Insurers urged not to shy away from contributory negligence arguments under new protocols

Head: aim must always be to deal with meritorious claims within the portal

Insurers should still run contributory negligence arguments rather than seek to settle under the new extended protocols for employers’ and public liability (EL/PL) claims – which come into force tomorrow – a leading defendant insurance law firm has advised.

Kennedys also highlighted continuing “ambiguities” in the rules that “compound the challenges” faced by defendants.

Partner Tracy Head there had been considerable discussion over whether, on a commercial basis, it is cost effective to argue contributory negligence up to a certain level and have a claim exit the protocol.

Acknowledging the need for insurers to identify the “tipping point” between contributory negligence arguments the and cost savings available within the portal, she said: “We anticipate that most organisations will take the view that claims with real contributory negligence should be still be run. To not do so risks sending the wrong message to their workforce and/or members of the public about taking responsibility for one's own health and safety.”

Ms Head also speculated that there could be an increase in claimants making pre-action disclosure applications. “Such a step will allow a claimant to take a view on whether to proceed through the protocol as they can then assess if it has merit without committing resources to completion of a CNF [claim notification form] and any associated steps.”

She said it was “unfortunate” that the ambiguities around some of the sanctions have not been ironed out before extension. In particular she said it was unclear what the sanction would be for:

  • Failure by the claimant to re-submit the CNF within 30 days of first issue to insurer (in EL and PL claims);
  • Failure to provide next-day acknowledgment of the CNF or a defendant CNF. What does the word “must” acknowledge mean without clear guidance on whether a sanction applies?;
  • Failure to provide details of loss of earnings after 20 days of making an admission of liability (in an EL claim); and
  • Failure to pay settlement monies within 10 days of agreed settlement, including stage 2 fixed costs.

“Whether clarity will be offered by the Ministry of Justice via the Civil Procedure Rule Committee in due course waits to be seen,” she said. “In the meantime, such grey areas represent potential risk points for insurers, insureds and those with self-insured retentions.”

More generally, Ms Head said: “Whilst the protocols take effect and organisations learn to understand the impact of the response times, we might see certain procedural ‘behaviours’ develop.

“For example, there may be an increase in the number of repudiations as organisations get to grips with the timelines for making decisions on liability, although we suspect this will level off in due course. The aim must always be to deal with meritorious claims within the portal and compensate genuinely injured individuals as quickly as possible and at a reasonable value…

“As with other aspects of the civil justice reforms, we anticipate that the next 12-18 months are likely to bring a number of challenges which organisations will need to be alive to. Ongoing review of their claims-handling procedures will be vital, to ensure efficiencies are identified and maximised in order to take full advantage of the costs savings that are available.”