor damage claims.
Personal Lines motor insurers have the advantage of early customer notification of the accident and should look at the upscaling of their direct capture processes. The benefits would be threefold. First to gain control of pre-Reform “simple legacy claims”. Second to divert post-Reform small claims track, tariff based whiplash claims away from the Litigant in Person (LIP) Portal to combat the “ghosting” activities of a claims management company or similar organisation. And third, to prevent claimant representatives “adding in” injuries to inflate compensation claimed and therefore remove a claim from the small claims track and the LIP portal entirely.
And also remember that today’s satisfied claimant could be tomorrow’s happy customer.
Although arguably more limited, the same opportunity exists for Commercial Lines insurers even though delays in accident reporting are more frequent due to the business nature of the commercial policyholder. Incentives for early accident reporting could be offered such as partial excess refunds or at renewal a reduced premium, in order to encourage contemporaneous accident reporting facilitating the direct capture process. Of course such financial incentives would need underwriter buy in and approval!
Several Personal Lines direct insurers have already implemented pro-active and robust interventions in the personal injury motor claims space, partnering up with rehabilitation providers to deliver claims spend savings through direct capture processes.
Those insurers who have not revisited their direct capture processes for motor personal injury “simple” claims may find themselves “behind the curve” once the Reforms take effect.
But before insurers rush off to remodel and upscale their direct capture processes for motor personal injury claims, can I give one significant health warning which is the dread of every Claims Director: the spectre of claims inflation both in frequency and severity.
A claimant direct capture process which is too aggressive can generate motor personal injury claims which may not have otherwise been presented. The method of capturing direct claimants without increasing personal injury claims frequency is a difficult one to balance. The key is a good quality personal injury investigation script to follow at first notification of the road traffic accident which can tease out a genuinely injured claimant without sowing the seed of bringing an injury claim in the mind of a claimant who has not been injured at all.
And so all of this brings me back to our Chinese military strategist Sun-Tzu.
Identifying when an insurer should or should not engage in motor personal injury direct capture will be important to counter the unintended consequences of the Whiplash Reforms on “simple motor claims” and to manage claims inflation.
Knowing when to “turn up the dial” on existing direct capture processes may be the difference between a successful capture strategy and one that fails to deliver its objectives. And knowing when to engage the process to capture a genuinely injured claimant will be crucial to manage claims frequency.
As Sun-Tzu said:
“He who knows when he can fight and when he cannot fight will be victorious”.
Author Mark Hall - Partner
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