The Norwich Union is keen to de-lawyer smaller personal injury claims. Catherine Leech says that would not be good news for claimants


The Norwich Union (NU) recently launched another attack on the current personal injury claim system (see [2004] Gazette, 9 December, 3). Particularly criticised were claims management companies and solicitors whom the insurance company charged with having 'exploited claimant expectations'. The NU went on to say that consequently 40% of all compensation it paid was 'frivolous and vexatious'.


On this premise, the NU made proposals for change. Unfortunately, it is a flawed premise. It is at odds with recent statistics illustrating that there is no objective evidence in the public domain to show that 40% of claimants are frivolous, vexatious or, by implication, fraudulent.


The NU proposes that the 'wrongdoer' (insurer) should deal direct with the injured claimant without independent legal advice. Only if they cannot resolve the case should the matter proceed, perhaps to mediation. No legal costs should be paid routinely. It contends that damages should be calculated on a 'transparent basis', but without defining what that means.

Consider the present system in the light of these proposals. The basis of calculating compensation is perfectly clear to experienced insurers and to claimants' solicitors. Notwithstanding that, our research suggests that insurers still seek to offer claimants a low sum at the outset of a case rather than its proper value.


My law firm recently reviewed 540 settlements of our cases handled over six weeks. These were cases where the first offer was for a sum of less than £5,000, a figure that has been considered as the possible cut-off point for a 'small claim'. Presumably, the sort of figure below which the NU would suggest a lawyer-free system could operate.


Our research showed that only 26% of the first offers made by insurers were acceptable. The average percentage increase between first offer and final settlement in the cases looked at was 52.57%.


Most offers were at least 17% too low. Many cases involve exacerbation of existing conditions (orthopaedic or psychiatric). Unravelling the effect of an accident on a claimant in this situation is not straightforward, and expecting a claimant to look at this without the benefit of legal advice is unrealistic. In one case, a claimant with a pre-existing orthopaedic condition was initially offered £1,000 for her injury; settlement was eventually reached at £21,500.


Of cases reviewed, there were increases following rejection of the first offer totalling in excess of £451,000. The prospect of the first offer being accepted is much more likely if the person on the other side of the desk is the injured claimant and not an experienced legal representative.


It is wrong for the NU to present, as fact, its opinion that the system is rotten to the core and it is out of kilter with other reports that have been produced recently. It is essential for an injured person to have redress to a properly qualified representative, to ensure equality of representation with the insurers.


Given half a chance, insurers will take advantage of any system that removes direct representation for the claimant. Even in the present system where that representation exists, they seek to offer too little in the vast majority of cases.


Catherine Leech is a personal injury partner at Manchester-based law firm Pannone & Partners