Business liability - critical insurance changes - Business Works
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Business liability - critical insurance changes

Danny Cooper, MD, The Insurance Manager It may have passed you by, but for the last few years there has been an established protocol for dealing with injury claims following a motor accident. Basically, your insurers had to decide within 15 days whether you were liable or not (and will continue to do so). In theory, a good idea in that the sooner a claim is settled the lower the legal costs.

Somebody spotted the fact that a similar system could be applied to other injury claims. Enter Lord Justice Jackson to see how this might work. To universal acclaim (except for personal injury lawyers and claims management companies) he came up with a list of measures, some of which were implemented (without irony) on the 1st April this year. This first salvo saw changes to Contingency Fees, Conditional Fee Agreements and 'After the Event' insurance arrangements. So far, so good but now it gets personal.

Employee Liability and Personal Liability

From the 31 July 2013, the protocol extends to include Employers Liability (EL) claims and Public Liability (PL) injury claims up to £25,000. Your insurers will get 30 working days for EL and 40 working days for PL injury claims to make a decision on Liability. Not a great deal of time given the level of efficiency generally found in the industry. The protocol doesn’t seem to include any prescribed penalties for missing deadlines, but expect your insurers to get a bit shirty if you have anything to do with it.

It is now more important than ever that businesses have a robust system of incident reporting, investigation and notification of any incident that might give rise to a claim. Don’t wait until a claim is made as your insurers will argue their position has been compromised by a late notification. Unfortunately, if you notify everything they will set a claims reserve against each one and your premium goes up next time round. Agree a sensible cut off point – RIDDOR reported incidents, prolonged absence etc. Most will be pretty obvious, but any doubts then notify anyway.

a system which is bound to be exploited to the full by certain lawyers

Unfortunately, it doesn’t stop there. On receipt of a letter intimating a claim you only have one (yes, one) working day to acknowledge receipt and supply details of your insurers. The absence of the MD or an extended Christmas shut down are no excuse. As if the odds weren’t already stacked heavily in the claimant’s favour, we now have a system which is bound to be exploited to the full by certain lawyers.

Management systems should now include an identification and response procedure. Our clients have also been issued with a standard response letter which includes the relevant insurer detail. If your broker’s on the ball, then you should already have something similar, but, if not, we’re happy to supply a template to do your own.

In addition, ensure:

  • post is opened promptly and a claim letter gets to the top of the pile;
  • there is always someone on site with authority to send an acknowledgement letter;
  • the offending letter and a copy of the standard response are sent to your broker immediately (unless you’ve progressed to an outsourced insurance manager who would then be your first port of call).

One other thing. Insurers do tend to roll over when faced with a potentially large injury claim and have preferred to settle – rightly or wrongly – rather than see the claim through to court and risk losing. The tighter time limits for investigation are unlikely to change this unsatisfactory state of affairs, so the more evidence you can supply at the outset, the more chance you will convince them to fight. This is really important as the claims record will be a matter of fact leading to increased premiums and higher alternative quotes.

To balance this as best we can, we will follow up a claims notification with a conversation regarding potential liability and the direction we want the claim to take. Some brokers are more pro-active than others but a lack of early involvement reduces the influence they will be able to exert on your behalf.

Good Luck!

For further information or a copy of the standard letter template, contact The Insurance Manager on, call 01795 890 804 or visit:

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