Claims managers get the blame for PI spike
The legal profession has rounded on claims management companies after a sharp spike in personal injury claims following road accidents.
Figures from the Institute of Actuaries released this week show the proportion of accidents involving bodily injury rose by 18% last year. This was at a time when third-party claims for damages fell by 11%.
Manchester, Liverpool and Birmingham were found to have a much higher proportion of injury claims than elsewhere in the country - and overtook the equivalent claim-prone areas of the USA. The figures have been held up as further proof of a compensation culture that continues to drive up insurance premiums across the board.
The Motor Accidents Solicitors Society said it was ‘disappointed but not surprised’ at the findings.
Chair Donna Scully said: ‘Unprecedented activity by some claims management companies (CMCs), a group we have often said are implicated in the rise of personal injury cases and uplift in motor insurance premiums, has and continues to be an important factor in these unwanted increases.’
She called for strong action to be taken cold calling and unsolicited texts and asked why there have been no prosecutions by the Information Commissioner in a year despite there being more than 2,000 complaints every month. MASS also said it supports the Association of British Insurers’ call for compulsory medical examinations before any damages are awarded.
Dani Holliday, partner at Hertfordshire firm Collins, said the government’s imminent crackdown on no win, no fee cases - set to be introduced from April 2013 - will not address the underlying problems in the system.
‘There has been a lot of talk about the parasitic nature of spurious PI claims. It may cost the insurance industry £400m a year and it may be more. It is in reality all of us who pay through increased insurance premiums.
‘The time has come for affirmative action and we need to ban TV advertising, claims management companies, cold calling and texting and, "third-party capture" in all PI claims, permanently.’
Whilst the frequency or personal injury claims increase, other factors remain consistent. The acturial study found the average age of claimants rose slightly from 34.4 in 2010 to 35.2 in 2011.
Average awards were almost unchanged at £78,700, with the proportion of cases that were settled remaining at 70% for the third year running.
David Brown, chairman of the working group that produced the report, said: ‘In 2010 the worst areas of the UK overtook the worst areas of the US in terms of the proportion of accidents involving bodily injury.
‘It is disappointing to see this trend not only continue, but worsen in all regions with the exception of Scotland.’
The report said Liverpool had the highest proportion of claims last year, with 52% of third-party accidents involving personal injury. Manchester had the second largest proportion, with 46% of accidents involving an injury claim. In Birmingham the figure was 39.2%.