Staying power - how to avoid claims incubation

“Incubation claims” are claims where liability has been admitted early, but where the medical evidence has not been finalised. As the date which the claimant needs to bring a claim approaches, so as not to fall foul of the statutory limits imposed by The Limitation Act 1980, proceedings are brought either under Part 8 of the Civil Procedure Rules or within the OIC ‘O’ portal process to allow a claimant to begin litigation for ‘protective’ purposes.

Once issued, the claim is then ‘stayed’ by the court to a date in the future by which time the claimant must notify the court of the steps required to progress the claim to the next stage or to seek a further stay if the case is still not ready to be finally assessed.

Broadly, such cases fall into two categories:

• Stays imposed by the court for a fixed period, say six to 12 months.
• Stays imposed by the court for an indefinite period.

For insurers both scenarios are unwelcome. Firstly, by their nature such cases cannot be closed because at some point in the future further evidence and/or litigation will follow and so further payments may be required. Therefore, a reserve needs to be maintained.

Secondly, and of greater concern, is that the insurer can be effectively ‘locked out’ of the claim process, potentially allowing the claimant to gather further evidence from unseen experts and so build a case of more significant value unfettered by, and without recourse to, the insurer.  This deprives the insurer of potentially useful early evidence and creates a world of uncertainty in terms of effective reserves and potential offers and, invariably, leads to an increase in claim spend. Indeed, we have seen claims of significant value masquerading as low value injury claims due to these tactics.

Thankfully, the courts have acted to curtail the worst of these behaviours by striking out cases not properly and openly managed (Lyle, 2017) or restricting costs recoverable (Cable, 2019). However, the key to obtaining such findings is spotting the clues that this is an incubated claim and taking steps to strengthen the insurer’s position.

There are signposts that an insurer can look for when faced with potential incubated claims. For example, indications within the (S)CNF as to the degree of injuries alleged, the claimant’s employment situation (and time off work), attendance at hospital and how they were transported there.

The insurer should also consider the extent of vehicle damage in a car crash or height of a fall in an accident at work. The insured and witnesses can also be quizzed as to the degree of injury the witnessed at first hand or indications given during conversations held in the immediate aftermath of the incident.

Steps can then be taken to best manage claims that are suspected of being manipulated; a history should be created of correspondence with the claimant raising questions of when the claimant is likely to be obtaining the next medical report and/or when is treatment likely to be concluded.  The claimant can also be asked when they intend to progress to the next step in the claims process.

Whilst such correspondence may seem innocuous in isolation, when put together it can show that a particular claimant has not been responsive to reasonable enquiry and thus unreasonably increasing costs.

This can be enough to convince a court that a stay is potentially detrimental, not least to the claimant who may be being deprived of access to treatment not otherwise available, and that more definite steps may be required to compel a claimant to engage with the insurer.