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%.
Comments
nonsense report
I suspect that as we are in times of austerity those that have had an accident are more likely to claim. What is wrong with that? Provideing it is a genuine claim and a Court will determine that.
The only reason insurance premiums are high is due to the greed of insurers. LV and Aviva announced record profits. Have they passed that on to drivers by way of reduced premiums?
People in Glass Houses......!!!!
Typical of some in the legal profession to point the blame at CMC's for the rise in PI claims when you consider the largest advertisers for PI claims are in fact lawyers and lawyer collectives, CMC's spend does not even register in the top 10. The reality is everyone in the sector including - Donna Scully - are to blame for the rise in PI claims so blaming one part of the sector is stupid at best and completely ignorant of whats really going on. Lets also not forget that times are hard out there so people who may not even have considered making a claim before are now doing so because they may get some compensation to pay for their summer holiday - a crude analogy but the truth so its no wonder their has been a rise in claims. On top of all this it also seems convenient to forget that the insurers joined the race with third Party capture schemes to beat CMC's at their own game - they do it rather well and in most cases better than lawyers and CMCs. These claims are also their customers and looking after them and controlling the costs of claims is a sensible financial strategy. As usual CMCs and some innovative law firms [theres not many] lead the way in most of the developments in this sector - already the new use of the medical diagnostic tool for whiplash - the Neck Disability Index is being piloted with insurers and succeeding in removing questionable whiplash cases from the system. CMC's and insurers are working together - yes thats right working together - to bypass claimant law firms running what is a parallel portal process - the outcome is the same but the costs are significantly less especially the legal fees. The shake up in the market place is well and truly happening - the legal profession needs to wake up and stop trying to point the blame at others when ultimately they are just as guilty for the rise in PI claims as the rest of us
The insurers openly admit
The insurers openly admit that they will contact potential claimants asking whether they are injured and if so would like a quick £500 - £1500 to by off the claim.
The insurers also admit that they sell their their client's details to solicitors for a referral fee.
Did MASS not bother mentioning this?
Yet the insurance industry
Yet the insurance industry bleats on about fraudulent claimants/CMC's/solicitors being the cause!
If you have a non-fault car crash tomorrow, you can be sure that one of the first people to contact you after reporting the incident will be the other party's insurers/solicitors with a wad of cash, or solicitors instructed by your own insurers for a fee, inviting you to make a claim.
Those insurers are creating the rise in the number of claims and then relying on the figures to push for reform - reform that will see their profits rise to the detriment of the poor sod who has had the misfortune to be injured.
Does no-one other than those on the claimant side see this?
A friend of mine was recently
A friend of mine was recently offered this. She explained that she had not been injured and so wouldn't be making a claim. She was told it was standard procedure and that they would pay her £1,000 if she agreed not to seek legal advice even though she was not injured!
What I find extremely
What I find extremely frustrating is that the Insurance industry is hiding behind the veil of "PI claims are causing premiums to rise" when they in my opinion are a large contributory factor making vast sums of money in the process!
The industry has for a long time now been making money from referal fees, third party capture, credit hire. The cost of these, along with the expensive advertising campaigns they lead along with referral fees to Comparison sites / brokers will, without a shadow of a doubt be reflected in the premiums we all pay. The Portal is saving legal costs where the insurer does not breach the rules and makes a reasonable offer to settle - yet this saving is not being reflected in premiums.
One thing I also find astonishing is that my own insurer recently tried to persuade me that i "needed" to take out personal injury benefit to supplement my insurance. The idea being that for a one of fee I would be covered for PI up to £30,000 where I was at fault for a collision and was injured. The little pot created certainly won't be big enough to pay out each time for an at fault accident and so this to put be being reflected in the premiums.
I also agree with Anon - claims as a whole appear to be rising whether slips / trips, rta's or AWW, and Claimant's who would not previously have thought to pursue a claim are now considering the same in light of the current climate which will impact on the number of claims being made. Insurers seem to have completely forgotten about the limitation period for PI!
Surely the point is that
Surely the point is that insurance is there to cover claims. Claims only pay out if they are validly made.
And that's it.
End of discussion.
In my view, it is irrelevant *why* more claims are being made. It is only relevant whether or not invalid claims are being paid out at a greater rate than is acceptable.
Averages and scousers
Average awards "unchanged at £78,700". That surely cannot be correct can it? If so the figure must be skewed dramatically by a few massive settlements. I'd have thought that 80% plus of RTAs settle at around the 5 grand figure including costs. (for P.I. element only)
Liverpool top of the league for claims? Quel surprise?!