Chris Rooke of Davies Liability reports on the changes wrought by the Woolf reforms and the benefits that certain specialists are managing to accrue
For loss adjusters it was always predicted that the Woolf reforms with their accent on speedy investigation, co-operation and fast payment would increase the already growing workload for loss adjusters specialising in liability and eventually professional indemnity and other claims areas.
Although some have been disappointed that their workloads have increased by only ten per cent, others have seen workloads increase 50%.
While insurers may be reporting a drop of more than 54% drop in claims litigation, they are also finding the whole business of fast-tracking paperwork and investigation more time-consuming than they expected. One insurer has acknowledged being behind on a quarter of its cases. It was hoped that the new system would weed out a high percentage of frivolous claims since the claimant has to start the process with a reasoned letter. This has not happened.
Since insurers stand to be penalised for missing the deadlines imposed by Woolf they have sought out the help of specialist adjusters even more. Of course, for firms of loss adjusters that have been losing work in other areas this is most welcome. However, this pressure has contributed to creating something of a shortage of specialist liability adjusters, which have benefited accordingly.
It may well be that this shortage will be reflected in more loss adjusters specialising in this area.
It was predicted some time ago that if insurers put the squeeze on loss adjusters they would eventually be faced with bottlenecks as there would not be the supply of professional expertise to handle the rising tide of specialist claims. At present adjusters in this area are being asked to work every hour they can afford in order to deal with the backlog.
While many insurers have found the real world post-Woolf much faster and harder than they anticipated, I have been impressed with the way the courts are handling the new regime. Lawyers and the legal system are not noted for their capacity for change but, so far, I have not noticed the expected teething problems happening. The process has become more streamlined and matters that used to take months or years are being handled in weeks. There is definitely a broader brush at work, with much less fiddling about.
Striking the right balance
At present, the balance of speeding-up payments, making the process simpler and cutting professional time and cost seems to be working.
One surprise is that there has not been any discernible increase in the use of mediation. Woolf certainly encouraged that form of dispute resolution, allowing both parties a month out of any litigation process. This may be due to the number of claimants forcing a result through early Part 36 offers. However, we must remember that these are is still very early days and what we are seeing now may not reflect what we will be doing in two or three years.
The new weapon in the claimant's armoury is, of course, the Part 36 offer. This counter-balances the pressure that could be placed upon them by a payment into court.
The fact that the courts have the power to penalise insurers by imposing punitive interest and indemnity costs if they fail to beat the Part 36 offer has concentrated minds particularly since such an offer can be made before proceedings are issued.
However, it is to be hoped that the courts will not so penalise the insurer and its client when its own offer is close or reasonably argued. The situation will have to be monitored but at this stage quite rightly insurers, in my experience, are not being pressured into accepting Part 36 offers which are highly ambitious.
Insurers are fully aware of not only the problems of turning paperwork and investigation around quickly but of the consequences of getting any part of the process wrong.
They know they will be punished by the court if they fall behind. With more and more members of the public prepared to make claims anyway, for loss adjusters liability has been a real growth area for some time. Woolf has accelerated this process. We are involved in more claims which last longer under the new regime.
It may well be that, as in other areas, insurers will have to decide whether they want to set up their own in-house professional teams – but the trends elsewhere suggest that insurers are wedded to the idea of outsourcing more and more of their non-core activities. Either way, however, it is a good time to be a loss adjuster working in liability.