Magazine article Risk Management

The Woolf Reforms

Magazine article Risk Management

The Woolf Reforms

Article excerpt

The United States isn't the only nation with a legal system bogged down by an overload of third party claims, an abundance of frivolous law suits, settlements that take years to end, and increasing delays and costs. Across the Atlantic, England and Wales are similarly plagued. Only there, the government has decided to do something about it. In July 1996, Lord Justice Woolf, in his final report, Access to Justice, proposed a complete overhaul of the civil justice system in these countries. His proposition has now come to fruition.

These civil justice reforms are having a dramatic effect on the way claims are handled-making the process more streamlined and less cumbersome for claimants, and more demanding of defendants.

The Woolf Reforms, perhaps the biggest change to the English legal system this century, apply to all claims actions begun on or after April 26, 1999. The aim is to reduce the need for litigation, speed up the process and ultimately lower costs, enabling courts to deal with cases more justly. These civil justice reforms are having a dramatic effect on the way claims are handled--making the process more streamlined and less cumbersome for claimants, and more demanding of defendants; keeping as many claims as possible out of the legal system; and where cases do go to court, resolving them quickly. The result, however, may be eye-opening: risk managers and insurers not prepared to play by the new rules will be at a distinct disadvantage.

"From now on, insurers, brokers, risk managers and their clients will need to look very carefully at the way they manage insurance claims. The rules introduce radical changes, and this is merely the beginning," explains Brian Tunnah, Manchester branch manager at McLarens Toplis, a major U.K. third party claims administrator.

Letter of the Law

At the heart of Woolf is a set of pre-action protocols that introduce strict time limits for plaintiffs to report claims and insurers to respond to them. Under Woolf the timetable is no longer managed by the parties, but rather by the court. The hope is that these restrictions will smooth over the current delays and costs of litigation.

The key time frames: Defendants have twenty-one days to respond to personal injury claims, and ninety for the insurer to investigate and come to a decision on liability. The date typed on the plaintiff attorney's initial letter of claim is the trigger date used to measure subsequent deadlines. The defendant must acknowledge it within twenty-one days, while providing the plaintiffs attorney with full insurance details. Then, within ninety days of the date of acknowledgment, the insurer must accept or decline liability, fully explaining its decision.

The reforms apply to four protocols: housing disrepair, medical negligence, road traffic accidents and personal injury. These are fitted into three classes of claims tracks: small claims track, valued at less than [5,000 pounds sterling] (with a personal injury limit of [1,000 pounds sterling]) for which costs are limited and a hearing will likely not be required; fast track, with claims valued up to [15,000 pounds sterling]; and multi track, which involves complex cases with more judicial management, such as pretrial reviews.

The most advanced protocol is for personal injury--road accidents, slip and fall, and employer liability cases (excluding industrial disease)--which had been the main testing ground for Lord Woolfs recommendations and will act as a guideline for other protocols. Such claims, with high frequency and low severity, fit the fast track, where time is of the essence for the defendant.

Fast track claims require that the letter of claim include a summary of the facts, description of injuries involved and any financial losses incurred. Any denial of liability must be supported by reasons and appropriate documents. Both plaintiff and defendant must also sign statements of truth, documents signed by parties who attest to the facts of the case and confirm they are true. …

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