Secrets and lies – The dysfunctional car insurance meerkat (and other animals)

Secrets and lies - The dysfunctional car insurance meerkat (and other animals)

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Monday’s Dispatches investigation on Channel 4, presented by Harry Wallop certainly packed a punch and was a welcome riposte to the insurance lobby’s PR deluge of misinformation, miscreancy and mendacity.

We hope it is the first of many broadsides in the fight to redress the balance in favour of the British public’s entirely reasonable expectation to be treated fairly by some of the world’s largest corporations.

Not much to ask you would think but these guys have had it their own way for so long now and have so successfully weasled their way into government circles that they are setting the insurance agenda for all of us. A concerted effort by the concerned is required NOW to identify the real villains of the piece and the true insurance scammers operating in this dysfunctional market.

In our opinion this documentary was a good first step because it exploded the myth that insurance companies are primarily concerned about us, their customers.

The film absolutely nailed the point that the insurance companies and accident management firms are only concerned about maximising their profit margins as they pressurise motorists to deal with their ‘approved’ body shops and pressurise the garages to carry out work at minimal cost., often using non-standard parts.

Now this would not in itself be such a problem if savings were shared between insurance companies and policy holders and work was carried out to a high standard but this does not happen…and our premiums go up and up.

Evidence from experienced people in the trade confirmed that the pressure insurance companies put on body shops to cut costs compromises the integrity of the damaged vehicle and the safety of the driver and their family.

The story gets worse.

If a driver is involved in a no-fault accident his/her insurance company will seek to max out the ‘value’ of the claim by shamelessly inflating the cost of the repairs and hitting the other side for all they are worth….and who pays for this?

Correct. We do every day.

Whilst the insurance companies are busy portraying themselves as ‘holier than thou’ and the nation’s protectors of the vulnerable, they are busily scamming the market for every penny they can extract from supplier rebates and other kickbacks and exploiting their customers without any regard to the principles of good business practice, far less business ethics.

The insurance companies then have the bare-faced audacity to stuff their own pockets with all this extra ‘bunce’ and then claim that innocent accident victims who have the temerity to claim compensation are responsible for the hike in premiums which the Office of Fair Trading (OFT) states are inflated to the tune of at least £250m per annum by the industry’s own malpractices.

Their underhand tactics have thankfully not gone completely unnoticed. The OFT has announced that it will be investigating the insurance market, despite the best efforts of a toadying government to foster the myth of a compensation culture and agree to virtually everything the Association of British Insurers (ABI) has demanded in recent years.

In typical weasel word fashion, as befits its modus operandi, the ABI claims that it welcomes an investigation. Aye right, we’ll see…as we live in hope.

Meanwhile, we are still waiting for the ABI to explain why its members are paying out on claims known to be fraudulent.

If a claim is known to be fraudulent why does the industry not take action to prosecute the fradusters? The conclusion must be that the insurance companies are spending a hefty chunk of our car insurance premiums on fraudulent claims. Perhaps the ABI’s Nick Starling can explain why this SCANDAL is allowed to go on unchecked.

Could it be that there are far fewer fraudulent claims than suits the ABI position and that the creation of the ‘bogeyman’ of an insurance fraudster is a very useful whipping boy when it comes to peddling lies about whiplash claims and the impact on premiums?

We will be asking the OFT to look at this matter very closely…and checking with Harry Wallop to see if he is planning to look at the government’s and the insurance industry’s perverse approach to dealing with personal injury claims.

Written by Andy Thorogood, Business Development Manager, Bonnar Accident Law. 


Weasel Words from the ‘Wronged’ as car insurers try to shift blame for inflated premiums

Weasel Words from the 'Wronged' as car insurers try to shift blame for inflated premiums

A weasel.

Finally, we hope, insurance companies are to face the government’s competition watchdog over their oft-quoted claims that inflated motor premiums have nothing whatsoever to do with their business practices.

Really? Do they think we are THAT stupid?

At last a government department has blown their cover and published what everyone, barring Jack Straw and chums, knows to be true:

Insurance companies ARE taking advantage of the system to inflate premiums for drivers by £225m a year, the Office of Fair Trading (OFT) reports today.

The competition watchdog says that after a road traffic accident, insurers of the not-at-fault driver and others, such as brokers, credit hire organisations and repairers, exploit a lack of control in the current system. They charge referral fees for using expensive hire organisations and then add to the cost by replacing the car for longer than is necessary.

The OFT has provisionally decided to refer the private motor insurance market to the Competition Commission after finding evidence that firms are competing in a ‘dysfunctional way’.

The report states that the government has focused its attention on reducing the cost of personal injury claims, but without intervention in the cost of replacement vehicles and repairs, artificially-inflated premiums are ‘likely to persist’.

Exactly. Three cheers and due credit for a chink of light in a tunnel of darkness and despond…

John Fingleton, chief executive of the OFT, said:

‘Competition in this market does not appear to work well for drivers. We believe the focus that insurers have on gaining the competitive edge through raising their rivals’ costs means that drivers pay more than they need to for their motor insurance policies.

‘Because insurers are distracted from competing primarily on the quality and value of service provided to insured drivers, incentives for greater efficiency may be reduced.’

Donna Scully, chairman of the Motor Accident Solicitors’ Society (MASS), said the scale of the problem could be ‘immense’ once it is fully investigated.

‘Money is clearly being made from consumers behind their backs and MASS would welcome full disclosure of specific fee income on every case so that the consumer is fully informed,’ she said.

It is no wonder the whole sector has fallen into disrepute and that consumers are so wary of everyone who operates in it, and frustrated by exploitative practices they are likely to encounter when they make a claim.’

The Association of British Insurers welcomed the report – hmm, doubt that – but declined to address the accusations over its members receiving referral fees from credit hire companies.

Now THAT we believe…

Nick Starling, director general of the ABI, said: ‘For too long insurers have faced inflated rates for credit hire cars and excessive hire periods which have led to higher insurance premiums for customers.




Soon there will be nobody else left to blame and what then Nick?

Karl Tonks, president of the Association of Persosanl Injury Lawyers (APIL) commented:

‘For years the insurance industry has sought to blame anyone and anything but itself and its own sharp practices for high insurance premiums. Legal costs for compensation claims were slashed two years ago for this very reason, but premiums remained sky high.’

The OFT expects to reach a final decision by October 2012.

In our opinion it can’t come soon enough.



Jack Straw aimed a kick at the wrong target when he bemoaned activities of claims companies and lawyers in referral fee investigation.


Thus, at a stroke, Djanogly kicked into touch the key finding of Lord Young’s 2010 report on the Compensation Culture (see our other blog posts) i.e. that there is no compensation culture (page 26 of the report) – it is the figment of the popular press’ imagination, aided and abetted by the insurance industry. 



Mr. Straw, the Labour MP for Blackburn, said the scandal was hitting ‘perfectly law-abiding people’ with sky-high insurance costs…


and what about the perfectly law-abiding people who will find their access to justice cut off?


Mr. Straw, whose own investigation (bit of a ‘cult of Jack’ going on here) into how even the police are taking tip-fees, prompted the select committee to re-open its earlier enquiry, said: ‘What I am clear about is that of a total of about £9billion premium income, £2billion is costs caused by people who can be accurately be classed as the parasites in the system.


How is he clear about this again? Didn’t HE read Lord Young’s report?


Mr. Straw told MPs that the previous night, while he was preparing his evidence to the committee, he had been phoned at home by a claims accident company seeking to represent him over an alleged accident  in the last three years: ’I’d not had an accident in the last three years,’ he told MPs.

‘But it shows the relentless pressure inside these very dodgy firms.’


Yes Jack, but you like countless others did not claim, nay COULD NOT CLAIM BECAUSE YOU HADN’T HAD AN ACCIDENT – GEDDITT?


Mr. Straw added: ‘Claims management companies are parasitic. In any other walk of life, we would describe this racket by referral companies as bribery.

‘These practices are leading to very substantial (insurance) increases on law-abiding motorists.’


Jonathan Djanogly said the Government intended to band the ‘merry-go-round’ of referral fees which have sent premiums rocketing.


He noted: ‘You only have to turn on daytime TV to see lots of dodgy solicitors’ firms which are part of this racket.’ He said there were two firms of solicitors within 100 yards of his own front door offering ‘£600 for a referral.’


Memo to Justice Secretary:

If dodgy solicitors are advertising on tv, then bring them to justice now!! Haven’t you heard about the Advertising Standards Authority?


Justice Minister Jonathan Djanogly told the committee the Government’s decision to ban the ‘merry-go-round’ of referral fees was ‘appropriate’ and had been ‘generally welcomed’.


Referral fees were part of the ‘sick, suing culture’ that was keeping premiums artificially high: ‘We want the benefit to feed through to the consumer in the form of lower premiums.’…and fair compensation settlements!!! 


He believed the Government’s reforms would bring commons sense to the system by weeding out greedy claims, noting how under the current system: ‘If you are a claimant and have no chance of losing, you are almost crazy not to sue. Why wouldn’t you? That’s what we propose to reverse.’ 


This is getting rather tiresome. Will somebody PLEASE tell the UK Justice Minister that an injured person wishing to make a claim has to actually prove negligence? Ye gods – does he think that people claiming compensation just have to ask the insurance companies nicely?


Keen to get in on the act, or is it the feeding frenzy, roads Minister Mike Penning condemned the claims firms as ‘ambulance chasers’ noting: ‘As a human being I find it very difficult that any organisation would seek to profit from others’ injury. Yet fifty per cent of claims are personal injury claims.’ 


This comment is about as crass and unthinking as it is possible to get, even for a government minister.


Critics say soaring premiums are tempting some to drive uninsured – with an estimated 1.3 million drivers now on the road without insurance.


A word anyone about insurance company profit margins or their active participation in and encouragement of referral payment schemes?


MPs on the Transport select committee report have already condemned the current system as ‘dysfunctional’. We take it they mean the claiming ‘thing’ and not Mr. Djanogly’s department…although that story isn’t over yet, not by a long way.


Paul Evans, chief executive of insurance company AXA UK, said increases had slowed to about a 1 to 2% rise a month but added:’ we shall continue to see continuing increases in the months to come


aye right enough, as he squeezes every ounce of profit out of claimants before his game is rumbled by a myopic government and an enraged public who aren’t as gullible as he thinks.

Referral fees in personal injury cases – the real culprits

How would you feel if your solicitor had sold your personal details to an insurance company, a claims management company, a car hire firm or a vehicle repair garage? …Exactly.

…and how would you feel if your insurance company had sold your personal details without your knowledge??

The fact is that insurance companies have been making money this way for years, by selling accident details to third parties.

Now, having been found out, they now have the bare-faced cheek to welcome the proposed government reforms announced last week by Jonathan Djanogly MP, Under Secretary of State for Jusrtice. The Association of British Insurers (ABI) is on record as stating that they didn’t actually want to charge referral fees in the first place but felt they had to otherwise someone else would.

Well that’s alright then. What they really meant to say was that they could not possibly ignore a lucrative, no-cost, income generation stream, so why not have the moral fibre to say so?

Then they shamelessly turn the heat up on innocent accident victims claiming that people who have the temerity to actually seek compensation are the main cause of increases in car insurance premiums.

It is really quite nauseating to hear the insurance companies bleat their belated concerns on referral fees from their newly discovered moral high ground.

As personal injury solicitors helping hurt and injured people every day, we regularly have to dispel the myths and set the record straight on what’s involved in making a compensation claim.

We never have and never will pay an insurance company for a road traffic accident claimant’s details and we would be very happy to see the back of referral fees for all types of personal injury cases.  We would welcome much greater transparency at every stage of the claims process, because for the most part most of the public have got it wrong through no fault of their own.

They have been fed a line by the insurance companies that claiming compensation is borderline immoral in this current climate and conversely  ‘sold’ an idea by the claims companies that they only need to register aclaim to be awarded damages. No wonder people are confused…and no wonder most people with a genuine claim still do not make a claim for compensation (The Association of Citizens’ Advice Bureaux research).

The problem,however, is that the current heated debate has not shed much light on the real culprits, namely the insurance industry and claims management firms.

The former uses its slick PR machine to vilify and stigmatise legitimate claimants and actively discourages accident victims from making a claim. The latter get in between claimants and professionally qualified legal advisors and have created a commodity market in accident claims which they seek to trade.

The real losers are the claimants. Many car accident victims are discouraged by their own insurance company from appointing an independent solicitor and furthermore claimants are generally unaware that they are often not dealing directly with a qualified solicitor but with an unqualified and unregulated claims management intermediary who is normally unable to do anything for them other than ‘find’ them a lawyer – at a price…expensive televison adverts have to be paid for somehow. 

The answer is simple. Let claimants shop most are now already doing.

There is no shortage of advice available to help people make an informed choice and by advice I mean proper independent advice such as that provided by the CAB, The Law Society of Scotland, The Association of Personal Injury Lawyers or organisations such as Headway UK – the Brian Injury Association – none of which have a financial interest in recommending the best solicitor for the job.

As a final check claimants should always seek out and study testimonials from satisfied customers of their preferred law firm. 







Banning referral fees for personal injury claims in the UK – who is to blame for increased car insurance premiums?

According to the Association of British Insurers, motorists who have been in a road traffic accident are the main cause of increased car insurance premiums.


Unfortunately for hurt and injured people, insurance companies are winning the public debate on the so-called compensation culture and last week’s decision by the government to ban the payment of referral fees in exchange for the contact details of road traffic accident victims would appear to vindicate their position that UK motorists are driving up costs by making up spurious accident compensation claims with intent to defraud the system…


Are we really to believe that the majority of road traffic accident claims are fraudulent?


However, let’s assume for argument’s sake that motorists the length and breadth of the UK are indeed staging accidents for the purpose of making a claim. If it is true that fraudulent claims are costing the insurance industry millions and these costs are being passed on to other motorists we have to wonder why these claims are being settled at all.


If the insurance companies know for a fact that the claims are fraudulent why on earth are these people not being prosecuted?


Either the insurance companies are happy to pay out on fraudulent claims, lazily pass the costs on to other policy holders and not pursue the fraudsters through the courts, or they have no evidence to back up their core assertion that personal injury claims are the cause of increased premiums. THEY CAN’T HAVE IT BOTH WAYS.


We all know how difficult it can be to make a legitimate claim on our own household insurance policy for a genuine accident at home and we all know from personal experience or from talking to family and friends the lengths that insurance companies will go to avoid paying out.


Are we really to believe that insurance companies apply a less rigorous test when assessing the merits of a (potentially) costly personal injury claim and deciding whether or not to admit liability?


Can it be that insurance companies just don’t like paying out on insurance policies?


When making a claim for personal injury following a road traffic accident the injured person has to prove that their injuries were caused by someone else. Without proof there is no claim, period.


At Bonnar & Company we very quickly root out any potential accident compensation claims that are likely to fail from lack of evidence. However, injured people can sometimes find it hard to understand that we cannot help them with their claim if we cannot prove that someone else was at fault.


It is even harder to take when injuries are very serious and the accident victim has clearly suffered but the fact remains – solicitors need to prove their cases. Otherwise anyone could claim for an injury and the insurance company would just pay up, no questions asked…Wait a minute. Is this not the line we are being fed by the insurance industry?


So what is the insurance industry talking about? Simples! The answer is profit, plain and simple. The insurance industry would prefer that nobody made a claim for personal injury and that is why their propaganda machine has moved into overdrive recently to stigmatise hurt and injured people who are already worried about making a claim.


Make no mistake we want a healthy and vigorous insurance industry with the financial strength to provide us all with cover but we want a fair insurance industry that will compensate genuine accident victims with as little fuss and bluster as possible.


What is an accident victim expected to do? Are we just supposed to grin and bear it when some careless driver runs into us, causing us pain and suffering and forcing us to take time off work…if we’re lucky?


What if we’re not lucky? What if we can’t work again? What if we can’t walk again? What if the outcome is even worse for us and by association for our families?


Against this backdrop of pain, suffering and loss of earnings the insurance industry has worked tirelessly to paint innocent accident victims as the villains of the piece and make them think twice about taking independent legal advice.


Let’s be clear on one thing. A successful personal injury claim is not the same thing as a lottery win. In order to be awarded compensation the successful claimant must have been injured and in order to be awarded a very large sum of money the claimant must have been very seriously injured. Of course not only must the claimant have been injured they have to prove that their injuries were caused by someone else’s negligence.


Personal injury compensation is not a guessing game in which claimants and lawyers think of a number and try their luck. Awards are carefully calculated based on pain, suffering and loss of earnings. Despite rumours to the contrary you will not receive a small fortune for a minor injury. It just does not happen.


Please also bear in mind that the insurance companies employ an army of solicitors who are not about to sanction a compensation claim without a forensic level of scrutiny. This, incidentally, is the main reason why accident victims need to take independent legal advice.  


Assuming an accident victim is determined enough to make a claim for compensation, then the insurance company tries really hard to persuade that person to accept its first and inevitably low offer ‘in full and final settlement’. Insurance companies know the same day and often within the hour, if one of their policy holders has caused an accident and they rush to deal with the claim ASAP often before the injured party has had an opportunity to visit their GP far less consult an independent solicitor.


This practice, which is called ‘third party capture’ is endemic throughout the UK and was the subject of a Radio 4 investigation in 2010. Is it fair for multi-national insurance companies to put injured people under intense pressure to settle their claim in the immediate aftermath of their accident? Is this justice? You may well ask why insurance companies rush to settle claims before a personal injury solicitor gets involved.


Insurance companies would say that it keeps costs down by short-circuiting the legal process. We would say what about the rights of the hurt and injured to be examined by expert medical professionals and have their claim properly evaluated?    


If you are thinking that all personal injury solicitors are ‘ambulance chasers’ you should think about the propaganda that underpins the insurance companies’ position and the fact that it is in their interest to stigmatise both accident victims and their solicitors.


But what of the real stigma that rightly attaches to the insurance industry, its PR operation and its legal advisors?    


You may wonder who has been receiving referral fees for passing on details of accident victims.


One guess?


Correct! The insurance industry itself has been pocketing millions over the years and is now portraying its behaviour as ‘squeaky clean’. Admiral Insurance has admitted to earning over £6million per annum from road traffic accident referral fees and one has to wonder what the grand total is across the industry. Our conservative estimate is that the minimum total value of road traffic accident referral fees raked in by the insurance industry is £100 million per annum given the number of insurance companies in the UK and taking Admiral’s ‘take’ as a benchmark.


We have not, do not and never will pay an insurance company any money for an accident victim’s personal details. We find the whole idea repulsive as do many of our colleagues in the legal profession.


Can we look forward to a reduction in car insurance premiums? Don’t hold your breath but remember the quoted figure of £150 as the average annual saving UK motorists can expect as a result of ‘striking a blow’ against fraudulent compensation claims from car accident victims and their ‘ambulance chasing’ legal advisors.


Personally speaking, my blood is boiling at the antics of the insurance industry as it manufactures its own spurious evidence and attempts to stigmatise and disadvantage hurt and injured people at a vulnerable time in their lives.


Perhaps, if I look hard enough, I could find a firm of solicitors with no moral compass and no business sense who would be willing to waste their time, money and resources to help me prepare a spurious compensation claim against the insurance industry for ‘aggravated high blood pressure and associated psychological trauma’…or would that be too ridiculous?   


Answers on a postcard to the Association of British Insurers.