What equality would mean for the insurance sector

A fantastical look at what could be done to try and balance the civil justice reforms affecting personal injury claims.


Claimant law firms are no longer allowed to pay referral fees to claims companies for leads.

The insurers knew that this ban would massively affect the amount of claims that would be made thereby reducing their outlay. Even though the consultation confirmed that referral fees posed no detriment to the public and only increased the public’s awareness of their right to pursue a claim, the ban was imposed to tackle a ‘compensation culture’, although the Government acknowledged that the data showed that there was only a ‘perceived’ compensation culture – not a real one. Nevertheless, when is the last time the Government let a consultation get in its way.

Using this ‘logic’, all fees paid by insurers to comparison websites should be banned.  As Joe Public is the one footing the bill for all of the insurers’ marketing costs, such fees should be banned as there is actually a detriment to the public. The insurers should be restricted to direct marketing only, just as claimant law firms have been.  That would then make their decision to spend millions on paying celebrities to star in their adverts slightly more understandable.


Claimant law firms have had the costs that they can recover from insurers fixed by the Government (following heavy lobbying from the insurance sector). For the vast majority of motor accident claims, solicitor costs have been slashed from an average of around £1,800 per claim to £1,200 and then £500 over the last 5 years.

In view of the fact that the insurance companies’ main business is providing cover that individuals and businesses are required to purchase by law, isn’t it more in the public’s interest to have such insurance premiums capped (or at least heavily monitored) rather than reduce the legal costs payable by an insurer on behalf of an at fault defendant.  If insurance companies are effectively providing a public service, is it commercially ethical for them to make unlimited and exorbitant profits each year from providing that service?  Look at the Government and most of the media’s attack on the TV licence.  The licence, much like our motor insurance, is something that we are legally required to purchase each year and, as such, the cost of the licence is something that is heavily scrutinised and justified each year.  Would it not be reasonable to review the level of insurance premiums in a similar way each year and to actually check what the insurers are charging for in their premiums rather than listening to their constant cries of premiums being increased due to dodgy whiplash claims and lawyer costs?

The insurance sector spent years arguing that claimant lawyer costs were too high (and continue to do so), stating that the services provided were straightforward and advising that, if referral fees of around £700 per case were removed, only £500 per claim needed to be paid to the claimant’s solicitor, making no allowance whatsoever for other marketing fees and business costs.

There has been no similar assessment and review of precisely what our insurance premiums represent and, as insurance is something that the vast majority of people in this country pay for on an annual basis, is it not in the public interest to address this urgently?

Apparently not. Instead, the Government, backed by the insurance sector, is now wanting to slash the legal costs payable in clinical negligence cases, and the insurers continue lobbying to remove the requirement to pay any legal fees at all for claims under £5,000 and continue campaigning to make whiplash victims feel guilty for wanting to pursue compensation at all.


According to a recent pamphlet sent to me by one of my opponent insurers, ‘£50 of every premium goes towards the cost of insurance fraud’. Furthermore, the insurers are doing well in their campaign to have the word ‘whiplash’ synonymously linked to the word ‘dodgy’.  The insurers have never been required to provide any objective data to back up their constant claims and, for years, they refused to share their historical data which would assist claimant lawyers in identifying potential fraudulent claimants by checking for any history of claims.

After nearly 10 years, the insurers have finally agreed to allow us access to this database but, in the news, you will consistently see reports of fraudulent claimants successfully prosecuted after trying to dishonestly claim compensation.  This is only further emblazoned on to the public conscience by tv programmes such as ‘Fraud Squad’ and ‘Saints & Scroungers’.

However, what we do not read about or see on tv are reports of the dishonest and/or misleading conduct of insurers when defending cases. Many claimant lawyers (myself included) will be able to give examples of how defendant insurers have tried to defend cases by conduct such as producing dishonest/untrue witness statements, by producing forged or tampered documentation or by withholding crucial documentary evidence, to name but a few examples.

In cases such as this, the insurer will only be penalised by having to pay more costs (which they will subsequently put down to ‘greedy lawyers’). There will be no prosecutions and there will certainly be no media appetite for bringing this to the public’s attention.

If a claimant is found to have been fundamentally dishonest they can now be completely barred from receiving any compensation at all, even if their claim is successful despite their dishonesty. There is no such sanction for dishonesty on the part of the defendant insurer and the reduction and fixing of legal costs payable to the claimant’s lawyer only further serves to ensure that there are no proper safeguards in place to prevent an insurer that has refused to accept liability early on from unreasonably drawing out a claim and dishonestly defending a claim.  On the other hand, a genuine and honest claimant may well be persuaded to take a low offer or even withdraw a claim completely for fear of being accused of being dishonest.


As the Association of British Insurers recently confirmed at their conference, it is all about ‘perception’.  There is no need for hard facts or figures when reforming and shaping the administration of justice. As long as the public perceives that the changes are for the better. The insurance sector has unquestionably outperformed the legal services sector in gaining media and public support via an unrelenting and consistent stream of articles, reports and productions lambasting ‘dodgy whiplash claimants’ and their ‘greedy lawyers’.

The criminal legal services sector has had some joy in protesting against similar reforms aimed at saving money for the Government (as opposed to insurers) but this is because they have been able to strike and cause a headache for the Government by having criminal hearings and trials vacated due to a lack of representation creating a huge backlog as accused defendants cannot be prosecuted without a fair trial.  Personal injury solicitors and barristers did not have this leverage as, to not turn up at court, would have been to see our clients penalised which would have been to the benefit of the defendant insurers.

Make it fair!

My audacious and outlandish proposal:

  1. Before we consider any more reforms, stop and conduct a full and proper review of the reforms already introduced over the last few years;
  2. Consider capping insurance premiums following a full review with the levels/factors/multipliers being independently determined (just like claimant legal fees are capped, although that has been done with no accurate reference to the actual work performed, service/skills provided, level of compensation recovered or marketing and other business costs incurred);
  3. Ban insurers paying fees to comparison websites (this is a fee that must be recouped directly from the public and law firms have been banned from paying referral fees even when it did not cause the public any detriment);
  4. Fix recoverable legal costs for defendant insurers where they successfully defend claims at court.
  5. Introduce sanctions for defendants/defendant insurers adjudged to have been fundamentally dishonest in their defence/evidence.

One thought on “What equality would mean for the insurance sector

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.