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Looking Ahead: Scotland

29 March 2021
We outline the key steps following the implementation of Qualified One Way Costs Shifting (QOCS) and explain the potential impacts this may have for fraud and risk. We also explore what's on the horizon for Scotland in terms of self-driving vehicles and COVID-19.

Despite assurances that 2020 would see the introduction of Qualified One Way Costs Shifting (QOCS) in Scotland, Brexit and lockdown have inevitably delayed implementation. We have been assured from a number of sources that the implementation of QOCS is the main priority for the Scottish Civil Justice Council (SCJC) and we expect to see the rules published in the first quarter of 2021. Once published there will still be a three-month period before the rules come into force to allow for any operational changes that need to be made. It is currently anticipated QOCS will not go live before June 2021.

QOCS will undoubtedly fuel an increase in claims volumes and litigation rates, at least in the initial period after it comes into force. We expect dormant/repudiated claims to be litigated and claimant solicitors to stockpile claims for litigation, at least in the immediate run-up to the rules coming into force. The resulting increase in the size of the Scottish claims market will attract new entrants who see England & Wales as a less attractive location due to saturation and lower margins (whiplash reforms).

Counter-fraud

The increase in more dubious claims as a result of QOCS will create an increased fraud risk. Insurers need to be more alive than ever to specific Scottish fraud indicators. The need to develop a Scottish counter fraud strategy and KYO has never been more important. Equally, insurers will need a firm grasp of the exceptions to QOCS in Scotland to inform their handling of Scottish claims. Scotland will not have fundamental dishonesty. Our equivalent instead will be "fraudulent misrepresentation". Time will tell how high a bar the courts will set for that, and how they will interpret or limit claimant conduct.

The advent of DBAs in the last year will also make subrogated recoveries a more attractive proposition for insurers and we expect to see more recovery claims (which previously might have been uneconomic to pursue) to litigate in 2021. A number of insurers are reviewing their commercial books in Scotland to identify opportunities for outsourcing claims for litigation on a DBA risk/reward model.

On the horizon in 2021

  • Self-driving vehicles – the Scottish Law Commission committed at the end of last year to work together with the equivalent bodies in England and Wales to establish a comprehensive new legal framework which will seek to ensure the safety of self-driving vehicles via a comprehensive new legal framework. This work builds on previous consultations and is clearly something that the UK Government intends to press forward with.
  • COVID-19 – claims arising from the pandemic will increase significantly in 2021. There have already been EL claims in Scotland in the care home sector and we are currently instructed by a client in what may become a test case in Scotland on the duties of care involved in these topical and complex claims.

Read our full report 'Looking Ahead in the Insurance Sector'.

Further Reading