Motor claims

1. Motor claims Zurich UK Commercial

2. Claims market overview • Rising claims cost. • Falling claim volumes.

3. What are our current topics in the claims market? • Claims inflation • frequency of PI claims level, cost of all claims increasing: • cost of vehicle repair • Judicial Studies Board seventh edition, higher awards for damages • fifth edition Ogden tables.

4. What are our current topics in the claims market? (continued) • Compensation culture • debate whether it exists: • yes, government and insurers • no, claimant solicitors • statistics can be used to support either side. • Rehabilitation • amendment to pre-action protocol. • The current repair market…

5. …is a challenging environment • The current repair market is characterised by fragmentation and decline: • narrow insurer focus on labour rate • adversarial relationship with insurers • increasing construction complexity • reduced claims incidence • low profitability • poor performance • compliance issues.

6. Approved repairers • Approved repair network offers an effective solution to getting customers back on the road, including: • extensive UK coverage • repair quality and warranty in line with manufacturer • delegated authority • free collection and delivery • courtesy vehicle available • management of repair costs • complaint resolution.

7. How does early notification benefit customer, broker and insurer? • Accurate and correct information can be obtained at earliest opportunity. • Key to claim management: • liability • potential injury • repairs. • Efficiency of service on AD repair.

8. How does early notification benefit customer, broker and insurer? (continued) • Proactive management of third party claims costs: • early cash settlements • low rate hire • approved repairers /courtesy cars • whiplash treatment / rehabilitation. • Customer ‘hidden costs’: • business capacity issues, e.g. a van out of action for a period • loss of revenue e.g. being unable to fulfil deliveries.

9. Pre-action protocol for personal injury claims (Woolf Reforms) • Recommendation of the development of pre-action protocols: • Lord Woolf (1996) Access to Justice Report “To build on and increase the benefits of early and well informed settlement which genuinely satisfy both parties to dispute.”

10. Pre-action protocol for personal injury claims (Woolf Reforms) (continued) • Why? • more open pre-action contact between parties • better and earlier exchange of information • better pre-action investigation by both sides • to put the parties in a position where they may be able to settle cases fairly and early without litigation • to enable proceedings to run to the court’s timetable and efficiently, if litigation does become necessary • to promote the provision of medical or rehabilitation treatment (not just in high value cases) to address the needs of the claimant.

11. Rehabilitation code • From 1st April 2005 the following is applicable to all personal injury claims: • Beachcroft Wansbroughs (2005) Insurance Litigation Alert “At as early stage as possible either party (or both) should consider whether the reasonable needs of the claimant could be met by rehabilitation, not just in high value claims.” *with exception of claims covered by the Clinical Disputes and Disease and Illness Protocol

12. Rehabilitation code (cont) • What does this essentially mean? • injured person makes the best and quickest possible medical, social and psychological recovery • rehabilitation code provides a framework for UK insurers and personal injury lawyers. • Case law has been reported where claimants have been penalised for failure to mitigate losses when they have refused reasonable offers of early rehabilitation. *with exception of claims covered by the Clinical Disputes and Disease and Illness Protocol

13. Catastrophic personal injury case example • Vehicle accident in 2003 involving our insured and a passenger. • Driver lost control of the car and rolled over, injuring the young female passenger who subsequently sued our insured for damages. • Accident circumstances investigated by Zurich Commercial, interviewing attending police officers, ambulance crew, witnesses present.

14. Catastrophic personal injury case example (continued) • Investigation revealed passenger was not wearing a seat belt, application of contributory negligence following Froom v Butcher 1976 enabling negotiation for a 15-25 % reduction in final settlement. • Photos were from our motor engineers unit as part of the accident investigations as well as for vehicle repair assessment.

15. Catastrophic personal injury case example (continued) • In concurrence with investigations into accident circumstances, calculations over the quantum are calculated: • appointment of medical experts • rehabilitation if appropriate • selection of independent • rehabilitation expert to • undertake immediate • needs assessment.

16. Catastrophic personal injury case example (continued) • Claimant was found to have physical injury and a moderate brain injury: • provision of ramps for access • supervision of patient.

17. Catastrophic personal injury case example - Ogden Tables (continued) • Claims for future losses are calculated using Ogden Tables. • Multiplier x multiplicand = future loss. • Issued by the Government’s Actuary Department.

18. Catastrophic personal injury case example - Ogden Tables (continued) • Recently revised fifth edition takes into account increased life expectancy and decreased interest rates. • Zurich Commercial Actuaries take into account changes in reserving and settlements that will result from future Ogden Table adjustments.

19. Catastrophic personal injury case example (continued) • Claimant had planned to enter a career requiring physical activity. • As part of quantum investigation we obtained: • claimants school records • college records • medical records • expert medical opinion: • Neurologist (reports on physical damage to brain). • Neuro-psychologist (reports on how damage affects behaviour). • We sought a settlement meeting for all parties to discuss and negotiate a mutually acceptable outcome.

20. The factors influencing reserve changes • Reasons for the difference from initial reserve to final settlement: • Time value of money. • Liability / contributory negligence developments. • Variation in insurance company and claimant lawyers expectation. • Claimant recovery. • Anticipated future care costs. • Claimant future career prospects.

21. New developments - periodic payments • What are they? • An award for payment of damages for a future pecuniary loss to be made on a period (annual) basis as opposed to the traditional one off lump sum award. • Payments are linked to the Retail Price Index (RPI), thus increase each year in line with inflation. • Periodic payments may not take into account the whole future pecuniary loss and may be in the form of partial annual payment combined with a lump sum award.

22. New developments - periodic payments (continued) • What claims will be considered by the court for periodic payments? • A patient of the Court of Protection. • Minors / Infant. • Claims for future loss of earnings / reduction in earnings capacity to retirement. • Future care claims. • Cases involving a dispute over expectation of life.