Outcome of the MedCo Review. MedCo. Ian Scanlan 19 th May 2016

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1 Outcome of the MedCo Review MedCo Ian Scanlan 19 th May 2016

2 Introduction Ian Scanlan Group Head of Business Development at Winn Group. The group comprises of Winn Solicitors, On Medical and On Hire. On Medical post April 6 th became a Medical Agency in its own right, with ten Tier 2 companies. 19/05/2016

3 Four Minute Summary of MedCo April 6 th 2015 MedCo goes live. Tier 1 has more applicants then initially envisaged. Tier 2 has significantly less applicants than envisaged. MoJ and MedCo get angry about multiple MRO Gaming. Lots of statements made, very little action. Accreditation of experts unveiled October /05/2016

4 Four Minute Summary of MedCo MoJ Publishes Outcomes of MedCo Review - 24th March Accreditation training deadline extended to the 1 st June. Lord Faulks speaking at the APIL Conference confirms Government is pleased with MedCo and discusses Autumn Statement. MedCo Enforcement Action - 12 th May /05/2016

5 Call for Evidence On 16 th July 2015 the Government issued a public Call for Evidence to enable all stakeholders to make submissions in relation to what is referred to as the offer (i.e the number and mix of MROs presented to the user following a search on MedCo). The Call for Evidence closed on 4 th September 2015 with a total 93 responses received from insurers, claimant and defendant solicitors, medical experts, MROs, physiotherapists, trade unions and alternative business structures. 19/05/2016

6 The Offer Stakeholders were asked to consider if the current offer of 7 MROs was set at the right level and the factors that should be considered when setting the number of MROs/experts presented in the offer. Stakeholder responses indicated support for a proposal to make sure that more than one Tier 1 MRO should be included in the revised offer and that there is fair competition both within and outside each tier. Following this, it was concluded that the revised offer for MROs upon completion of a search on MedCo will be: Two Tier 1 MROs and Ten Tier 2 MROs No changes will be made to the number of direct medical experts presented. 19/05/2016

7 MRO Qualifying Criteria It was stated in June 2015, that the MoJ believes practices such as registering multiple shell MROs on the system must stop. Therefore, measures will be implemented through changes to the qualifying criteria to address these. The key changes are: the introduction of a new criterion covering the definition of an MRO with the aim of establishing, for the purposes of MedCo, the core roles and functions of an MRO supplying medical reports via the MedCo portal. to widen the criterion on minimum service level standards (as defined by MedCo) to apply to all MROs so that users are reassured that all MedCo registered MROs operate to the same minimum standards of service. in relation to the two criteria covering a tier 1 MRO s operational capacity, the 250 medical experts must be active MedCo accredited experts qualified to prepare initial whiplash reports. However, the 40,000 report requirement may be fulfilled by counting all medico- 19/05/2016

8 Changes Declaration of Financial Links Implementation of Changes The changes will be implemented in late summer Further details will be provided in due course. Operational Feedback As part of the Call for evidence, the MoJ asked stakeholders to submit evidence and views on operational aspects of MedCo. This feedback has been compiled and will be communicated directly to the MedCo Board for consideration. Future Changes A final point of note to arise from the Call for Evidence was a strong show of support for formal regulation of MROs, with stakeholders from across the sector agreeing on the need for regulation. This is a complex area, and the MoJ will consider whether further action is required. 19/05/2016

9 Market Movements Accreditation of Experts Lord Faulks and the rumour mill MedCo enforcement action Market future perceptions 19/05/2016

10 Outcome of the MedCo Review Any All views expressed are those of the chap I bumped into outside just prior to this seminar and are not those of On Medical, Winn Solicitors and On Hire.

11 Autumn Statement

12 Point 12 will also. be able to claim compensation

13 Point 12 will also soon be able to claim compensation from their rail tickets if their train is more than 15 minutes late.

14 Point 20 People will no longer be able to get cash compensation for minor whiplash claims

15 Point 20 To make it harder for people to claim compensation for exaggerated or fraudulent whiplash claims, the government is ending the right to cash compensation.

16 Point 20 More injuries will also be able to go to the small claims court as the upper limit for these claims will be increased from 1,000 to 5,000.

17 Point 20 This means that annual insurance costs for drivers could fall by between 40 to 50 a year.

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19 How much? There were more than half a million whiplash claims last year - and insurers estimate they add 90 a year to the average motor insurance policy. ( 2 billion overall)

20 How much? In 2011, insurers received 13.3 billion in UK motor premiums, ceded 1.7 billion in reinsurance and paid out 12.1 billion in motor claims and expenses. ABI UK Insurance Key Facts 2012

21 How much? The ABI estimates that around 2 billion goes undetected each year, adding around 50 to the insurance premium costs of each UK household. ABI UK Insurance Key Facts 2012

22 How much? So in 2011, the government using the ABI figures, state 2 billion equates to 90 per policy. Yet the ABI state 2 billion equates to 50 per policy.

23 How much? Average insurance premium (Whiplash 20% of premium) Average insurance premium 429 Q (Whiplash?% of premium)

24 How much? LASPO savings? 1.3 billion

25 How much? ,000 whiplash claims made to Medco in the first 12 months. Average PI payment 2614 x 528,000 = c 1.4b Costs 500 x 528,000 c 265m Medical 180 x 528,000 c 95m Saving c 1.75 billion

26 How much? 28.4 million vehicles insured x 429 average policy = 12.1 billion With a 1.75 billion saving meaning the saving should be 60 at least not this claimed. But.really? Where s the LASPO savings?

27 How much? Insurers have made an aggregate saving on claims costs of 6.68 billion Motorists have paid 353 million more in premiums Annual claims costs have decreased by 29% The number of road accidents a year has decreased by 5% Serious and fatal accidents have increased each year by just under 1% The number of claims registered was 4.7% lower in than in

28 Consultation Will be released by Easter Will be released in May Will be released in the summer What is the delay?!?!?

29 Consultation Impact assessment. The MOJ have made a lot of statements over what should be considered.

30 Consultation Therefore, while the Government believes that an increase in the Small Claims limit in this sector would provide additional benefits, it regards it as sensible and pragmatic to consider the combined impact of earlier reforms before embarking on any further change now.

31 Consultation The provision of robust data by insurers on case volumes, case injury types, initial claim values, and final case settlements would be beneficial, together with information on suspected exaggerated and fraudulent claims and on claims which were withdrawn.

32 Consultation The Government does not intend to adopt a formal regulatory or legal information gathering power in respect of this information. Instead the Government invites the insurance industry and its representative bodies to collect this information and to publish it.

33 Consultation The Government would not support forcing insurers to supply data through legislation.

34 Consultation We are trying to work closely with the Association of British Insurers on reducing insurance premiums for young drivers. Mandating a central collection of data at this stage might jeopardise this work.

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36 Consultation It would be financially difficult for many solicitors to assist litigants fighting personal injury claims using the small claims procedure, given the limited fees available. However, we are concerned that some claims management firms might find a way to enter the process, fuelling another boom in their activities.

37 Consultation The Government is also keen to ensure that raising the Small Claims limit does not lead to any unscrupulous CMCs taking advantage of any resulting increase in self representing litigants and entering the market to offer advice services which might not be in claimants best interests.

38 Conclusion It won t be before June 23. The impact assessment will have to be substantial. The 50 saving being passed on..well.

39 The Need for Further Reform Presentation to Manchester Claims Association Don Clarke 19th May 2016

40 Reviewing the Objectives of the Reforms A brief Chronology Jackson Report January 2010 December 2012 Government s Consultation on the number and costs of whiplash claims LASPO Act 2012 April 2013 Introduction of Reforms Extending the Portal and reducing fixed costs April 2015 Fixed Costs for Medical Experts via MedCo Autumn Statement 2016 Consultation expected in The New Year or Easter or May or July Implementation April 2017 or October 2017

41 Reviewing the objectives Government concerned with the number of whiplash claims in 2010 and 2011 So what have we seen: estimated So in terms of frequency there can be no question that the reforms have patently failed

42 The Cost of Claims April 2013 fixed fees more than halved to 500 to Stage 2 Reduced fixed fees outside the portal But the claimant market has adjusted and we have seen: De facto referral fees being paid in a variety of guises General damages inflation from September 2012 to March 2016 of 35.5% An increase in frequency of 7.9% from 2012 to 2016 ( the death of access to justice?) Frequency for medical expenses over 300 is 35.8% compared with a market average prior to the reforms in the low 20% range Consolidators with rehab connections have additional medical treatment on over 60% of cases now with some at 80%+ In short the benefits to insurers of reduced fixed fees have been rapidly eroded by increased frequency and add-ons Congratulations to the Claims market, entrepreneurial and adaptable but the problem has not been solved and motor premiums are on the rise

43 Autumn statement Don t do it quickly get it right Removal of cash compensation Primary legislation Definitions beware of unintended consequences Small claims track increase Secondary legislation Associated measures Consultation July publication likely 6/8/12 week consultation period? Implementation Legislation standalone or to be contained within the Finance Bill?

44 SCT limit increase what about safeguards Don t do it quickly get it right In addition to an increase in the SCT limit, the Government also needs to look at implementing the following as a comprehensive package of reforms: The compulsory use of a damages calibration tool/agreed tariff A mandatory and regulated Code of Conduct for compensators Improved regulation of Damages Based Agreements (DBAs) Better education and awareness for genuinely injured claimants to enable them to claim for their own damages without the need for a CMC or a solicitor. This includes amending the capabilities of the Portal to enable claimants to use it directly

45 Money, money, money Claimants are a very valuable commodity Problems stem from pure economics it s this that needs tackling. Regulation can only go so far Any change or reform MUST NOT be done in isolation how do these fit together? Jackson and FRC Briggs Carol Brady s review Government must work with the judiciary and the CJC

46 Costs The Future Whilst there may be doubts about the timetable, there are no doubts about the direction: Original RTA fixed fees 2013 Reforms extending fixed costs Clinical Negligence Consultation Jackson and the CJC review on fixed fees

47 Jackson Fixed Fees 28th January 2016 Lord Justice Jackson The Time Has Come Proposing fixed costs for all civil litigation cases up to a value of CJC working party has already been set up and has met. Timetable realistically probably eighteen months to two years if done properly What happens if the solution is based on a different model to the solution found for clinical negligence cases? The spectre of unintended consequences

48 Clinical Negligence Fixed Costs DoH pre-consultation in August 2015 Full consultation originally planned for December 2015 and we are still waiting! Deadline for implementation 1 st October 2016 Is this still feasible? Rationale for introducing fixed costs for clinical negligence cases up to rather than personal injury cases up to ?