Challenges for the PI market in 2019


Posted by Phil Ruse, head of legal protection sales and distribution at Litigation Futures Associate Allianz Legal Protection

Ruse: Brexit may impact the willingness of defendants to settle cases

The world today can be described as volatile and uncertain at the best of times. Given the recent dealings around Brexit, it’s no surprise that we’ve grown resilient to these conditions.

Whether we leave the EU on 29 March 2019, with deal and transition period or without, what’s crucial is that we continue to meet regulatory and legal standards. Treating customers fairly in our insurance provisions remains a matter of underlying importance.

The force of the Civil Liability Act itself won’t be impacted by Brexit; but amidst the turmoil of a potential no deal outcome, I was surprised to read that 12.2% of UK case law could be at risk of uncertainty.

This may impact the willingness of defendants to settle cases, which puts added pressure on claimants when bringing a case to court.

With natural catastrophes, economic and political factors further restricting our confidence in what we thought would be better times ahead, we’ll need to count on the resilience and expertise that’s carried us through our past challenges.

Civil Liability Act

We thought the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO) was the time of big change in the legal expenses market.

However, the Civil Liability Act, due to take effect in April 2020, has also received a huge amount of attention. The small claims limit for personal injury (PI) claims is currently £1,000, which accounts for around 5% of PI claimants. After April 2020, this is expected to rise to 30% of claimants with the new limit at £5,000 for road traffic accident claims.

With a higher portion of PI claimants going through the system without legal representation, this should bring opportunity for the before-the-event (BTE) market. Since BTE insurance will offer some protection for PI claimants when proceeding with a small claim, it could take after-the-event insurance’s place as a more appealing product.

But for that to work, these products must be relevant, robust and responsive.

Fixed recoverable costs

Amidst the Civil Liability Act, the new Civil Justice Council working group has considered fixed recoverable costs (FRC) for clinical negligence claims worth up to £25,000.

This has received lots of scrutiny because the complexity and sensitivity around clinical negligence clams made against the NHS make it difficult for claimants to represent themselves without professional legal support.

FRC could restrict access to justice altogether, were it not for specialist claimant law firms effectively and efficiently responding to such challenges. It is important that we maintain a system that doesn’t allow mistakes to go un-investigated.

The Society of Clinical Negligence Lawyers (SCIL) has voiced its opinions on the unsuitability of FRC in this area. Its proposals represent a fairer way of reducing the costs payable by negligent defendants:

  • The NHS should be accountable to its mistakes and take actions to prevent them from happening again;
  • Safety champions should be appointed to each NHS trust to manage the learning from mistakes process;
  • A formal legal process for these claims should be enlisted; and
  • Sanctions should be in place for not co-operating with the new process to encourage compliance.

Research by IRN has predicted that clinical negligence claims will rise, with more pressure on nurses and doctors and more to go wrong with the innovation of new technology.

It’s the right time to introduce a structured way of dealing with these situations. Otherwise confidence in the NHS may suffer as more horror stories break the headlines. SCIL’s proposals are backed by some in power, but time will tell if it succeeds.

Claims portal

When the claims portal was introduced, many liked the idea of having a process providing security and efficiency, quicker decision making, cost savings and more reliable validation. With the Civil Liability Act set to increase the number of claims passing through the portal, it’s essential it remains in good working order.

Market consolidation

There’s been a significant amount of consolidation in the PI market recently, with mergers and acquisitions, as well as firms announcing voluntary wind downs, and dismantling PI departments.

It could be that this is a perfectly natural market response with survival of the fittest. Somewhere between the consolidators and those divesting, there are some brilliant, truly customer centric law firms emerging.

As a coping mechanism to the changing infrastructure of the legal market, it’s been expected that firms will also look to simplify processes, look at value-added services and innovate in technology.

Nevertheless, it’s expected that the PI market will pick up again in 2021.

Technology and innovation

This brings both threat and opportunity. Law firms could use advanced technology and artificial intelligence to enhance the service they provide to customers. They can access a solicitor remotely and simple legal advice can be provided by bots.

Incredibly, eBay handles over 60 million disputes every year through its online dispute system. In addition, the benefits of technology lets solicitors offer a better service – they’ll have more time to spend with their customers.

Other areas technology could benefit the industry, such as secure cloud data storage, improved communication via video, live chat and telephone, online contract processing, e-billing, online documentation portals, and online case management systems.

However, the world may be getting smarter, but what about the associated risk that entails? Cybersecurity takes centre stage as small, medium and large businesses continue to struggle with the increasing risk of data breaches, cyber-attack and system failures.

Regulation

With solicitors’ overriding duty being to the rule of law and administration of justice, this will always be a risk to solicitors. We’ve seen a steady increase in reports of solicitors misleading the courts and times when solicitors have been unclear about the risks of litigation with unnecessary costs incurred as a result.

Both prioritising the customer over the other duties and failing in the customer’s interests are poor practice, so the sector must address the reasons for allegations of misconduct. After all, the UK rule of law is underpinned by public confidence in the system.

GDPR is one of the regulatory buzz words of today. It’s been at the forefront of many businesses’ strategies for the last 18 months. If not adhered to, it can have substantial consequences.

Luckily, there’s a lot of quality information available, so solicitors and insurers alike can stay compliant. It does remain be a key risk for this year however.

Challenges aside, it’s an exciting time to be innovating in the legal sector. Those that thrive will set the pace for the next generation of solicitors in the PI and clinical negligence market. What seems critical now, is maintaining an industry focused on enhancing the integrity of the legal sector.

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