The UK (re)insurance industry is working to improve the rehabilitation of accident victims, while an innovative, internet database should make claims settlement faster and more equitable. Lee Coppack explains.

The UK (re)insurance industry has pledged itself to a code of best practice on rehabilitation of victims of personal injuries following a second study into trends in bodily injury awards sponsored by the International Underwriting Association (IUA) and Association of British Insurers (ABI).

The second study confirmed the results of the first, that bodily injury claims are rising at over 12% a year, as a result of increased frequency and severity, and that the provision of rehabilitation for victims is fragmented and significantly less effective than in other countries. Insurers, reinsurers and personal injury lawyers have, therefore, decided that a more active role and less adversarial approach to rehabilitation is likely to achieve a more desirable result for all the parties. The (re)insurers believe there may be costs savings through greater control and predictability of costs, while they are genuinely helping the victims and their families.

The aim of the code, which has the wide support of insurers and the legal profession, is to ensure that insurers and claimant lawyers make rehabilitation a priority whenever dealing with a claim for personal injury, to the extent that, for example, money can be provided for treatment or therapy before the claim is settled. The code of conduct also sets out duties for claimants' solicitors.

The study has examined 700,000 motor bodily injury claims from 1988-98. Among its other findings:
• A 5.9% rise in claims frequency, particularly in claims in the £5,000 to £15,000 range over the last five years.
• Personal injury costs accounted for 36% of the market's premium income in 1997, compared to around 23% in 1993.
• Evidence of increasing frequency and severity pressure on large claims.
• Legal changes generally increasing the size of awards.

The IQ database
Launched in tandem with the IUA-ABI report was a nationwide, interactive database of personal injury settlements which should shortly enable lawyers and insurers to negotiate settlements more quickly and equitably.

Called WIRE IQ (Intelligent Quantum), the project is the brainchild of Rowan Douglas, managing director of University of Sussex-based internet company, WIRE, with the support of Douglas Stewart, a leading personal injury solicitor and director of the company. WIRE specialises in creating online markets in key data for global commerce, financial markets and the professions.

According to Mr Douglas, it currently takes on average six years for seriously injured victims to receive their settlements and settlement decisions vary greatly, as around 95% of personal injury settlements go unrecorded - only 184 were recorded in 1998. By contrast, IQ intends to record 100,000 cases in the first 12 months. Details of many thousands of past court decisions and negotiated settlements have already been fed into the database, with the active co-operation of some of the UK's largest insurers and legal experts.

Around 100 fields of information are completed for each claim - including location, cause of accident, severity of injury, occupation of claimant, etc. Neural networks (artificial intelligence) are then applied to the details in order to establish comparability with past law. IQ will be capable of handling one million cases a year.

The major data input will begin in January 2000, with the full database expected to go live on the internet in July. The online system which allows courts and solicitors to record case details into IQ's central case library, via standard online forms, using only conventional browser software is scheduled for launch in early 2001.

The IQ system should provide the first ever comprehensive picture of litigation trends in the UK, including key aspects such as case settlement times, delays and awards, regional variations, court costs, emerging classes of cases and legal results. Mr Douglas believes that most of the UK's insurers, personal injury solicitors and other key parties will be keen to join the network and he hopes to see it integrated into the UK civil court system.

The IQ database was created with the technical co-operation of internet systems firm Intelligent Financial Systems Limited. Initial research was sponsored by Aon Group Ltd. WIRE is now working closely with five UK insurers, two leading reinsurers and one reinsurance broker - in close consultation with the Lord Chancellor's Department - to launch the pilot database. Says Rowan Douglas: “IQ is one of the first, and most advanced, applications of internet technology to tackle a fundamental social problem. It is far ahead of any similar project in the US and elsewhere.”

Lee Coppack is co-editor of Global Reinsurance.