Examination of Witnesses (Questions 80-88)
ANNA ROWLAND,
DAVID MARSHALL,
RICHARD LANGTON
AND TONY
GOFF
13 DECEMBER 2005
Q80 David Howarth: I will ask you
to elaborate on that point, if you might. What is the nature of
the insurers' interest?
Tony Goff: That is another issue
altogether. The insurance industry appears to have an agenda to
change the way in which personal injury claims are handled. They
have had that for some time, and I think creating the myth, the
perception, shall we say, that there is a compensation culture
has suited their purpose, insofar as it has helped them in their
arguments, with regard to small claims and other issues. I think
they have used it very successfully.
Richard Langton: There is a widespread
belief in the claimant side that insurers have been writing premiums
that are too low to get market share for many years, that they
have taken on the wrong risk or have been unlucky with natural
disasters, things like the asbestosis claims that have come out
they were not expecting. The number of insurers has reduced over
the last 10 years, there has been a lot of price competition in
order to gain market share and now perhaps they are looking at
ways in which they can recoup some of the losses; they were hit
by the stock market crash, perhaps they underreserved for the
risks involved. That is the claimants' perception and now this
is a golden opportunity perhaps to get back into profitability.
Q81 David Howarth: What you are saying
is that if there is a sudden, unexpected reduction in the scope
of liability they get a windfall?
Richard Langton: The experience
in Australia was that when the tort law reform stopped people
pursuing claims insurance premiums did not go down, and I think
we are sceptical as to whether there will be a direct cause and
effect of, say, increasing the small claims limit and reduction
in premiums.
David Marshall: Certainly the
DWP ELCI review did not really find a very close correlation between
underwriting costs and premiums, and this idea that, in fact,
policies were being underpriced to get market share, it may well
be that is a way of recouping, if you can reduce the number of
claims. I think that the media side of it and the power of anecdote,
it is good stories to read in the press, it is like urban myths
being carried forward and often they are very entertaining stories,
but when you actually scratch the surface of them . . . I think
I was called in once by Sky to talk about backstroke was going
to be banned at a local swimming baths because of a risk of injury.
I was about to go in, on the seven o'clock news on Sky, to talk
about this, and, to their credit, they looked into the story and
discovered it was nothing to do with that. Somebody was splashing
other people in the pool and it was just a question of trying
to stop overexuberant backstroke, nothing to do with compensation
culture at all, but that was what they had believed when it was
first said. It is good stories and I suppose it sells newspapers.
Q82 David Howarth: It has been suggested
that, instead of the existing court case system, there should
be an ombudsman-type, inquisitorial system for smaller claims,
funded by the insurance industry. I was just wondering what your
view was of that suggestion?
Tony Goff: This is similar to
the Irish system (PIPA).
Richard Langton: Our experience
so far of the Irish system is that a lot of claims have gone into
it but we are told very few yet have come out and perhaps when
some do we will have some evidence as to how it works. It seems
difficult to believe that an efficient lawyer, doing sufficient
work on a case, in terms of taking instructions from a client,
gathering the necessary evidence to prove a claim, putting in
a letter which the insurers accept, in fact is going to do more
work than an ombudsman or an administrative bureaucracy; this
is just a way of shifting the cost to the ombudsman from the law
firm.
David Marshall: I think the experience
of dealing with MIB and CICA, which are very similar sorts of
schemes, MIB untraced cases, is it does not speed things up, in
fact they are very, very slow and bureaucratic. I think there
is an issue of public confidence really, because you talk about
the insurer of the wrongdoer and I think the lawyer does add that,
that public confidence.
Q83 Barbara Keeley: Turning to the
NHS Redress Bill now, obviously the Bill itself does not provide
details of the scheme. Have you received any contact from the
Department of Health explaining how it envisages solicitors acting
under the new dispute resolution process which will be introduced
by the Bill?
Anna Rowland: We have not had
any contact from the Department of Health. We have written to
them very recently seeking a meeting to talk through some of the
practical details about how the redress scheme might work, but
that is quite recent so we have not got to a point of setting
a date yet, or anything.
Richard Langton: We are seeking
material though.
Q84 Barbara Keeley: Do you foresee
difficulties currently in drafting, management or enforcement
of guaranteed care contracts?
Richard Langton: No.
Barbara Keeley: Clearly it has not got
that far yet.
Chairman: Do you think it is a problem?
Q85 Barbara Keeley: In terms of guaranteed
care contracts introduced under the Bill, do you foresee difficulties
in drafting those, managing those or enforcing those?
Anna Rowland: We have not got
to that level of detail.
Q86 Barbara Keeley: A further question
is around really the provision of independent medical reports.
I think The Law Society have touched on this in your written evidence
to us for today. What practical difficulties do you envisage if
solicitors are not provided with that independent medical report
but are still asked to advise clients on whether to settle the
claim out of court?
Anna Rowland: I think two issues
arise. As you rightly say, there is the issue of independence,
which is to do with consumer confidence. I heard a minister speak
recently and say that independence would be guaranteed by the
fact that the NHSLA would be involved. Certainly our view is that
if the redress claim does not work and the claimant goes to court
the NHSLA will then be representing the person on the other side.
Clearly, there is an issue of consumer confidence there. The second
issue is about how the role of the lawyer and independent advice
will work, which is connected to that, to the extent that it depends
at what stage the lawyer gets involved. We do perceive some practical
difficulties if what is envisaged is that presumably there is
an internal investigation and then an offer is made and the claimant
is simply sent along to a lawyer. What the lawyer will not know
is was there other information that has not been considered, has
all the information been considered, so what are the difficulties,
and what you do not really want happening then is the lawyer having
to reinvestigate just in order to advise the client. Clearly,
the issue of how independent are the documents they are seeing
will be a factor, but we think there is a further factor about
how does a lawyer, also from the terms of their own duty to give
best advice to the client, say "Yes, this is good,"
or not, if they do not know whether they are seeing the full picture
or not. I think what we would like to discuss at the Department
of Health is how that relationship might work and how you ensure
that the lawyer has enough information to say to the claimant,
"Well, this is the ballpark of what I think you should get;
this looks fair," or "this does not." I think that
needs a little more thought, although we accept that you are going
to want their involvement to be more streamlined than it is at
present, in most cases.
Q87 Barbara Keeley: Clearly, the
aim is to avoid introducing undue costs into the scheme, clearly
that is an overall aim. Is there a way, do you think, to allow
for independent verification of settlements, it is a balance,
is it not, costs on one side and independent verification on the
other side?
Anna Rowland: I do not see why
it should be impossible to do that. I think the details need some
further thought. I think that is something we will want to discuss
in greater detail. I do not see why that should be impossible
but, we have very little detail. Just saying, "Oh, you can
then go along for some advice" there are difficulties with
that. Certainly we would think it must be possible to create a
streamlined system, but it needs some thought.
David Marshall: I think it is
important that the public feel there is sufficient rigour and
independence in the investigation, and certainly various attempts
to revamp NHS complaint regimes have not really commanded a great
deal of confidence. There are lots of shades of grey in medical
practice and I think it would be very, very disappointing if the
redress scheme, which I think does have lots of potential advantages
in bringing a cheaper system for the smaller cases, were to fail
because there was not really the idea that there was a publicly
accountable way of investigating the NHS. I think the lawyer does
have a very important role, and you cannot just say, "Here's
our report, carried out internally, is it any good?" I just
do not see how a lawyer can possibly deal with that sort of situation.
Richard Langton: There may even
be some benefit in a lawyer at the earlier stages giving independent
advice to the patient that this is a good scheme that they can
trust to go through, even if the lawyer's initial involvement
is relatively modest, and perhaps identifies maybe evidence that
needs to be saved, just in case, at the end of this scheme, which
is still going to be fault-based, the claim is rejected. In terms
of consumer confidence, or the patient confidence, in the system,
having an independent person there at the beginning may well assist
in ensuring that this works.
Q88 Barbara Keeley: My final question
was going to be do you think such a scheme could operate fairly
without input by lawyers, but I think you have answered that.
You see it coming in at a couple of points?
David Marshall: Yes.
Chairman: Thank you very much indeed
for giving us the benefit of your experience. Clearly there are
further meetings we are going to have to have with the Department
in order for them to answer some of the questions we were putting
today. Thank you very much.
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