Personal injury solicitors rebuff ABI claims over ‘excessive’ costs
Personal injury lawyers have hit back at claims that they ‘take motorists for a ride’ by charging high legal fees for settling road traffic accident (RTA) claims.
The Association of British Insurers (ABI) said last week that legal fees add £40 a year to the average motor insurance premium, or 87p for every £1 that insurers pay in compensation.
The Motor Accident Solicitors Society (MASS) and Association of Personal Injury Lawyers (APIL) both pointed out that insurers agreed on fixed costs for the current low-value RTA claims process.
MASS chair John Spencer called on the ABI to share its evidence and calculations.
An APIL spokesman said: ‘This is old news, and it really beggars belief that the ABI has focused on the same tired old argument, when its members have been actively involved in the development of a new claims process. All stakeholders worked on this together, so this statement now is particularly disappointing.
‘The new scheme has been designed to make this specific type of claim more efficient. It will apply to all straightforward road traffic cases up to a value of £10,000, which will actually account for 75% of all personal injury cases, according to the government.
‘It will be interesting to see how insurance premiums will be affected in a year’s time.’
In a statement released last week, the ABI claimed that motorists ‘are being taken for a ride by high legal costs’. It said that 10% of every motor insurance premium, or £2.7m a day, is passed to lawyers as fees.
The ABI said that an average claim of £2,430 costs an extra £2,100 in legal fees. It said it analysed more than 50,000 low-value road accident personal injury claims to arrive at these figures.
Nick Starling, ABI director of general insurance and health, said: ‘A compensation system that can deliver £2,000 of compensation at a cost of as much as £5,000 is dysfunctional. Excessive legal costs are a symptom of a civil litigation system that is broken and in urgent need of fixing.
‘Too often genuine claimants get the compensation they deserve despite the system, not because of it. The activities of some claims management companies in racking up high legal costs adds to the cost pressures that end up being paid for by motorists through higher premiums.’
He added: ‘We agree with Lord Young that the recommendations of Lord Justice Jackson’s review of civil litigation costs should be implemented in full as soon as possible. We need a simpler, faster, more cost-effective compensation system that gives claimants a much better deal. Reducing excessive legal costs is essential to achieving this.’
Comments
What About The Use Of BTE
These issues can simply be avoided if the implementation of Lord Justice Jackson’s review of civil litigation. Most people have the benefit of a BTE legal expenses insurance policy of some kind or another. The PI system at present utilises ATE policies which can be highly inflated and dumped onto the insurer as an expenditure to the case in question. Even where there is an admission of liability??
It’s about time the public was made aware that they do not have to utilIse these ATE products when it’s clearly obvious a BTE is available. Whilst most solicitors will show due diligence from the inception of a case to establish BTE availability some will always take the stance of reducing their cost per acquisition by accepting a kickback from the ATE provider. Right or wrong this must stop.
I have a simple idea.
The solution for insurers is simple. Costs only arise after their insured has had an 'at fault' accident. Simply persuade the people you insure to stop having accidents. either that or stop moaning when you have to pay for the consequences. If insurance has to get more expensive then so be it.
More effiecent process
Whilst the issue of disporportation legal costs in low value cases has looked to be addressed once again loopholes have been found and are starting to be exploited. What needs to be addressed is the very fact that compensation and the claimants needs and not the costs element should be the priority. Why not give the claimant the ability to move away from the CFA if they are not entirely satisfied with the service the solicitor is providing. If a claimant wishes to leave our process they are free to do so at any time - Can the same be said about NWNF?
Not a bad earner then
If legal costs add £40 to every policy then on those figures to allow for compensation and legal fees that comes to around £85 per policy.
A few weeks ago I heard (I think it was from the AA) that the average motor policy is now around £650 a year. That means less than 15% of the premiums are actually used to meet injury claims which insurance is taken out for.
I accept there will be the overheads, advertising, call centre running costs, etc. but it seems like a decent profit margin to me!
Rip off
Everyone knows the whole RTA/PI claims process has brought the profession into disrepute by issues such as credit hire and those with no injury whatsoever bringing whiplash claims, duly assisted by solicitors and medical "experts" who happily turn a blind eye or actively encourage fraud in order to generate fees. It really is about time the Courts/Parliament considered the poor mugs who pay the premiums which are inflated by a very significant number of claims which are entirely, or verge upon, fraudulent. Many such claimants are actively encouraged/ assisted by the Claimant PI firms whose main drive, allegedly, is "access to justice".
This is a very good point and
This is a very good point and one which will only be exacerbated if Jackson's fixed costs proposals are implemented. It should not be forgotten that the Defendant insurance companies are already in a very strong position.
More details, less headline-grabbing
Like the MASS chair John Spencer, I'd be interested in seeing details of the ABI calculations and not just a headline-grabbing poke at PI solicitors.
The insurance industry chiefs
The insurance industry chiefs are on a roll. Those in power/ the rule makers are taking this one-sided Defendant propaganda seriously. The insurance industry chiefs aren't going to stop banging their drum until they've got what they want (maximum profits). I genuinely sympathize with victims of accidents, but it's now time for all those who work in the Claimant personal injury field (Claims Farmers, Claimant fee earners, Defendant fee earners, Costs Draftsmen, Barristers and Judges) to consider their plan B career options. The end is near.
Claimant Lawyer
A farce
The ABI change their figures more than their socks. 6 months ago they said costs represent £0.40 in the pound of what they paid out for PI Claims. Now it is almost the same as what they are paying in damages. So what has changed?
I look forward to the day (probably in the next year or two) when the number of RTA claims double. These claims in the portal (what the insurance lobby insisted on) surely can not be thoroughly investigated or checked where they are admitting liability within a fortnight, probably to avoid the chance of the claim leaving the portal.
Some unscrupulous people will get onto this soon enough and fraudulent claims will not be spotted or weeded out.
They, and the MOJ, will then be scratching their heads wondering why. At least us Claimant Solicitors will be able to say "We told you so."
Predictive costs regime
Hasn't Nick Starling heard that costs in motor claims have been fixed for 6 years? Under PCR costs, his £2430 claim would attract costs of £1286, or £1446.75 if on a CFA. Someone should tell him that if he is paying out £2100 or £5000 then it is because his own claims handlers are either failing to admit liability within the Protocol or failing to make reasonable offers so that cases have to be litigated.
Excessive Costs
This is ridiculous, why is this system so inefficient that it imposes such high charges? It adds 13% to my insurance premium.