Archive for February, 2010

26
Feb
10

Ping pong drives up legal costs

In a Court of Appeal ruling on the case of an academic constructively dismissed after his marking was called into question,  Lord Justice Jacob criticised the habit  of “Ping pong”: the practice of sending cases back to the tribunal or court. He noted that it generally serves litigants badly, prolongs things and increases costs.

Certainly a case like archeology professor Paul Buckland’s, which was heard at tribunal, appeal tribunal and court of appeal must have racked up hundreds of thousands pounds in costs but it’s rare that full figures emerge. We should, therefore, be thankful for the recent and rather ridiculous story of  lance sergeant Donna Rayment who took a case for sexual harassment to the High Court.

She said that having to work occasionally in a room at the Honourable Artillery Company – preferred TA unit of City boys looking for some soldiering – which featured pin ups amounted to sexual harassment. Although the MoD offered her a settlement of £60,000 and £125,000 towards legal costs she turned it down.

The High Court recently ruled in her favour but awarded damages of just £7,000 for harassment. The costs came to about £500,000, of which £400,000 fell to Rayment’s lawyers.

She seems happy enough and will give her damages to a soldiers’ charity. Just think how much more she could have given had she settled earlier?

Much of these costs will be borne by the public. Thanks partly to the endless stream of employment law over the past three decades, the tribunal system has become a money eating machine that would have left even King Croesus  breathless.

There should be a moratorium on new employment law – we’ve got far too much as it is. I think Hattie Harman’s Equalities Bill should suffice for now, or for the next 100 years.

The professor Buckland case also raises the issue of standards – one taken up by respondents to the Times Higher Education Supplement: “Let’s hope that this is a lesson to all of those universities (mainly post-92, but not all) which have got into the habit of scooping up low grade students in clearing and then manipulating academic standards to ensure that students who couldn’t demonstrate strong ability at A level come out with high grade degrees.”

Now, now, steady on – we all know students are brighter than ever and standards have never been higher. The Government has told us so.

25
Feb
10

News roundup – Solicitors’ PI market at a crossroads

The troubles surrounding Solicitors’ Professional Indemnity are looked at from a range of angles this week across both the insurance and legal trade press. Post Magazine leads with an update on the case involving Quinn Insurance and its disclosure argument against the Law Society; leave to appeal has been granted for the insurer which says in its argument that when the Solicitors’ Regulation Authority has closed down a firm of lawyers, access to that firm’s confidential files should be allowed. The courts previously denied access after a number of claims arose against the firm in question following its closure.

All of this illustrates the extreme pressure the legal profession is under right now; juxtaposed to the Quinn case which presumably would expose lawyers to further negligence claims if the insurers win, is a Law Society Gazette report on whether to close down the Assigned Risks Pool.

The place lawyers have to go for cover when no insurer will touch them is being touted for closure by the SRA and we’ve covered this previously on BMR from the insurers’ point of view. Here the Gazette pulls out all the stops to explain the dismay amongst solicitors that their safety net may be closed, led by the Law Society president himself, who said “The ARP is an integral element of client protection…”

Returning to Post, a report on how the Ministry of Justice fast track personal injury claims reforms could affect solicitors, reveals yet another negligence timebomb waiting to explode. Damian McPhun of Halliwells, explains that under the new regime which pays claimant solicitors fixed costs up to a maximum of £1200 will mean an increased temptation for those involved to seek settlement without a medical report. McPhun added that the Bolam test means any lawyer who settles without a medical report and subsequently faces a negligence claim if they get the injury wrong, will not have a leg to stand on.

24
Feb
10

Will ganging up on Aviva force up rates?

Results season always pits the top firms against one another and in some cases its possible to uncover the true politicians amongst a sector’s big fromages.

If poking the opposition forms part of your favoured political archetype, then look no further than Axa UK chief executive Philippe Maso, who has attempted to huddle with Allianz and Zurich and gang up against Aviva, which he claims is still pricing ‘aggressively’ (ie cheap), against his better judgement.

In my imagination life’s always more interesting so I would like to indulge the following idea; there must be an element of coopetition going on at the top of some of our largest insurers. Perhaps Maso asked Allianz and Zurich beforehand if they wanted to be named publicly in his group of premium inflators and today a call has come through to Axa towers from both Andrew Torrance and Stephen Lewis thanking Axa for the compliment of being labelled ‘serious players’.

In the true spirit of finding an angle to an otherwise unexciting set of results, Axa’s figures come up the rear of this article. They aren’t spectacular, but they’re not as bad as some; an 18% fall in annual profits to £235m (much better than Zurich’s tumble from £295m in 2008, to £146m in 2009 announced two weeks ago) and more namedropping, this time for Peter Cullum who luckily ‘speaks the same language’ as Maso.

The Axa UK boss comes across as supremely confident perhaps because a man that smiles when times are hard has probably just thought of someone else to blame.

23
Feb
10

Is HR up to driving the recovery?

Could HR have to move out of its comfort zone if it’s to make more of itself than a purely admin function?

This, frankly age-old question, is at the heart of interpretations of research carried out by  PricewaterhouseCoopers (PwC) after the recent Davos forum of world economic leaders.  The research, said PwC, based on interviews with 70 or so bosses of large UK companies, found that key issues, that are usually thought of as HR territory, need addressing pronto.

These include talent management, staff morale, change management, and staff engagement. Some 85% of those polled said staff morale needed addressing, while 65% said they planned to spend more on training and development over the next 12 months.

Alarmingly respondents said that the UK’s prosperity depended on a limited number of talented people who were capable of creating wealth.

You don’t need a degree in HR and dance to realise that if these pontifications are true then this is a great opportunity for HR departments, are at least those at larger companies, to prove themselves and for HR directors to carve more lucrative careers for themselves.

Are they up to it?

The jury could well be out on this one. Mark Rendell, PwC partner and human resources leader said: “There is some debate about whether  HR did its job during the downturn and whether the function is broken, particularly in terms of the reward models it champions. And its ability to cultivate an agile and flexible workforce.” He added that if HR did not address these issues satisfactorily then it could be reduced to ad admin function.

PwC also asked if HR “could be trusted” as an “appropriate adviser during and beyond recovery”.

Well HR did its job pretty well during the downturn in terms of getting rid of people and looking after pay cuts, wage freezes and changes to terms and conditions. It will, no doubt, do its job well enough when it comes to hiring new staff and keeping personnel functions ticking over.

But if employers want more than that then they need to ask what kind of HR they want. If they want a department that does the typical HR administrative  stuff then they might as well outsource much of that function.

If they want an HR function that propels the business forward and makes a real difference in terms of staff engagement and talent development etc. then maybe they should re-think their requirements. Traditional HR is unlikely to meet those aims.

Employers would be better advised to either recruit talent development specialists, who may well have developed outside the HR department, or look to line managers to take more responsibility for the issues mentioned above and by PwC.

They might also look to develop their HR departments along quite different lines altogether so that development, reward and talent management functions have far more power, attract high calibre people and are at least on a par with the traditional HR director.

Heaven help us if the recovery is dependent in any meaningful way on traditional HR teams.

One other gem from the PwC report: It said 32% of those polled think the Government has been effective in helping create a skilled workforce. The words praise, damning and faint spring to mind.

19
Feb
10

Council executives’ pay – publish and be bashed?

Thanks to a Freedom of Information request from the Taxpayers’ Alliance it’s been revealed that councils have dodged a duty of giving details of all their high earners in case they get set upon by members of the public.

The TA has accused council chiefs of resorting to “emotional blackmail” and “scare-mongering”. The Government wanted councils to list the names and salaries, as well as pensions, perks and pay-offs, of everyone paid more than £50,000 a year.

Councils have since persuaded ministers that they should only have to disclose the full details of staff earning more than  £150,000 a year. Councils will only have to  list the number of staff and the job titles of those employees getting more than £50,000.

Where’s the logic in this? Do councils think it’s OK for tax payers to know the whereabouts of council fat cats in order to get deep down and personal with them in an aggressive way?

I suspect it’s because the best paid council execs live well away from potential aggressors and their off-spring do not attend crap state schools.

In any case why did the Government think £50,000 a year is big money? It’s but a fraction of what ex England soccer ball team captain John Terry pays his strumpets to keep schtum and would  barely pay the mortgage on a bolt hole in a half-decent area.

As it stands just 114 council staff, most of them chief executives, will have to disclose their pay and be named and shamed, as it were.

Also on the topic of pay, more evidence emerges of HR’s peripheral role in setting it.

David Coats, associate director of think-tank The Work Foundation has said that banks which insisted on paying huge bonuses and rewards in the aftermath of the financial crisis were risking ruining their reputation – wrong Dave they lost that in 2008 –  and employer brand. But HR had little boardroom influence in reward decisions.

“If you take the financial crisis – the approach being taken to remuneration at the top is doing nothing to remedy the reputational damage at all. HR is peddling furiously but frankly doesn’t have the clout inside organisations to make the difference that will overcome risk to reputation.”

Oh dear – HRniks had better stick to rolling out benefits packages and P45s, and steer well clear of the board room.

18
Feb
10

News Round up from the insurance trade press

CREDIT HIRE STORIES-A-PLENTY

The positive PR bus is in full swing amongst credit hire firms, as Drive Assist reports in Insurance Times how it has wisely called in forensic accountants to rifle through its books. This follows last week’s revelation that one or two files may have seen the number of hire days inflated. DA is instructing KPMG and it’s CEO Steve Binch said: “Our investigation is showing that the number of cases where insurers have suffered a financial loss is about 1% of the 125,000 hires we have carried out in the period.”

Post Magazine has found the entire credit hire sector gathering forces with its story about a potential merger of the two existing trade bodies. The Accident Management Association and National Association of Credit Hire Operators are ‘poised’ to merge, according to this little yarn, with talks at an advanced stage. Between them, they claim to represent 80% of the CHO sector. Frustratingly, there’s no quotes to elaborate on the story so we don’t really know why it’s happening, but ganging up would be my best bet.

As if that wasn’t enough about credit hire, there’s another one to boot. Post can be forgiven because this one’s an interesting tale about former wrestler called T-bone who is now a professional rugby player trying to claim a £11 000 credit hire bill for 34 days, despite the fact he was in Italy for six days of the hire period. The judgement handed down at Glasgow Sheriff Court last week in the case of Kevin Tkachuk v Direct Line, eventually saw the court reduce the £11 000 sought for the hire by Accident Exchange to £3500.

(SOME) DEBT-BURDENED COMPANIES REVEAL ALL

Both IT and Post have coverage relating to the trials of insurance businesses who may have bitten off a little more than they could chew during those cheap money days. IT focuses on broker Jelf with a story about it having ‘thrashed’ out a deal to refinance its debt with a new £24m facility and a repayment timetable drawn up for the next five years. There’s not much more detail though, as Jelf is due to report its results on 23 Feb. The stock is currently trading at half the value it achieved in May 2008, when the price reached a high of around 80p.

In contrast to AIM-listed Jelf Group, loss adjuster Merlin Claims really does open the books with a full page interview, explaining about the ‘perils of boom-time private equity backed deals’. This kind of open communication from a business looking to stop the rumour mill from going out of control is becoming increasingly common and should be applauded if the intentions are good; maintaining a business as a going concern, honouring contracts, retaining staff. Without reciting stock exchange regulations, it appears this level of candour may only ever be possible for privately held businesses.

TRADE UNIONS GET BEHIND ELIB

The TUC has backed Department for Work and Pensions proposals for an Employers’ Liability Insurance Bureau as well as an EL Tracing Office. Opting against declaring that it is insurers who have dragged their heels, TUC health and safety officer Hugh Robertson said: “If employers are injuring people through negligence they should have to pay.”

17
Feb
10

Is Aviva boss making a calculated PR Manoeuvre?

It’s nice to have a scapegoat. Aviva seems more than happy to allow the blame for its troubled relationship with the UK’s brokers to be delivered through the letter box of ex-boss Igal Mayer.

In this week’s Insurance Times, Mayer’s replacement David McMillan could well be taking a calculated approach with his comments about how sitting across the negotiating table with brokers is not within his remit.

With this statement, McMillan is in one stroke distancing himself from the saga which saw Igal Mayer say he would limit commission plus expenses to 30% in all cases and apparently alienate a lot of distributors in the process. Hats off from a PR point of view.

McMillan has instead talked up Aviva’s newest Dragon, Janice Deakin as his fox in the box. “She’s a top class relationship builder, trader, negotiator and that’s what she’s paid to do,” he said.

Spare a thought for poor Mr Mayer though. Few executives have left under such a cloud and for his legacy to be so totally lacking in positive sentiment must be galling to say the least. Insurance Times being the broker’s champion, had the knives out for him and reported his exit with characteristic gusto back in October 2009. One quote from a market source was too good to be consigned to the cutting room floor: “He pissed off all his major distributors.”

17
Feb
10

Employment law update

Headline case of the month – so far – is the Court of Appeal’s ruling that BA did not discriminate against employee Nadia Eweida by banning her from wearing a small crucifix around her neck, in contravention of a BA dress code. This case seems have dragged on longer than Eastenders and with much the same banal plots. Surely BA and Eweida could have sorted this dispute out years ago – before the end of the last Ice Age – and saved themselves the GDP of Greece in legal fees? Of course there’s still no end in sight as Eweida, who has Christian backers, plans to take the case to the Supreme Court. One note of interest is that the series of rulings could be interpreted as strengthening the employer’s hand when it comes to enforcing dress codes.

The Metropolitan Police seems to be on a winning run in the courts. Fresh from ex commander Ali D being banged to rights, a Met officer has lost a race discrimination claim against the force. Det Sgt Gareth Reid, 45, said he faced negative treatment from colleagues and was removed from a training programme which would have led to a promotion. The Croydon tribunal was unable to find any grounds to substantiate Reid’s claim.

In the true spirit of you  couldn’t make it up, the Equalities and Human Rihgts Commission  (EHRC) has faced legal challenges from 12 employees – some with more than one complaint – who have accused it of racial, religious and sex discrimination. Well I guess these are just the sort of people who could spot alleged discrimination from the outer fringes of the Solar System, so we shouldn’t be surprised.  Of the 15 cases, at least six were withdrawn and two were dismissed at trial, while others were “settled” out of court. Two continue.

Trendy US clothes purveyor’s Abercrombie & Fitch’s advert for “cool and good looking people”  to work at its planned store in Aberdeen has caused something of a flutter in employment law circles. Apart from wondering how many people in Aberdeen fit this description, one has to wonder at the levels of commonsense held by those who drew up the advert. Even the most average recruiter knows you can’t get away with that sort of thing, even if you have no intention whatsover of recruiting someone who is neither cool nor good looking, ie anyone drawn from 99% of the UK population. A&F got into hot water last year after losing an employment tribunal case against a disabled employee who said she was harassed and dismissed without good reason. Oh, the pressure of looking good and cool. Not something I’ve ever encountered at George at Asda.

And finally – who said that? – employment law behemoth Charles ERussell has released details of its 2009 employment law survey. The top three concerns amongst its clients and contacts are, in order of priority: How to deal with persistent sickness absence; how to put into practice an effective performance management process; and the impact of proposed changes to the default retirement age. No mention of dress codes and recruiting cool and good looking people, thank the Lord.



15
Feb
10

A contingent can of worms

Last week saw New York State Insurance Department superintendent James Wrynn’s final compensation disclosure regulation come into force and put contingent commissions back into play for brokers.

I’m sure many will not need reminding that contingent commissions fell foul of Eliot Spitzer’s crusades a few years ago and were the subject of multi-million settlements by some brokers. But, for some the issue never really went away as some smaller producers continued to use them quietly while the larger brokers cries of unfair fell upon deaf ears.

Now Wrynn’s decision to allow them – although the new rules require full disclosure of all remuneration by the intermediary, which must also state up front whether it is acting as the agent of the insured or the insurer – has opened a real can of worms.

Wrynn says: “Today the department publishes the producer compensation regulations, and essentially they require that the broker describes his/her role in the transaction, including details of volume and profitability – and if the purchaser wants more information they can request it.”

However, there was immediately dissent from brokers and buyers alike.

Business Insurance reports that in fact the Independent Insurance Agents and Brokers of New York is so strongly against the new regulations it has threatened legal action calling them “overly burdensome to their businesses”.

In a statement, it added. “We cannot sit back idly and let the department impose an unnecessary rule that will only serve to add another time-consuming and costly requirement for our members, which in turn could also result in additional costs to consumers.”

Meanwhile The Risk & Insurance Management Society Inc was more measured in its response, saying that “the final rule that falls short of complete and mandatory disclosure, for which RIMS has been a longtime advocate”.

Of course Willis have made great play over the years from the fact that they voluntarily gave up contingent commissions – unlike their two big rivals.

In a statement Willis CEO remained consistent in his opposition to the payments.

He says: “Simply telling clients that you are taking contingents does not make it okay. It does not change the fact that you have an incentive to act in the interests of someone other than your client – and that when push comes to shove you might not fight for the best deal in the marketplace or advocate fiercely to recover a claim if you know your compensation from the insurer will suffer. It sounds like transparency, but it can never be true transparency.”

Adding: “I am convinced that the only way to resolve the conflicts inherent in contingent commissions is not to take them. We stopped taking them because we want to be paid for the value we provide our clients, not the insurance companies.”

However there are supporters of the new regulation, such as the The Council of Insurance Agents and Brokers.

Ken Crerar, president of the CIAB, said: “The New York requirement appears to be not a heavy burden. It’s a basic transparency requirement and we don’t see any major issues with it per se.”

He adds: “More than anything, it’s time for the industry to move on from this.”

That last comment can surely only be wishful thinking, there is a long way to go before all sides are happy with both commissions and dislcosure.

15
Feb
10

Swine flu downgrade leaves an HR policy mountain

Swine flu may not have generated as many victims as the experts led us to believe but it certainly made a mighty impact in HR and the HR press.

From Spring 2009 onwards scarcely a day passed without dire warnings that HR  should prepare itself to face the biggest threat to the British workforce and economy since the Millennium bug and investment bankers. For a time it seemed that swine flu was a fifth horseman of the Apocalypse ready to lay waste to the world, the nation and most worryingly, the football fixture lists.

Only HR could save the day through the creation of policies. Yes, swine flu policies. And the HR press spared neither paper nor bits and bytes in pressing home this message.

Of course the creation of a swine flu policy would allow senior HR management to be big men on campus, giving them an aura of being in control of whatever swine flu bugs threw their way.  Policies also give HR departments, or at least their senior management, added standing showing that they can deliver more than hirings, firings and assessing leave entitlement.

Now the moment has passed and, with hindsight it all seems rather ridiculous and totally over the top. But the media is inclined to ride waves and none seemed bigger last year than the swine flu one.

Now what are HR departments that followed the HR media’s advice to do with all those swine flu policies? Fairly simple really: just change the term swine flu to epidemic and that should do the trick.




BMR Editors - click for latest posts

Choose Industry Sector

Blog Stats

  • 9,662 hits

Enter your email address to subscribe to this blog and receive notifications of new posts by email.

Join 579 other followers

Twitter – @ralphsavage


Follow

Get every new post delivered to your Inbox.

Join 579 other followers