Claimspace ADR pilot scores highly on costs and timing

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An alternative dispute resolution (ADR) pilot scheme for minor injury claims has achieved average settlement times of 6.7 days and an average £550 reduction in claims costs for insurers.

Claimspace, part of handl Group, which has run the independent pilot scheme in conjunction with Verisk, has successfully processed more than 100 cases through to settlement, with three participating law firms, including Slater and Gordon, and two insurers. The programme started in January 2021 and is still running.

Other law firms and insurers are in the process of signing up, according to Stewart McCulloch, managing director of Claimspace.  

McCulloch said that users had reported average Claimspace awards being in line with Ministry of Justice (MoJ) stage three averages awarded at court. Comparison between Claimspace awards and insurers’ final offers are also consistent with industry standards achieved at court.  

On costs, McCulloch said that ADR has proven to significantly cut costs for insurers without penalising law firms, which he believed would accelerate take up in the industry. 

“In an average case the at fault insurer has to pay court fees, solicitor’s costs and advocacy (barristers’) costs of around £1,700. ADR removes the requirement for advocacy, which is outsourced and therefore cash neutral for law firms, of around £600.” 

“It is a no-brainer for insurers and law firms alike,” he said, adding: “As well as driving down costs, Claimspace ADR clears reserves for insurers. It provides a significant cash flow advantage to the claimant law firm as cases are taking less than a week to conclude compared to around twelve months for court cases. We’ve also found that it improves the customer journey, whether fault or non-fault.” 

Commenting on the pilot, Matt Jarvis, managing director of personal injury at Slater and Gordon, said: “This ADR pilot shows how the legal and insurance sectors can work together to help people get justice. We’re focused on delivering the best possible process and outcome for customers, and that means looking for new ways of resolving problems. 

“ADR is a solution for cases which would otherwise have had to go through the court process. At the best of times this can be time consuming, costly and frustrating for customers, but delays and disruption caused by Covid has made that even worse, so this successful trial couldn’t have been more timely.”

McCulloch added: “Customers really like it. It is efficient, quick and easy to use. They can monitor on screen where all cases are up to (unlike in the courts). There is plentiful MI. There is no need to sort out costs awards after the end of a case because damages and costs are all dealt with by the arbitrator at the same time.”

“Our ability to offer an option to connect with both the MoJ portal and the new OIC (Official Injury Claim) small claims portal for immediate case creation is unique and market leading, as is our ability to connect to insurers’ payment systems for immediate payment.”

The technology that powers the ADR journey is built on two straightforward principles: “Although the technology is complex, what the customer sees is quite simple: we need to make sure the relevant documents are with the right parties at the right time, and that the arbitrator is suitable, such as a district judge or barrister.”

He believed ADR would bring significant benefits for law firms, insurers and the justice system overall. “Even before the pandemic, cases were taking twelve months or even more to come to court, but the current case backlog has ballooned. By unlocking the backlog, we can remove friction, insurers can better manage their claims reserving and we both achieve a better journey for our customers.” 

“ADR will be used if, at stage two, the parties cannot agree a settlement. Instead of waiting months for a court hearing, the parties will get their claim settled in a matter of days, enabling them to return to normal life far quicker than waiting months for the court. This is good news for our customers, and good news for the justice system.”

McCulloch predicted that tech-based ADR will be the norm for disputed injury claims up to a value of £25,000 within 18 months.

He said the MoJ’s decision to abandon its ADR programme last year was “disappointing” but the pilot reflected the value of cross-industry thinking with the customer at the heart of the solution. “We hope it sets a precedent for even more co-operation in the claims sector,” he added.

“Industry-driven responses to the various challenges we share will always be far more successful than any government intervention. This is a vital initiative which can become a template for tech-based ADR in the post-reform world.”

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Mark Dugdale is the editor of Claims Media. Mark welcomes articles, letters or feedback from readers and can be reached via mark.dugdale@barkerbrooks.co.uk