UK MGA’s Advised on Changes in Employers Liability, Public Liability Claims

June 22, 2012

Impending changes in UK laws governing claims for Employers Liability (EL) and Public Liability (PL) should be a priority membersof the UK’s Managing General Agents’ Association were told at a recent briefing in London.

The MGAA’s bulletin warned that changes in the “costs regime and processes for handling” these types of claims “need to be an important focus for MGAs ahead of their implementation in 2013.”

Alistair Kinley, policy development partner at the law firm Berrymans Lace Mawer LLP, highlighted a range of developments and changes in the EL and PL claims area, and urged MGAs to consider their implications as strategically important.

He stated: “The Jackson review* of costs will bite, from April 2013, and will change the costs paid in ‘no win, no fee’ claims. Under the reforms, defendants’ insurers will no longer pay for success fees and for legal costs insurance.

“The flip-side of these changes is that awards for general damages may rise – by ten percent – and that successful defendants will generally no longer recover costs from losing claimants under a system known as qualified one-way costs shifting. MGAs and insurers will need to understand the balance of impacts across their claims portfolio.”

In addition, Kinley explained that these changes were likely to coincide with proposals to introduce a streamlined process for handling moderate value EL and PL claims, highlighting the Government’s commitment to extending the present scheme for motor injury cases under £10,000 [$15,600] to EL and PL cases up to £25,000 [$39,000].

“This could represent a further opportunity to address disproportionate legal costs in these claims, but compensators will need to review their claims notification and liability decision making processes to ensure they can comply with what are likely to be quite tight timescales for admitting liability and making offers to claimants,” Kinley added.”

MGAA Chairman Reg Brown commented: “The potential impact of these changes emphasizes the need for MGAs to ensure they understand, and as importantly, respond to the challenges ahead. The implications for not taking action could undermine the fundamental role MGAs play in protecting their capacity provider, and hence the hard earned reputation this market has achieved for innovation and service.”

The briefing, held at the Lloyd’s Library, provided MGAA members with a ‘snapshot’ of EL and PL claims trends, themes and practical advice and top product liability topics, over the past 12 months. Speakers touched on subjects including important coverage issues, non-injury related PL claims and highlighted legal developments, in particular the current key legal position, such as The Jackson Reforms, extending the road traffic scheme to EL and PL, and the consultation about discount rates.

*The proposed changes stem from recommendations made by Lord Justice Jackson’s review of the costs of civil litigation in 2010. Chief among them are the initiative to limit the costs to be borne by the losing side in a ‘no win no fee’ civil action, restrictions on the operation of referral agencies and personal injury lawyers and greater controls over the amount and type of advertising they are permitted to employ.

Source: Managing General Agents’ Association

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