Changes in the costs regime and processes for handling employers liability and public liability claims need to be an important focus for MGAs ahead of their implementation in 2013.

Speaking at the Managing General Agents’ Association (MGAA) London market briefing earlier this week, Alistair Kinley, policy development partner at Berrymans Lace Mawer LLP, highlighted a range of developments and changes in the EL and PL claims area, and urged MGAs to consider their implications as a strategic importance.

“The Jackson review of costs will bite, from April 2013, and will change the costs paid in "no win, no fee" claims". Under the reforms, defendants’ insurers will no longer pay for success fees and for legal costs insurance," Kinley said. "The flip side of these changes is that awards for general damages may rise – by 10% – and that successful defendants will generally no longer recover costs from losing claimants under a system known as qualified one-way costs shifting. MGAs and insurers will need to understand the balance of impacts across their claims portfolio.”

In addition, Kinley explained that these changes were likely to coincide with proposals to introduce a streamlined process for handling moderate value EL and PL claims, highlighting the government’s commitment to extending the present scheme for motor injury cases under £10,000 to EL and PL cases up to £25,000.

“This could represent a further opportunity to address disproportionate legal costs in these claims, but compensators will need to review their claims notification and liability decision making processes to ensure they can comply with what are likely to be quite tight timescales for admitting liability and making offers to claimants,” Kinley explained.

Chairing the briefing, Reg Brown, chairman of the MGAA, added: “The potential impact of these changes emphasises the need for MGAs to ensure they understand, and as importantly, respond to the challenges ahead. The implications for not taking action could undermine the fundamental role MGAs play in protecting their capacity provider, and hence the hard earned reputation this market has achieved for innovation and service.”

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