OIC: Under-settlement fears as system problems grow backlog

Hayes: Call for interim payments

The Official Injury Claim (OIC) portal is still not working well, with growing delays and concerns that injured people are under-settling as a result, a leading claimant lawyer said yesterday.

It was also suggested that the number of true litigants in person – already low at less than 10% – was an overestimate due to third-party capture by insurers.

Speaking at the Motor Accident Solicitors Society’s annual conference, Alan Hayes, chief legal officer at the Carpenters Group, said that, while the web-based process for litigants in person was working, the A2A system for professional users was not – which was a problem given that more than 90% of claims went through lawyers.

He acknowledged that the Motor Insurers Bureau (MIB), which runs the portal, has a difficult job and was responsive when there were errors – which there often were, as periodic system updates “improve some aspects but break others”.

An example came in August, when a new requirement to input the precise amount of financial loss meant the small claims notification forms started failing, because it was not information generally available at that stage.

The MIB agreed to reverse the change within 24 hours and implemented it within a week. “When you engage with them, they are good,” Mr Hayes said.

But a backlog is fast building up, with the lifecycle of claims lengthening. He revealed that Carpenters’ own data showed that the number of claims settled in the first 15 months of the OIC portal was 48% lower than in the previous 15 months.

“The only thing that’s changed is the introduction of the portal. We’re pouring claims into a funnel and it’s blocked at the other end, which is causing a backlog. For us, that’s the clearest possible evidence that the introduction of the new system impaired the progress of claims.”

Also speaking in the session, Trevor Webb, claims director at Sabre Insurance, said Sabre has seen a similar fall in settlement rates, making it harder to estimate reserves and future pricing.

He added that LiPs often refused to accept the application of the damages tariff. Given insurers’ duty to treat customers fairly, this was taking up “a lot of resources and time”.

Mr Hayes noted that the proportion of LiPs was coming down, from just under 10% in the first quarter to 8.6% in the last statistics – and Carpenters estimated that half to two-thirds of that number were people “who have been captured by third-party insurers through intervention schemes”.

This would explain why OIC data showed LiPs were three times as likely to settle as represented claimants.

The fact that MIB figures showed LiPs receiving the same damages as represented claimants did not tell the whole story, he argued, as they did not consider “the potential of the claim”. There should an audit of claims to see if the outcome was “appropriate” for the injuries suffered.

Further, the OIC’s settlement data only captured injuries and not special damages.

Mr Hayes also questioned why represented claimants were three times more likely than LiPs to have liability denied. “It doesn’t make any sense to us. Are you more likely to have a non-fault accident if you brought your own claim? It seems unlikely.”

Mr Webb said Sabre, which does not engage in third-party capture, also received a lower proportion of claims by LiPs than the OIC figure.

Mr Hayes said the MIB could establish what was happening simply by asking LiPs if they were being helped by an insurer.

“There’s quite a lot of evidence that the process has delayed claim progression,” he went on. “We all know consumers settle cheaply to avoid delay… particularly the case with the cost-of-living crisis. So you’ve got customers who are being under-compensated as a direct result of the delay inherent in the new process…

“It’s really important that we understand that all of the problems we and our customers have had is as a result of the development of the process for a cohort of consumers that just aren’t using it.”

Mr Hayes also called on the government to allow for interim payments, as the MoJ portal for claims worth up to £25,000 did.

Now that cases were beginning to reach court, he continued, a series of further problems were being uncovered, such as the system calculating damages and issue fees incorrectly. It was the “opposite of the frictionless process” that had been promised.

Disputes over mixed injuries – those with both whiplash and non-whiplash elements – were being litigated, with counsel instructed by insurers and hearings with reserved judgments, while claimants tried to give oral evidence.

“None of this existed in the previous system and all of this is going through with the funding removed because the Ministry of Justice was persuaded that these cases were straightforward.”

Around 70% of claims have a non-whiplash physical injury. Insurers thought this was a “behavioural issue”, Mr Hayes said.

“We think that’s potentially a cynical view – these injuries have always existed but they’re just now more important because of the comparative value to the tariff, so they’re going to be picked up. We don’t believe that statistic is evidence of any particular adverse behaviour by claimants.”

Indeed, the fact that LiPs were nearly twice as likely to seek the 20% exceptional circumstances uplift than represented claimants “shows lawyers are doing their jobs”.

Mr Webb was critical of the volume of medical reports – “Where are they? We’re really not seeing them come through” – and also their quality, particularly in failing to deal with causation.

He suggested that one of the reasons for the increase in non-whiplash injuries was the OIC process, which encouraged LiPs to list every injury they suffered. “We’ve also not seen enough medical reports to know if they support what [the LiPs] say.”

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