Disspelling the (insurer) myths of personal injury claims

For as long as I have been practising, there has been a stigma attached to personal injury claims.

WHY?

The companies and organisations that are responsible for paying out damages to injured claimants who succeed with their claims are made up of insurance companies, local authorities and the NHS. In other words, the very large and influential insurance sector and the state are liable for paying the settlements agreed between the parties or the awards ordered by the court in the vast majority of (if not all) personal injury claims.

Does the insurance sector and the Government have much sway or influence over what is conveyed and portrayed by the national media? I will leave this for you to consider but would point out that a previous Justice minister had to stand down due to his failure to declare a financial interest in one of the large insurance companies and the Register of Members’ Financial Interests shows many MP’s as having financial interests in insurance companies (and being recipients of insurer donations).  Also, whilst the media seem to often report on instances of ‘fraudulent’ claims, have you ever read about a case where the Defendant raised a false or misleading defence, buried or withheld evidence or wrongly accused the Claimant of fraud?

HOW?

The national media has been used to pedal the myths spun by the insurance sector (and certainly not discouraged by the Government) for years. The general messages repeatedly rammed home are:

“Ambulance chasing lawyers”

Lawyers have long been allowed to advertise their services. Like any other type of business, law firms have sought to advertise in areas where their services may be most needed.  Hospital literature/brochures often include advertisements from physiotherapists, undertakers, care homes, charities or florists but I do not recall having ever seen any of these types of business being referred to as ‘ambulance-chasing’ and I very much doubt that anyone has actually ever seen a lawyer chasing an ambulance.

Lawyers provide a service to the public whereby they provide assistance with pursuing justice. Why should the intention of law firms to advertise their services to as many people as possible who may require those services be viewed with such disdain? I recall an insurer’s TV advert which showed a family struggling to cope with the death of their father/husband as an advertisement to take out life insurance!

In any event, the vast majority of law firms providing personal injury claims services do not actually advertise in this way. This was usually a form of advertising done by claims management companies who would try to generate leads to then sell on to lawyers. This practice of referring leads was banned 3 years ago and, as a result, law firms have been REQUIRED to engage in direct marketing practices in order to bring in clients as they are no longer allowed to pay marketing companies for leads.

“Cold-calling lawyers”

Whilst the above points again apply here, the most frustrating aspect of the cold-calling is that this is and can only be instigated by the insurance sector itself. Independent law firms can not and do not have access to the personal details of people who have recently been involved in an accident. Insurance companies do! They receive this information as soon as an accident is reported to them by their insured customer.

Therefore, if you receive a cold-call or any contact from anyone who already knows about your accident when you have not contacted anyone (other than your insurer), this can only be the result of your details having been passed on by the insurer.

Cold-calling can only be the result of referrals made by insurance companies.  Banning this referral of personal data would effectively ban all cold-calling. Independent law firms will not and do not engage in or become connected with any cold-calling practices.

“Greedy lawyers”

For nearly 6 years, claimant lawyers have only been able to charge a limited and fixed fee for legal costs in the vast majority of cases involving straightforward road traffic accident claims. Insurance companies now only have to pay out £500 to lawyers for an injury claim worth up to £10,000 and only have to pay £800 in claims worth between £10,001 and £25,000.  The Government stated that this vastly reduced level of recoverable fees would have to be offset by the lawyers making a deduction from their own client’s compensation. Therefore, at the behest of the Government and insurance sector, a claimant who has been wrongly injured due to the negligence of another driver will often now have to pay more in legal fees that the negligent driver’s insurance company.

For nearly 3 years, fixed fees have also applied to non-straightforward claims worth up to £25,000.  Therefore, insurers do not have to pay claimant’s lawyers for the actual work done and time spent on a case but instead only have to pay a fixed fee based on the level of compensation recovered and the stage at which the claim is concluded.

Therefore, for over 90% of personal injury claims, defendant insurers only have to pay a fixed fee as a contribution towards the claimant lawyer’s fees.

It seems that the Government now intends to introduce fixed fees for all claims worth up to £250,000 and also introduce fixed fees to clinical negligence claims (a separate issue which I will not go into here).

Therefore, any argument that lawyers charge too much has been redundant for years. In any event, lawyer’s charges have always been supervised by the courts. If a claimant lawyer’s fees were ever considered too high, the defendant could ensure that the lawyer’s fees were assessed and determined by the court. There was never any way in which lawyers could in fact be permitted to charge excessive fees! The defendant insurer either agreed the fees or the court assessed them.

“Dodgy/Fraudulent claims”

The insurance sector has long argued that there is a prevalent and rising issue of fraudulent whiplash claims in the UK. However, the fact that insurers pay out compensation in 99% of road traffic accident claims contradicts any claim that fraud is rife or so serious so as to justify repeatedly reforming the entire system.

The Government acknowledges that it has no data (or idea) about what proportion of the sums paid out by insurers for whiplash claims are due to fraudulent claims.

Despite this, the system has already been changed dramatically to tackle the ‘massive’ problem of fraud. The perceived high level of fraud has been rolled out and embedded into the public consciousness in order to change the entire system, to the detriment of all genuine claimants (which are the vast majority of claimants).

By constantly and consistently stating (but never proving) that there is a problem with fraudulent claims, the insurance sector has managed to reform the civil justice system to ensure that it pays out significantly less in legal costs.

As a result, genuine claimants have to face deductions from their own compensation.

In addition, Government has now introduced legislation which allows insurers to apply to have a claimant’s case completely thrown out and for the claimant to be ordered to pay costs if the claimant is found to have been fundamentally dishonest about any material aspect of their claim.  This is hugely disproportionate and significant and the practical implications of this cannot be overstated.  Insurers are now incentivised to raise allegations or suggestions of dishonesty so that the claimant is put in fear of losing their case and receiving a costs order. For example, in a case where the defendant has admitted fault and the claimant has been permanently injured and will be unable to return to work, the claimant’s entire claim could be thrown out if, for instance, the claimant is found to have been dishonest about the level of care they have required since the accident.  Rather than reduce the level of care damages, a claimant could have their entire claim struck out and receive a costs order.  There is no similar or corresponding sanction for defendants who are dishonest in their defence.

I have seen letters from insurers sent directly to claimants (even though the claimant is represented by a lawyer, meaning that only the lawyer should be contacted). Those letters effectively threaten the claimant by suggesting that their claim may be fraudulent from the outset.

The minor issue of fraud is being used as a massive bat to beat ALL injured claimants with in order to (a) reduce the chances of them making a claim at all, (b) reduce the chances of them pursuing a claim at court and (c) reduce the compensation that they receive.

Furthermore, insurers engage in the common practices of:

(1) Third Party Capture

Insurers contact injured claimants directly once they are notified of an accident and make an offer of compensation to them before they have had a chance to seek legal representation. They do this to avoid legal fees and to ‘buy-off’ the claim cheaply.

This encourages fraud because many people who are involved in accidents but who are not injured receive offers of compensation. Many people accept these offers and the public is constantly reminded of how easy it is to receive compensation following an accident. This is an insurer practice which actively encourages fraud. The Government should BAN third party capture and claimant lawyers have been campaigning for this for many years.

(2) Pre-Med Offers

Insurers also regularly make offers to injured claimants before the claimant’s lawyer has had the opportunity/time to obtain independent medical evidence to prove the injuries (and extent thereof) suffered by the claimant.

This practice encourages claimants to accept compensation without ever having to prove that they have been injured. This is another insurer practice which actively encourages fraud by regularly reminding the public that they can get compensation simply by presenting a claim without ever having to PROVE their claim.

If the issue of fraud is so bad, the insurance sector should be endorsing the calls for both third party capture and pre-med offers to be banned. Instead they repeatedly oppose those calls.

“Whiplash claims increase motor insurance premiums”

The reforms made in 2013 were very much based on the need to reduce motor insurance premiums. Despite claimant lawyers strongly denying that motor insurance premiums were linked to the cost of paying out for injury claims, many reforms were introduced on the promise that the insurance sector would pass on their savings to the public by way of reduced premiums

Indeed, a year after the reforms came into effect, the insurance sector stated that “The ABI premium tracker shows that the average motor insurance premium has fallen by 14%. And if you don’t believe the ABI’s numbers, look at the Confused.com/Towers Watson tracker or the AA premium index. Premiums are down.”

And this was before the true savings from the reforms had truly kicked in! Happy days – surely premiums would continue to drop in light of the huge savings being made by the insurance companies!?

Sadly not. Within another 12 months, the Confused.com/Towers Watson report opened with “Comprehensive car insurance rises by 8.1%. Car insurance prices have risen in the third quarter of 2015.”

The insurance sector has failed to deliver on its promise from 2012 to pass on savings. However, it has no interest in doing so. It can increase premiums to increase its revenues whilst also arguing that the increased premiums are again due to the cost of whiplash, in order to lobby for (and probably get) further reforms which will reduce and compromise the public’s access to justice.

Last year, the insurance sector repeated its message from 2010 which was that whiplash claims were adding £90 to your premiums. Reforms came in in 2013 which will save the insurance sector millions (if not billions) of pounds and yet premiums continue to increase.

They now rely on those increasing premiums to argue for more cost-saving reforms by again stating that they cost each policy holder £90 per premium. However, they have only pledged to pass on a saving of £40 to the policy holder if the latest set of cost-saving measures are brought in. As the Government has said that it has no intention or means of supervising or enforcing the reduction of premiums, the pledges are of course effective for lobbying purposes but ultimately empty and unlikely.

Nevertheless, the increase in premiums is now forming the basis for further reforms which seek to prevent whiplash victims from claiming any compensation at all and which seek to ensure that insurers avoid paying any legal fees whatsoever in over 80% of claims (i.e. those worth less than £5,000)! This will be the biggest curtailment of access to justice in this country for at least a generation, all in order to ensure that the insurance sector save hundreds of millions of pounds, with no guarantee that insurance premiums will fall (they certainly didn’t after the last set of reforms!).

“Compensation Culture”

The reports upon which all of the above reforms (and many more) were founded clearly stated that THERE IS NO COMPENSATION CULTURE, ONLY A PERCEIVED COMPENSATION CULTURE.

That very perception has been brought about by the above messages conveyed by the insurance sector through the national media.

Therefore, the stigma of personal injury claims has been created by the very business sector that directly incurs the cost of personal injury claims.

What’s more, the perpetuation of that stigma and the increasing strength of that stigma to influence and bring about legal reform to the civil justice system is affected directly by the very activities of the insurance sector, namely:

  • Cold-calling people involved in accidents;
  • Referring data to other firms to encourage claims;
  • Third party capture;
  • Making pre-med offers;
  • Increasing insurance premiums;
  • Publicising almost every instant of fraudulent claims (the minority);
  • Advertising the ‘high fraud’ argument through the media;
  • Lobbying through the media to make whiplash (a genuine injury) synonymous with fraud;
  • Writing to claimants directly about fraud (as a threat but also to make them think that fraud is rife);
  • Inaccurately referring to ‘ambulance-chasing’ and ‘greedy’ lawyers in the media (despite the vast majority of fees being fixed).

 

 

 

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