Importance of Reserving in Personal Injury Claims - Chelmsford CII Session

1. Reserving in Personal Injury claims Chelmsford CII SessionMaggie NightingaleTechnical Manager

2. Contents • Why is reserving important? • Reserving Philosophies • Sources of information • Heads of Claim • Case Studies • Summary

3. Reserving – “It is worth what it is worth” right? • The setting of accurate reserves is crucial to insurers/captives • Impacts financial results • Impacts future premiums offered – new business • Informs future underwriting considerations • Reinsurance considerations • Aggregate/deductible considerations

4. Reserving Philosophies • Worst Case • Pessimistic • Realistic • Cautious but realistic • Optimistic • Best Case • Crawford SLS – Ultimate projected Financial Outcome “with some caution but not undue pessimism”. • What about contribution/contributory negligence?

5. The Headlines • Establishing “Day One” Reserves • Application of Foresight in Reserving • Ongoing Consideration/Timely Reaction to Evidence • Use of Reserve Calculation Forms • Trigger Dates for Insurers • Reserving of Costs

6. Sources of Information CV Training records OH records Personnel records Ogden Tables Medical reports Medical records Rehabilitation reports Companies House Company Accounts Fire Brigade Report Vocational Expert Accommodation Expert And more Judicial College Guidelines Case law Insured Earnings Details C’s colleagues Third Party solicitor Social Media Profiling Enquiries Surveillance NHS Charges Certificate CRU Certificate DWP Records Police report HSE Report Media reports

7. Heads Of Claim Claimant’s Costs (Portal/Fixed/Hourly rate) Expert’s Fees Surveillance Rehabilitation Fees Defence Costs Medical Expert’s fee PSLA Loss of Earnings Care and Assistance Services/DIY Smith v Manchester Loss of Congenial Employment Aids and Adaptations NHS Charges CRU Benefits Bereavement Award

8. CRU/NHS • The Compensation Recovery Unit (CRU) works with insurance companies, solicitors and Department for Work and Pensions (DWP) customers, to recover:- • Amounts of social security benefits paid as a result of an accident, injury or disease. • Costs incurred by NHS hospitals and Ambulance Trusts for treatment from injuries from road traffic accidents and personal injury claims. • It is the compensator’s responsibility to repay the benefits back to the DWP.

9. Portal Data to April 2018

10. PSLA Quantum Levels • Portal PSLA quantum levels • PL - £4,142. • In the case of EL -£4,152. • With EL disease- £4,167. While this figure is 6.8% higher than the level seen last November, the sample is small as always in the disease portal and there are too many variables to draw useful conclusions.

11. CASE STUDIES

12. Example 1 • Insured – Spencer & Marks • Claimant – Miss T Rishopa (19 years old) • Accident – 26.12.16 • CNF – 21.2.17 • Circumstances • C, a customer, slipped on butternut squash soufflé in café area suffering soft tissue injury to ankle. • Allegations • Alleged breach of Occupiers Liability Act 1957. Insured have no reasonable system of inspection. • Injury – Soft tissue injury to ankle • Absence – From 26.12.16 to 26.1.17 • Earnings - £16,000 net per annum as hairdresser

13. Example 1 • JC Guidelines Chapter 7 (N) Ankle Injuries (d) Modest Injuries • The less serious, minor or undisplaced fractures, sprains and ligamentous injuries. Where recovery is complete without any ongoing symptoms or scarring, the award is unlikely to exceed £6,750. Where recovery is complete within a year, the award is unlikely to exceed £4,820. Modest injuries that resolve within a short space of time will attract lower awards. General Damages £3,500 Special Damages £1,500 Third Party Costs £2,000 NHS £ 647 Total = £ 7,647

14. Example 2 • Insured – Scaffolding Made Easy • Claimant – Mr T Ransom (50 years old) • Accident – 20.09.2017 • Letter of claim – 17.05.2018 • Circumstances • C employee suffered fractured os calcis when ladder fell from roof. C jumped to save himself suffering injury on landing. • Alleged system of work unsafe – C was working from the ladder at roof level. The ladder was not tied or footed. No ladder inspections or appropriate risk assessment, training or site supervision in place. • Injury – Fractured os calcis • Absence – From 20.09.2017 ongoing • Earnings - £20,000 net per annum

15. Example 2 Cont’d • JC Guidelines: JC Guidelines describes as Severe Foot Injuries, • “Fractures of both heels or feet with a substantial restriction on mobility or considerable and permanent pain. The bracket will also include unusually severe injury to a single foot. Examples include injuries that result in severe degloving, extensive surgery, heel fusion, osteoporosis, ulceration or other disability preventing the wearing of ordinary shoes. It will also apply in the case of a drop foot deformity corrected by a brace”. £31,900 to £53,200. • Serious Foot Injuries are detailed as, • “To include injuries less severe than above but leading to continuing pain from traumatic arthritis or the risk of future arthritis, prolonged treatment and the risk of fusion surgery”. £19,000 to £29,800.

16. Example 2 Cont’d General Damages £35,000 Loss of Earnings £20,000 Future Loss/Smith -v- Manchester £60,000 Care £10,000 Services/DIY £15,000 Rehabilitation £ 6,000 NHS Charges £ 5,000 Claimant’s Costs £30,000 Total £181,000

17. Example 3 (De-gloving Injury) • Insured – Waste Not • Claimant – Mr D Cherry (54 years old) • Accident – 20.11.2017 • Letter of claim – No formal Claim at this stage • Circumstances - C employee suffered injury when his hand was pulverised in a machine to separate waste. • Injury – The claimant suffered a de-gloving injury to his hand. • Absence – Ongoing • Earnings - £25,000 p.a.

18. De-gloving injury

19. Case Study – D Driver • Prolapsed Disc-Day 1 Reserve-£30,000 • Liability in issue • Medical Evidence Received 1 year later-significant back pain all due to accident-£80,000 • Surveillance-riding a bike, carrying bin bags, driving for 3 hours no break, walking with rucksack for 4.5 miles • Claimant Medical Report- 10 year exacerbation-£x • Defendant Medical Expert-back pain started before accident, no relation between incident and disc protrusion/prolapse • Conference with Counsel-defendant medical expert agrees 1-2 years exacerbation when pushed • Settlement-£107,413.

20. Stage 10 – Settled! 16/7/2015 Damages (inc. CRU) £30,000 NHS £ 615 TP Costs £42,000 Own legal costs £21,544 Surveillance £ 2,254 TOTAL £96,413

21. Questions?

22. Summary • Accurate Reserving is Important • Utilise all possible sources of Information • Apply Foresight in Reserving • Ongoing Consideration and Timely Reaction to Evidence • Keep your Principals informed • Inform your principals of cases with particular volatility