Insurers hit by report fees ruling

Pressure mounted on the insurance industry to set fixed fees for third party reports after a landmark court decision
this week.

The High Court ruled in December that liability insurers could avoid paying fees to medical agencies which assist in formulating medical reports for insurers. The ruling threatened to destroy the medical reporting industry.

This week that judgment was overturned by Senior Costs Judge Hurst in Woollard v Fowler. He ruled that insurers
should be responsible for paying for the disbursement of medical report fees, and that the same rule should apply to the cost of obtaining police reports, engineers'
report or the search of DVLA records.

Judge Hurst said: “It is entirely proper,and in accordance with general and established custom, that the payment should be treated as a disbursement made on behalf of the client and thus be recoverable on her behalf.”

The ruling was welcomed by medical agencies. “The ruling gives us clarity on what was a fairly ambiguous rule,” said
Simon Margolis, chief executive of Premex. “This is the right decision.”

Margolis said it was now time for insurers and reporting agencies to come to an agreement over fixed fees. “We
hope the work done up to now with the Civil Justice Council to arrive at predictable fees can be exonerated and
come to conclusion,” he said.

Insurers, however, will be entitled to challenge costs which they feel are disproportionate.

Paul Dowle, national head of costs for law firm DLA Piper Rudnick Gray Cary, said: “Being a decision of a circuit judge this is obviously not binding.
It is certainly an important victory for agencies, but even on the basis of this decision insurers remain entitled to
challenge the quantum of agency fees, just like any other disbursement.”

Trevor Webb, head of claims for Zenith urged insurers to “identify what is meant by proportional fees”. He said:
“We now need to explore opportunities with AMRO to get fixed fees in place.”

The Forum of Insurance Lawyers (Foil), which represents insurers' lawyers, said the judgment was disappointing and a
“step in the wrong direction”, bringing uncertainty to a regime “designed to introduced certainty”.

Foil said: “Paying parties are surely entitled to expect that routine tasks and activity are covered by the amount
allowed in the predictable costs regime and not face claims at a higher level as receiving parties claim for the additional cost of agencies.”