I have just read an article in Claims Management magazine on the issues surrounding legal expense insurers (LEI) and panel solicitors. As seems usual in this area, it makes depressing reading for lawyers: 'LEI providers expect to control costs in a number of ways. On personal injury claims they have learned that the best way of controlling handling costs is to expect panel firms to bear their own costs and to charge a referral fee on "good cases" where costs are recoverable... one solicitor I know is expected to pay in excess of £650 per case... and one of the UK's largest motor insurers looks to share at least 50% of the solicitor's final profit.'


I think it is worth reading this again to absorb the full enormity. I don't know why it was such a shock for me to see it on the page because I am well aware of the information it contains. I have employed solicitors who have been involved with arms handling LEI work and know the terms on which that was provided.



Policy holders may legitimately ask why they are being charged premiums - anything between £25 and £80 - for 'insurance' cover when the insurers concerned know very well that they are never going to have to sign a cheque in settlement of a claim. Moreover, when an insurer receives a secret profit of £650 by way of payment from a solicitor for selling an 'insured' case, why does the insurer not have to give credit to the client for that sum? A solicitor would certainly have to do so in the same circumstances.



A more fundamental question would be whether this is honest conduct. If not, could it be something far worse? In a climate of accepted practice among multi-national institutions, a winner-takes-all approach and the public's apparent love of large organisations, it is often difficult or indeed impossible to raise fundamental questions about widespread business practices.



However, I think this needs to be done simply because every lay person to whom I have relayed this story - most of whom hold the 'benefit' of LEI policies - have universally condemned the practice as misleading, underhand and, perhaps most importantly, dishonest. Several felt it was criminal to charge a premium in circumstances where the insurer knew it was at no risk of ever having to make a payment. Now there's a thought.



Eric Morris, Osborne Morris & Morgan, Leighton Buzzard