£240M In Payouts Tied Up In Court Delays, Insurer Warns

By Lucia Osborne-Crowley
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Law360, London (January 6, 2021, 11:35 AM GMT) -- Approximately £240 million ($327 million) in damage claims are tied up in the courts because of a huge backlog caused by the COVID-19 pandemic, according to estimates released Wednesday by Zurich Insurance PLC.

The Swiss insurer recorded long waiting periods for hearing dates, particularly for claimants seeking a payout after a traffic accident. Some were waiting more than a year — up to 62 weeks — for their day in court, Zurich said.

"Pressure on court capacity as a result of the pandemic is creating delays of over a year from the point of litigating to trial date, and this is only likely to be delayed further due to the ongoing impact of COVID-19," Calum McPhail, head of liability claims at Zurich, said.

The research also found that only a quarter of the usual number of trials took place between April and June 2020. Catching up on the shortfall will further exacerbate delays, Zurich said.

The insurer urged the government to speed up its new online portal for filing claims for so-called whiplash motor injuries in light of the new data. The claims portal is part of a civil litigation reform package intended to make it easier for people with injuries to file claims for compensation.

"Any further postponement to the civil justice reforms is likely to exacerbate this backlog and create more frustration for everyone," McPhail said. "The government must ensure that the reforms are introduced alongside a straightforward mechanism to resolve disputes to free up court time and, ultimately, reduce the time taken to resolve disputes and settle claims."

The reforms are scheduled to come into effect in April. Lawyers and consumer advocates stressed that the industry must act quickly to fix the backlog, including by taking action outside the government's reform plan.

"The industry — whether defendant or claimant — cannot and shouldn't wait for the government," Marcus Taylor, claims director at Minster Law, said. "Customer demand for settlement via technology is growing fast, and we need to step up to the plate."

Graham Pulford, chief executive of handl Group, a technology business that helps insurers and claims firms manage injury cases, said that the backlog is a "serious problem that, due to COVID, could become a disaster unless the industry acts now."

But Matthew Maxwell Scott, executive director of the Association of Consumer Support Organizations, which represents consumers in the civil justice system, said the government should not rush its reforms.

"Growing court delays are a huge source of frustration for injured people, but they will be even more put-upon if the government rushes through its new claims portal," he said. "The likely chaos could add to the courts backlog and create an entirely avoidable civil-justice headache."

The shakeup of the legal rules surrounding insurance claims for whiplash neck injuries received royal assent two years ago. The Civil Liability Act was originally expected to be introduced in April 2019, but it has been postponed three times since then.

--Additional reporting by Martin Croucher. Editing by Ed Harris.

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