Security technology that can be defeated for £75

Castlemead Insurance Brokers have become aware that GPS and GSM/3g based tracking and alarm technology can be blocked with off the shelf jammers available on the internet. Sites such as iforgou.com based in China offer gadgets that will jam mobile phones and GPS.

At the moment there is no law against owning one of these devices however use of them is a breach of the Wireless Telegraphy Act 2006. Somehow we doubt that thieves of high end vehicles or those involved with hi jacking high value loads from trucks will worry about this minor offence.

We urge you to be aware of the potential deficiencies in these technologies and ensure that you consider these as part of your security strategy.

Flood Barriers

You may have seen the ongoing debate between the Government and the insurance industry regarding who will pay for flood damage in areas that repeatedly suffer damage.

We act for a Flood Barrier designer and manufacturer and could never understand why these are not regularly used as a method for defeating this issue. Germany has many areas that flood annually and their cities are protected by miles of aluminium barriers installed each autumn. It appears that no UK insurer recognises flood barriers as an effective defence.

The British Standard that is set up is a start - See the video here but the specification does not deal with the depth or require a zero leak result, rather it compares the result to sandbags which cannot stop damage being caused. If you have commercial premises that need protection, we do have an insurance backed solution.

Please talk to Castlemead Insurance Brokers and we will afford you
an introduction.

Motor Fleet Risk Management

Castlemead Insurance Brokers find the haulage business remarkable as it’s one of the few businesses where you send a new employee out of the yard with £100,000 of kit and up to £300,000 of load and say we will see you back in a couple of days time! We've been working at ways to reduce this risk.

Our customer Framptons Transport Services have recently been featured on the BBC1 One Show demonstrating their new camera system. Castlemead were instrumental in getting them to fit cameras to their fleet of vehicles to protect them from fraudulent claims and reduce the number of incidents settled 50/50.

Interestingly the cameras were self funding as Castlemead negotiated a discount on the fleet premium that paid for the cameras in the first year. Motor fleet premiums are driven by claims cost. Every time an accident can be defended it helps in the next year's renewal negotiation.

Framptons have already seen two incidents where the camera has acted as the indisputable independent witness where the truck would have been found liable in absence of the video.

Castlemead have experience in rolling out cameras to large fleets and can help you with understanding the cultural issues that drivers naturally worry about. We are also working with Drivecam.com an American Camera supplier. They have combined cameras with remote monitoring and an analysis bureau. When the camera is tripped by a sudden manoeuvre the in-vehicle footage both out of the windscreen and of the driver gets sent for review to Drivecam's team.

They review the footage to see how the driver has performed in what may be a near miss late braking situation. If they have concerns they email the footage to the transport manager for them to review.

This could be invaluable where a driver has only just started with the business. The hope is that an accident can be avoided by training and good management using the footage as an aid. We also believe that this will change an organisation culturally to make their drivers aware that the business is looking for them to perform safely and professionally.

Need help with this type of insurance? 

Cheque fraud and BACS

Many businesses that Castlemead Insurance Brokers talk to are moving away from cheques due to perceived fraud issues. You may have experienced one of your cheques being changed to an alternative payee?

We have a number of examples of BACS causing a problem. We recently discovered that the Sort Code and Account number does not relate to the payee loaded onto the banks systems. We have seen a client loose a six figure sum due to a clerical fraud.

Their book keeper loaded many low value payments to realistic payees, electricity, sundry suppliers and changed the bank details to one of her nine that she had set up. The business did not become aware of the losses for two and a half years.

A supplier of ours also suffered a similar fate with their financial controller manipulating sales manager’s bonus payments to include 10% to her accounts.

Both culprits have been prosecuted, however neither has been able to pay back the money stolen. A fidelity policy would cover this issue which is something we are now regularly discussing with our clients.

As an aside professional indemnity cover suggests that it gives a fidelity cover as part of the wording, however most restrict cover to losses suffered by clients rather than losses suffered by the business itself.

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Ministry of Justice Reforms Legal Aid, Sentencing & Punishment of Offenders Act 2012

On the 1 August 2013 a new system for dealing with Personal injury claims relating to Employees and members of the public was introduced.

The insurance business has long felt that the costs enjoyed by solicitors dealing with these incidents unreasonably outweigh the compensation awards obtained. It is not unusual to see costs being 300% of the amount of Damages awarded for pain, suffering and loss of earnings.

A compromise has been agreed and the result initially looks positive.

• Referral fees banned
• No more insurance policy taken out to insure the costs of losing
• Fixed fees for claims up to £25,000 of between £900 and £4,000
• Online to make it faster

Naturally the legal profession has also made some gains.

• Strict timescales for response
  - 24 hours to acknowledge
  - Liability to be decided in 30 days
  - Substantial cost penalties if these timescales aren't achieved

Claim amount    Fees In time       Fees time not met           Increase

£2,000                    £900                £1,300                         44%

£15,000                  £1,600             £3,000                          87%

£25,000                  £1,600             £4,000                        150%

• The claimant will never face costs being awarded against them even if their claim fails unless for fraud
• 10% damage award increase, solicitors can now net their fees off the damages
• Allegations relating to the standing of the client or fraud need to be robust enough to withstand scrutiny
• Arguing contributory negligence is now uneconomic

Castlemead concerns

We are not convinced that these reforms will achieve a reduction in claims and that they may even inspire a greater claims culture, indeed there are several unintended consequences.

• Solicitors have bypassed referral fees rules by direct advertising or corporate structures that remunerate advertisers in different ways for example dividend payments
• Solicitors will press hard to push claims outside the portal to maintain their fees
• Next day 1st class post delivery is used as the measure for the 24 hours to start
• Our experience of the post system is that it is not reliable enough for this
• Settlement should now take 3 months unless medical evidence is complex or the injury is ongoing, solicitors will be able to advertise this fact promising a speedy payment
• By waiving rights to costs insurers have little incentive to go to court as any barristers and solicitors fees expended are unrecoverable and will form part of the claims experience
• We believe insurers will move to settle as many incidents as possible under £25,000 chasing the perceived benefit of reduced fees
• Fraud and contributory negligence arguments used in the past to 'horse trade' with claimants solicitors over damage awards are now eliminated as negotiation tactics leading to higher damage awards, this is together with a 10% automatic increase in damages award 

What we need our clients to achieve

• Deal with post promptly get the claim documents to us by email same day, a big ask but necessary
• Provide investigation documents by return following a claims investigation or better on the day, we will provide a list of documents to you when we are notified
• Draft a process for this internally for us to share with your insurers

Why?

• We are concerned insurers will recharge the increased solicitors costs to those clients who fail to forward documents in time in a similar way to Pre Action Disclosure requests not being met in the past
• At £1,500 a time this could mount up

Outlook

• Claims for £25,000 or less will result in insurers taking the most economic, if not the most robust strategy and paying claims
• Castlemead believe we are likely to see an increased volume of low value claims, similar to the whiplash phenomenon, processed under this system due to speed of process and solicitors needing larger volumes of work to make up lost revenue
• Claimants still get 3 years to make a claim, however the rules are not retrospective
• Claims experiences will change in profile, it is very unlikely that we will see claims reserves sitting on policies for years on end.  
• This is a positive although it reduces insurers limited opportunities for investment returns, it makes client exposure very quick to establish
• Some insurers invest much more heavily in claims investigation at early stages to defend claims
• We believe insurers performance on defending claims will become homogenous meaning that the larger process driven household name insurers will be able to deal successfully with claim intensive clients
• The increased number of claims will increase premiums serving to increase insurance company premium volumes and margin return typically 30% is aimed for by insurers
• We believe that clients with large footfall exposures may well be better off considering a self insurance excess that will take out claims and reduce overall cost of risk
• Taking the self insurance option means that a client’s health and safety systems and controls need to be exceptionally robust to make it worth investing in the fees incurred in defending this type of claim  

If you would like to discuss any of these issues raised in this blog regarding MOJ and how they may affect your business over the next 18 months please contact Richard Ingleby richard.ingleby@castlemead.com, direct dial  0117 9453907.

When cheap prices leave you unprotected

Price seems to be the main reason for people to choose which insurance broker and policy they use. The insurers have realised that some brokers will peddle any policy if the price and the keyfacts document look good.

We have recently seen a client, who is looked after by a superficially reputable national broker, sold a policy that we would consider unacceptable in its terms.

Our audit's findings relate to the following clauses covering the Employers and Public Liability sections of the policy.

“HSE RECOMMENDATIONS CONDITION

It shall be a condition precedent to ALL Liability Sections that the Insured shall ensure that they and their Employees, and any third parties acting on the Insured's behalf, comply with all applicable statutory requirements, and Health & Safety Executive (HSE) regulations, approved codes of practice, recommendations and guidance, or those of any equivalent bodies in Northern Ireland, the Channel Islands or the Isle of Man, applicable to the operations and processes conducted in connection with the Business”

In the event of a serious injury taking place the client will have to demonstrate compliance with a moving target of HSE guidance delivered via website which changes daily.

“PERSONAL PROTECTIVE CONDITION

The policy also required suitable PPE, maintained in working order, employees trained in its use, signed off and a disciplinary regime in place for non compliance”

We believe insurance is there for the times when accidents happen and processes fail, however in this case:-

• No safety boots - no cover
• No goggles being worn whilst grinding - no cover
• Workplace noise over 85db and a loss of hearing suffered - no cover 

The largest claim for personal injury in the UK is £15m - a business does not need to be fighting these claims by itself or employing a solicitor to get its claim paid by the insurer.

Castlemead Insurance Brokers offer an audit to customers who have concerns over their small print. 

Insurance Fraud - Courts siding with insurers to stem the tide

Two recent cases show that the Courts will not accept claimants grossly exaggerating their injury.

David Ribchester from Tyne and Wear said wrist injuries from a workplace incident stopped him from carrying out basic tasks including opening jars and driving, claiming £923,000 from insurers. He was jailed for 12 months when he was secretly filmed by insurance investigators on a number of occasions between February 2008 and October 2009.

You can see the footage on YouTube here. 

He was filmed at his local rugby club where he was seen to "grab the ball with both hands and go into a hard tackle" despite claiming he was unable to tie his shoelaces. The 31-year-old, who previously admitted fraud by false representation, was sentenced at the Old Bailey in London on Thursday.

In another case James Shikell submitted an inflated £1.35m claim for damages for injuries in a car crash. He was also sentenced to one year’s imprisonment after the courts found him guilty of contempt of court. The decision came after footage of him playing football revealed that he had exaggerated his symptoms. His father Robert Shikell also received a year's imprisonment for his role in supporting his son's claim while a third man, Simon Fennell was fined for providing a false statement in Mr Shikell's personal injury claim.

If only the industry can deal with minor whiplash claims - there are new Ministry of Justice changes coming into force from the end of the month to help reduce the value and fees on less serious injury claims.

We will blog about this in a few weeks’ time and add the link to this article.