Cost of motor insurance: whiplash

Written Evidence from Premex Services (WL 25)

INTRODUCTION

1. This written submission has been prepared by Premex Services in response to the Transport Select Committee’s current inquiry into whiplash.

2. Formed in 1996, Premex Services is the leading provider of independent medico legal reports for the insurance and legal sector. In 2012 Premex produced 124,371 medical reports using a panel of 2,500 independent medical experts. Premex has an estimated market share of 20% of all the medical evidence produced for personal injury cases. 

3. About Premex:

(i) Premex receives instructions from both insurance companies and claimant lawyers, and uses the same expert panel to produce the medical reports

(ii) Premex has invested considerably in its IT systems and infrastructure, which has streamlined the medical evidence procurement process significantly. These systems include an online appointment and diary management system for customers and medical experts. Report writing software (X-Port) is also used by GPs; this delivers a standardised report, detailing all the relevant information set out in RTA3 (The MOJ compliant medical reporting format) in a consistent format.

(iii) Premex is Sarbanes Oxley compliant and is working towards ISO 27001.

(iv) A founding signatory to the MRO Agreement between the insurance industry and MRO’s (relating to the cost of volume medical evidence) which was introduced in 2007

(v) Premex now employs over 350 people and in 2012 it created 60 new jobs at its head office in Bolton. It was awarded Investors in People, Gold Award, upon reaccreditation in 2012.

(vi) Premex has a panel of medical experts which spans all disciplines and who are paid an agreed commercial rate regardless of the outcome of the case. Premex also pays its experts significantly in advance of when it itself receives payment of its fees.

(vii) Medical experts in the most part are selected by Premex based upon speciality, geographical location and waiting times.

Independence is a cornerstone of Premex’s business ethos, something that is reflected in the wide range of opinion and medical prognosis periods delivered by its expert panel.

(viii) Premex has developed a medical expert accreditation, The Certificate in Medical Reporting (CertMR). This industry kite mark ensures that medico legal experts have the required expertise and knowledge of their obligations under the Civil Procedure Rules, and are aware of all current best practice, and guidelines around the diagnosis of whiplash type claims.

3. As the leading provider of medico legal reports, Premex holds a meaningful underlying data set relating to whiplash type injuries and associated prognosis periods. To the best of our knowledge, this is the largest data analysis of its kind involving some 279,148 ‘whiplash’ type injuries.  Whiplash reports have been defined as an injury sustained to the shoulder, neck and/or spine and have been compiled by a General Practitioner through the X-Port software. 

4. In March 2013 Premex submitted a response to the MoJ’s consultation paper "Reducing the number and costs of whiplash claims". Premex is fully supportive of positive reform and believes its recommendations regarding some proposed evolutionary changes would materially improve the quality and independence of medical evidence in PI claims.

EXECUTIVE SUMMARY

5. Whilst there may be some issues with the current system for obtaining evidence, we do not believe it is irrevocably broken or flawed.

6. There may be some reporting where the opinion of the expert is influenced by the source of the instruction but this is a minority and this could be addressed by appropriate accreditation, auditing, sanction and separation of the expert (or MRO) from any "connected party" relationship.

7. Experts may currently have difficulty in determining the veracity, or otherwise, of the claimants injuries due to a lack of evidence other than the verbal account of the index accident, injuries and previous problems from the claimant. More information could and should be sent to the expert at the time of instruction.

8. The analysis of a significant data sample from Premex relating to neck, back and shoulder injuries and their associated prognosis periods does not support the view or suggestion that experts in whiplash type cases routinely provide an elongated prognosis for recovery. The notion that the current system does not allow experts to act independently is clearly inaccurate and should not be applied to all individuals and organisations.

9. There is a risk, which should not be ignored, that a revolutionary change to the current way in which medical evidence is obtained will not in fact lead to the savings anticipated and could in fact, perversely, create additional costs that wipe out any savings. This would clearly mitigate against the idea that a new system would ultimately lead to reduced Insurance premiums.

10. There are simpler evolutionary developments that would create a change in culture for both experts and claimants that would address several of the shortcomings in the current system, making it harder for both experts and claimants to knowingly act inappropriately. These changes would reduce the overall cost burden to the Insurance industry without destroying the legitimate, independent, organisations and individuals that in recent years have revolutionised the way in which medical evidence can be obtained in an efficient, objective and cost effective manner.

SECTION 1 – THE LINK BETWEEN INSURANCE PREMIUMS AND MEDICAL EVIDENCE

11. It is first worth forging a link between how the proposals outlined in the government’s whiplash inquiry could reduce premiums.

12. The proposals would have to achieve one or more of the following to reduce the overall cost to the Insurance Industry of "Whiplash" which would, in theory, then create the ability to reduce premiums.

1) A decreased ability for claimants to attend medicals and convey misleading information about accident circumstances, previous relevant injuries / medical problems or the extent of injuries sustained.

And / or

2) An increase in the number of claimants seen by medical experts who are assessed and subsequently determined to have not suffered ANY injury at all as a result of the index accident.

And / or

3) A decrease in the average prognosis period for full recovery if the medical expert believed that the claimant did suffer an injury (which would lead to a reduction in General Damages).

And / or

4) A decrease in the cost of medical evidence used in whiplash cases.

SECTION 2- MEDICAL REPORTING – THE GOOD AND THE BAD

13. The key implication of the consultation on medical evidence is that there is an endemic problem with the integrity of medical experts and their evidence that, if addressed, will lead to one or more of the above coming to pass. Equally there has been some suggestion, which we fundamentally disagree with, that the current medical process has been a factor in the increased claims numbers in recent years. We do not see any link between the two and are not aware of any evidence to support any such assertion.

14. Whilst we believe there are probably some individuals and organisations, that produce medical evidence, that may be behaving inappropriately, (eg. accepting the claimant was injured when, on the balance of probabilities, they feel they were not or by offering an unrealistically protracted prognosis for recovery) we do not believe this is an accusation that can or should be levelled at all individuals or organisations with a broad brush.

15. An analysis of 279,148 injuries assessed in Premex’s GP reports over the past 36 months containing shoulder, neck or back injuries reveals that only 6% of injuries had prognosis periods of > 12 months, 62% had prognosis periods of less than 6 months, and 13% had prognosis periods of less than 1 month.

Table 1 – Prognosis period based on Whiplash type injury (last 36 months)

An injured party may have sustained an injury to more than more one area of their body, this table illustrates the prognosis period of each diagnosed injury.

Body Part

Up to 1month

1-3 Months

3-6 Months

6-9 Months

9-12 Months

Over 12 Months

No Prognosis

Grand Total

Grand Total - count

37,166

36,408

99,464

56,539

26,064

15,616

7,891

279,148

Grand Total - Percentage

13%

13%

36%

20%

9%

6%

3%

100%

16. We are concerned that dramatic changes might be implemented that could "throw the baby out with the bathwater" without actually achieving the objective of reducing premiums.

17. We believe that there are elements of the consultation that have the potential to deliver improvements that would have an impact on some, if not all, of the 4 points above, however, we believe that these benefits could and would be achieved by evolutionary rather than revolutionary change.

18. In attempting to answer the key question would changes to the medical process reduce premiums and to what extent, our view is that progress on all of the above 4 areas ought to lead to a reduced cost burden for Insurers. The extent to which those savings would be passed on in the form of reduced motor insurance premiums can only be a matter of conjecture. The possibility that significant changes could be introduced which ultimately would not lead to a reduction in premiums is not one that can be ignored.

19. At a very high level, if the ABI’s figures are correct in suggesting that £90 of every motor premium is paid out in relation to "whiplash" injuries then the reduction in the overall cost burden by changes to the process for obtaining medical evidence would have to be substantial in order for that to make any such changes worthwhile. This is without considering the potential that a radical change might in itself create additional costs as an unintended consequence.

20. If a radical, rather than evolutionary, new process brought with it consequences such as increased cost of evidence, delays in the speed with which evidence is obtained leading to a longer claims process, or a culture of claimants feeling they have been assessed unfairly, then it is not difficult to see how that potential to reduce premiums might easily be wiped out by increased costs elsewhere in the process for Insurers.

SECTION 3 – EVOLUTION NOT REVOLUTION

21. Our view is that there are in fact a number of ideas that could be introduced in an evolutionary manner which, without completely reinventing the wheel, would have the potential to address one or more of the requirements outlined at the start of this paper.

22. In order to give some context to the suggestions that will follow, it probably merits outlining some of the shortcomings in the current system that may be creating the misconception that all medical experts, or the MRO’s that instruct many of those experts, are not acting with honesty and integrity and therefore need "dealing with".

23. Difficulties with diagnosis: "Whiplash" is a generic term which describes a mechanism of injury…….not the injury itself. Symptoms can be caused by damage to muscular, ligamentous, nerve, intervertebral disc, vascular and bony structures. There exists no definitive method of confirming the presence or absence of a "whiplash" type injury and, as with many medical conditions, the history of the patient along with the training and clinical experience of the Dr is critical in reaching a diagnosis. The lack of a definitive test is a factor that would not be changed by any of the MOJ recommendations but the search for some such test is obviously something that should be pursued and supported.

24. It is interesting to note that prior to the implementation of the Civil Procedure Rules in 1999 (the Woolf reforms) when the process for obtaining medical evidence was much more adversarial, with "hired gun" experts prevalent, it was in fact rare that a defendant expert acting on behalf of an Insurer or defendant law firm would suggest that there was no injury at all sustained. Typically they might suggest that injuries were not as bad as purported, or were not entirely due to the index accident but due to some constitutional or pre-existing problem, but rarely would a report come back saying "I don’t believe they suffered any injury at all". If that was happening in the context of a much more adversarial system then the extent to which experts in a new process would be able to say that there was "no injury" must be considered.

25. Experts working with limited information / Claimants able to give misleading information to expert: The current system typically involves medical experts being asked to assess claimants with very limited information, in fact typically just the claimant’s account of the accident and subsequent injuries. Given that the history is so important when assessing any medical condition, if this history is deliberately misleading then the expert is clearly going to be working with one hand tied behind his / her back when determining if the injuries outlined are consistent with the index accident. Whilst one or both parties may well know about previous accidents, injuries or medical problems and, similarly, will have a good account of the index accident (albeit there may be two differing versions), it is typical that the examining Doctor rarely has access to that information. Similarly, on occasions when the expert might feel reviewing medical records would be informative that rarely happens as there is currently a "presumption" that medical notes will not be seen.

26. "Connected party" relationships: The duty of the expert is to the court. When the relationship between expert and any party involved in the claims process itself (such as solicitor, Insurer, Claims Management or Accident Management company) is too close then there exists, at the very least in perception if not in reality, a risk that the expert may come under pressure to produce reports that favour one party or the other (depending on who is doing the instructing). There are independent MRO’s that provide medical evidence for both claimant and defendant organisations, using exactly the same experts irrespective of the source of instruction, who are able to offer truly independent evidence. If the source of instruction is connected to, or owned by, a party that has an interest in the claims process itself, then clearly there is potential for a conflict of interest. There has been an increase in recent years in the number of close relationships of this type which could be contributing to a perception of a lack of independence. Further, the recently announced reforms regarding significantly reduced legal costs has already driven a growth in the number of solicitor and CMC owned medical reporting organisations, presumably as these businesses seek to replace income lost through the cost reforms.

27. Lack of accountability: Currently, if an expert is not acting honestly and with integrity there is a low chance of that expert being taken to task. It is rare, especially in the low value RTA arena, that cases go to court and therefore little likelihood of a judge censuring or criticising an expert if he has clearly given an inappropriate opinion. There is no formal method of accreditation, no peer review or audit and no route by which experts can be sanctioned or prevented from undertaking medico legal work. In essence a "bad" expert (either one acting without the necessary level of expertise or one offering an inappropriate opinion) can effectively undertake this work with impunity.

28. "Pre-med" offers: A not insignificant percentage (estimated about 20%) of cases are settled by Insurers where an offer is made without the claimant undergoing any sort of medical assessment. This can only create a perverse culture where dishonest claimants may pursue a claim knowing there is a distinct possibility they may not even have to describe their accident and injuries face to face with a Doctor. The medical examination is often the only face to face interaction a claimant has during the entire claims process and as such is a significant hurdle for a potentially fraudulent claimant to overcome. ‘Pre-med’ offers may well be a factor in the rise in claims numbers as it can be argued that such offers encourage the so called "have a go" culture.

29. Excessive prognoses: There are some that take the view that the experts who currently prepare medico-legal reports are in the habit of always offering an excessive prognosis for recovery, irrespective of the severity of the injury. Comments along the lines of "all reports are the same and always offer a prognosis of 12-18 months" are often bandied about and, as is often the case, if stated frequently enough move from being "anecdote" into "fact" and thereby become "proof" that the current system is irreparably broken and needs revolutionary reform. Whilst there are undoubtedly examples of such inappropriate behaviour, which is allowed to persist by virtue of the previously stated lack of peer review and audit, this is not an accusation that can or should be levelled at one and all.

SECTION 4 – RECOMMENDATIONS

30. All of the issues outlined above demonstrate that the process clearly has room for improvement. Fundamentally we are, however, of the view that these issues could be addressed by evolutionary rather than revolutionary change. The larger MRO’s have brought much to the procurement of medical evidence in terms of efficiency, reduction in timescales and cost control. Huge sums have been spent developing IT systems and processes that all stakeholders benefit from. The fact that all the major personal lines insurers use the services of the large, independent, MRO’s should not be ignored. They would not do so if they felt that reports were unsatisfactory.

31. In terms of the evolutionary changes that we believe would create greater confidence in the system, without essentially scrapping everything that currently exists; they are driven largely by the issues outlined above.

32. These include:

(i) Accreditation of experts and MRO’s:

Experts should be able to demonstrate a suitable knowledge of the relevant laws and rules relating to their role. Similarly they should have a good understanding of the research into, and current thinking about, the injuries they are expected to assess. In the case of MRO’s, they should be required to demonstrate true independence from any party involved in the claims process.

(ii) Peer review / audit of experts:

A system of random and targeted review of experts and their reports by a body independent of the organisation providing the report should be introduced. This would address the frustration that no doubt exists where Insurers feel powerless to challenge experts they believe are reporting dishonestly. The "threat" of review would almost certainly lead to a cultural shift in the thinking of those experts who are not behaving appropriately.

(iii) Sanction:

The accreditation and review process would create the evidence to then impose sanctions on those experts not behaving properly with the ultimate sanction being a loss of accreditation (so they couldn’t report any more) and reporting of the expert to the General Medical Council.

(iv) Banning of connected party relationships:

Organisations and individuals would be obliged to sign a statement of truth to confirm they were not owned by, or too closely connected to, any other organisation or individual actively involved in the claims process. This would remove the risk of any perverse incentive that might be brought to bear on experts.

(v) More information to experts:

Experts should have access to both parties account of the accident, not just the claimant’s account. Similarly, experts could be told in advance of any history of previous accidents / injuries that the compensator and / or solicitor are aware of. Both of the above would mitigate against the claimant giving a knowingly dishonest account of the index accident and previous injuries / claims. On a similar theme, experts who feel that a review of medical records would be appropriate either because they have doubts about the honesty of the claimant or because of previous medical history, should be allowed to see those notes. Currently there is a presumption that notes will not be reviewed in lower value cases.

33. There are other ideas that would also help address the perceived problems including the introduction of capped fees into the Civil Procedure Rules for the reports most commonly obtained for these injuries. "No medical, No damages" is also an idea that would address those claimants who may have been led to believe that a claim can be pursued and settled by simply filling in a form and waiting for an offer to be made, which as outlined above does occur in a significant percentage of cases.

April 2013

Prepared 30th April 2013