Agenda item

The Committee to receive a presentation on how Insurance claims are administered.

At the request of the Committee, the Internal Audit & Corporate Risk Manager and Insurance & Risk Manager provided an overview on the work of the Council’s Insurance Team.

The Committee was informed that the council arranged a large portfolio of insurance covers protecting council assets and staff including property insurance (buildings and contents), motor, liability and other risks. The Council opted to self-fund a large deductible in respect of the major risk areas which was financially advantageous and provided greater control and incentive to improve losses. It could be viewed on the basis of a very large excess and claims within which were met by the insurance fund. Payments from the fund were made in accordance with the policy terms and conditions.

The Committee was provided with a breakdown of the type and nature of claims arising from incidents during the period 1January 2008 to 31 December 2012 and the total cost associated with these indicated between that for the period 1 January 2008 to 31 December 2012.

Members gathered that, claims made against the council were investigated by the Insurance Team within the various legal protocols and timescales that apply. The council’s insurers provided a claims handling service for claims within the deductible which for public liability and employers liability claims currently stood at £156,331 but liability decisions were made in conjunction with the insurance team to prescribed limits of authority and in close liaison with the department concerned.

That the largest proportion of public liability claims arose from the council’s non delegable duty as a highway authority, these included accidents on the highway and highway tree related claims.

The overall figures showed a reducing trend in the number of claims and it needed to be highlighted that the 2010 figures reflect a year with two periods of poor winter weather which had a detrimental effect on highway condition and the weather itself could prevent prompt and effective repairs being carried out.

The highway tree claim numbers had steadied largely due to the wet summers experienced. Members were informed that low rain fall and hot summers increased the number of tree related claims.

Also that liability claims are long tailed in nature and as highway claims are registered on a claim occurring basis the full picture for any one policy year did not emerge fully probably for three years. However for highway tree claims that were registered on a claims made basis, the number of claims recorded would not increase significantly and bear better comparison.

Claims arising from incidents on the highway generally range from a damaged tyre on a pothole to a personal injury claim for someone tripping on the highway with varying degrees of injury.

2010 figures reflected a year with two periods of poor winter weather which had a detrimental effect on highway condition and the weather itself can prevent prompt and effective repairs being carried out. This also included a rare high value injury claim settlement

2009 figures reflected a severe winter period suffered that year.

Under the Highways Act the council is afforded a defence to claims as long as the service can demonstrate that it had reasonable systems of maintenance and inspection in place and that these were adhered to and where it can be demonstrated that the council had done all that was reasonable and the Councilcould not be held to be legally liable for an accident a claim would be defended to court.

Havering had a very good success record of defending cases that were litigated, either judgement being entered in its favour at trial of cases being discontinued before trial and costs recovered.

All claims were considered on their own merits considering the legal liability issue. Even in the case of a small claim i.e. £250 vehicle pothole damage if the council had a robust defence such a claim would be defended to court and whilst in such circumstances the Council may not recover its costs it sends a strong message to claimants and solicitors that the council would always take a robust but fair line when considering legal liability issues. This had notably given LBH a reputation of being no easy touch as the service had heard from local solicitors who agree they would not chance their arm on a weak case, knowing that the council would take a consistently robust approach.

The Committee was informed that team face the following future challenges:

·         That the Ministry of Justice (MOJ) was due to be implemented later this year which was to severely reduce the time in which the team had to deal with a liability claim from 90 days to 40 days. This meant there would be increased pressure on staff and resources to comply with.

·         Other changes in the MOJ reforms aimed to reduce the highly disproportionate costs of third party solicitors, allowing a fixed rate where claims up to £25k were dealt with within the parameters of the claims portal which was to be introduced and also removed the right for a solicitor to receive success fees which can double the base legal costs and under current protocols routinely outweigh the damages many times. They would also no longer be able to recover the ATE insurance premium.

·         There were also proposals to allow solicitors to receive a success fee from the claimant’s damages and in order to offset this, there would be an automatic rise in damages of 10%.

·         Also where claims were successfully defended to court, the council would no longer be able to recover costs but the potential saving outlined above more than made up for this as the council’s costs were only ever a fraction of claimant’s costs.

The Committee noted the presentation.