Easing the burden of recovery

The cost involved in insuring vehicles is one of the most significant financial burdens of running a fleet. This is particularly so if the fleet effectively self-insures, or if insureds carry a large policy excess. And premiums are rising. Only recently Norwich Union, which has a fleet book of £60m, announced that from next year it intends to increase fleet premiums in order to meet rising claims costs. New legislation, likely to be implemented next year, will see further hikes in claims costs and increased pressure on premiums. The proposal will allow the government to recover NHS charges arising from accidents. Recovery of charges was previously possible from road traffic accident costs, but as a consequence of Part 3 of the Health and Social Care (Community Health and Standards) Act [2003] recoveries can be made in relation to employers' and public liability claims as well.The Department for Work and Pensions was tasked some years ago to recover the benefits paid to injured parties and does so through a department known as the Compensation Recovery Unit (CRU). The sums recovered are commonly known as the CRU recoupment and are paid by the paying party the ‘compensator' whether that is an insurer or an organisation which self-insures. Essentially, whoever pays the personal injury damages picks up the liability to the CRU.There is consultation currently underway with a view to implementing the new provision by April 2005.

Treatment chargesIt is proposed that the charge will remain the same as that currently applied to road traffic cases, namely £473 for an out-patient visit and, on admission to hospital, a daily rate of £582 can be applied subject to an overall cap of £34,800.These charges will have a significant impact on insurance premiums. Take the CRU recoupment of benefits paid to individuals injured in road traffic accidents who recovered damages for personal injury. In 1999 the sum paid by compensators to the CRU was £201m, in 2000 it was £227m and in 2001 it was £273m. The forecast for 2003/4 is £275m.Also, hospital treatment charges, which are being paid to the NHS via the CRU, have to be added to the sums. In the year to April 2004 the figure recovered was almost £106m.Spread across motorists as a whole, the impact of these two areas of recovery will have a significant impact on premiums. But can fleet managers or their insurers have any control over these areas of loss? Certainly in the area of CRU recoupment of benefits how a claim is handled can have an overall impact on the benefits recouped. Take the simple example of a fleet driver who is involved in a road accident and causes a pedestrian to break a leg. There is likely to be a claim made by the pedestrian for personal injury as there cannot be many people who have not heard the phrase "where there is blame there is a claim".The injured pedestrian will be taken to hospital where NHS charges will be incurred. On release from hospital if the pedestrian is lucky he may be able to secure NHS physiotherapy for rehabilitation back to work. If not, any delay in his eventual recovery or any long term health problems caused by the injury, is going to result in a claim for benefits until such time as the individual is able to return to work. Those benefits will be recovered by the CRU from the fleet or its insurers.

Rehabilitation savingIn such a case the early rehabilitation of the injured pedestrian will result in a reduction of the benefits paid and consequently a saving on the claim.It is perhaps not surprising that in cases such as this, rehabilitation schemes have now been developed. They use the private health sector to achieve early intervention in the recovery and return to work process. In this way the fleet manager - and where appropriate the fleet insurers - can take a much more proactive role. Even allowing for the cost of the private treatment significant savings can still be made.From next April any employee injured at work or any member of the public injured on work premises is also going to trigger a recovery from an employer. All fleet managers should check with their insurers as to how they deal, or propose to deal, with rehabilitation, as not only can this save money there is also the moral and human resource issues in the care of injured employees. IT' David Faithful is a partner at law firm Clarke Willmott