In the next in our series looking at the impact of the civil justice reforms, and following on from our analysis of the retail sector, Lisa Fletcher reviews the impact that the reforms have had on employer’s liability and disease claims in the manufacturing and utilities sector.

Time to take stock

While it remains early days in terms of assessing the overall effect of the reforms, the extension of the portal to employer’s liability and disease claims is starting to have a noticeable impact on lower value injury claims in this sector.

The extension to the portal took effect from July 2013. Despite the immaturity of the data available, we are able to form a preliminary assessment of trends and portal behaviour. We have also considered data released by organisations such as the UK Asbestos Working Party, Employers Liability Tracing Office and the Compensation Recovery Unit.

Initial observations

The portal data is a good place to start when considering the true impact of the reforms on claims in this sector, although its limitations must be appreciated. What we can see is:

  • There has been a steady month on month increase in the number of claims received since the portal was introduced – from 816 in November 2013 to 1562 in November 2014.
  • While the number of claims received through the portal has risen, the number of claims leaving at stage 1 has largely stayed the same.
  • The number of claims leaving at stage 2 has increased slightly – yet those leaving via the exit function are continuing to increase at a disproportionate rate.
  • Relatively few court packs are being created each month with only 51 created in 2014 (as at November) representing only 0.85% of the 6097 claims notification forms (CNFs) received. With 35% leaving at stage 1, 1.8% leaving at stage 2 and 50% leaving via the exit process; it would seem that up to half of the claims received are leaving for some reason other than settlement. 
  • The average damages settlement is reducing. This peaked in March 2014 at £5665 per claim and has steadily decreased to £4183 in November 2014.
  • The most recent Employers Liability Tracing Office data (2013) indicates that 133,700 searches were made in 2013, compared to 64,126 in 2012. Although not necessarily the full picture, this could perhaps indicate that the number of claims is steadily increasing, or as we have found, that claims peaked before the introduction of the portal.
  • Data released by the Department for Work and Pensions, tells us that the number of claims for noise induced hearing loss stood at 3589 for 2013/2014 of which 39% were paid, contrasting with the 4081 claims received in 2012/2013, of which only 23% were paid. While this indicates that the number of claims is on the increase, it could also be explained in part by the move by some insurers toward registering all claims, not just those with hearing loss over 50db.

What to watch

With the average settlement figure within the portal well below the £25,000 threshold, the indication is that higher value claims are not being pursued through the portal. This could simply be due to the fact that most claims in this sector involve multiple defendants, although sceptics might say that claims approaching the upper limit are being inflated to avoid the portal restrictions.

The volume remains in noise induced hearing loss claims with proportionally fewer being settled. This adds credence to speculation that an increasing number of spurious deafness claims are being presented. However, it is fair to say also that claims for repetitive strain injury and hand arm vibration are on the increase, as are asbestos -related claims. Indeed, data released by the UK Asbestos Working Party in 2014 confirms that the number of asbestos claims continues to rise.

Overall, from analysis of the available data, along with our anecdotal experience it appears that whilst claims volume is increasing, claims quality is decreasing. This implies that the pressure of fixed fees is taking its toll, with lower quality claims pursued alongside tactics designed to secure exit from the portal and enable higher fees to be charged. Some of these tactics include provision of incomplete information, alongside spurious allegations for psychological loss designed purely to spark a challenge by a defendant, or even bringing in additional defendants without real grounds to do so.

Longer term predictions

While the reforms were designed to reduce costs across civil litigation, it is our experience that they have not achieved the intended result across employer’s liability and disease claims. Some of the behaviour exhibited indicates that further control is needed. As it stands, the trend towards volume as opposed to quality claims mirrors the industry observation that spurious claims are on the rise.

The Association of British Insurers (ABI) have recommended that fixed costs be extended to all claims that are started in the portal, along with an extension of the portal itself to include claims with multiple defendants. These may be developments to look out for in the future, and in our view, would go some way to achieving the objective of the reforms.