Whiplash claims – the truth, the whole truth and nothing but the truth…

My car was damaged recently. It was in a car park and I was somewhere else. I claimed on my own insurance, and was directed by them to a repair garage who took my mobile number, ostensibly to contact me when the car was ready. They did not. Instead they sold on my details to a claims management company . I know this because I received a text a week later telling me that I had been in an accident and was entitled to £2,750.00. Coincidentally, the insurance industry blamed a projected rise of 13% in premiums on the rise in personal injury claims.

Whiplash claims now make up 70% of all motor accident claims. Typically neck and back symptoms might last 3 – 6 months with the courts awarding damages of between £1,500 – £3,000, so the claims themselves are not large. However it is an injury which has few objective signs and there is a clear temptation for fraud and exaggeration.

Evidence was placed before the Transport Select Committee in 2011 that the insurance industry loses £2.1bn per annum to fraudulent claims, whether by “cash for crash” staged accidents or invention of symptoms. The industry presents a story of the honest citizen paying the price for a system milked by the unscrupulous.

The first point to make is that the number of claims in Scotland is dwarfed by those of our English neighbours. Figures obtained from the Compensation Recovery Unit show that instead of a proportion of around one tenth based on population, the figure is one twenty fifth.

The Commons Transport Committee Report “The Cost of Motor Insurance” noted that other countries without the whiplash problem included France, Germany, Spain and ………Scotland.

The reason is that Scotland has few claims management companies, and a minimal referral market.

A brief tour round the road traffic claims industry might illuminate where the real opportunities are:-

1. Claims Management Companies These are not lawyers. Their business model consists in the identification and encouragement of possible claimants.

Details are then sold on to solicitors for amounts of between £250 to £600. They operate customer friendly 24 hour helplines and have a ubiquitous online and TV presence. It is claimed that they fulfil a need in that people are too intimidated to speak to a lawyer. Whilst that may have been the case 20 years ago, is it really true of the current consumer? For anyone who can operate a mouse or turn the Yellow Pages, this is an introductory dating service which is wholly unnecessary.

2. Credit Hire Companies These companies will provide a replacement vehicle whilst yours is being repaired. They will have paid a referral fee generally of around £500, typically to a body shop. Their hire costs greatly exceed the market rates. These will then be transferred to the insurer of the at fault driver. An example of the business model in operation is the 2010 case of Clark v. City of Edinburgh Council .

After examining the credit hire arrangement the judge concluded that the unwitting pursuer was effectively required to raise proceedings for the sole purpose of recovering his credit hire payments . His 14 year old Toyota Celica (value of £1,000 with 91,000 miles) had been damaged and the Accident Exchange Company provided a replacement Honda Civic 2 litre GT with 900 miles on the clock. The hapless Mr. Clark then racked up daily hire costs of £161.63. He sued for a total of £12, 857.13. In a withering judgement Lord Turnbull held that a “new vehicle for old” hire approach was not appropriate and awarded him a total of £1,950.00.

3. Your own insurance company Insurers frequently incorporate an add-on which provides legal cover . The claimant is then referred to the insurer’s panel solicitor . You may believe that this recommendation is of a badge of quality. In fact the insurer receives a referral fee for every claimant. The industry is coy about the value of these backhanders, but estimates vary between £2 – 4 billion per annum. These payments never appear in the industry analysis of cost per claim against premium income.

There may be further conditions whereby the solicitor agrees to direct the client to specific medico-legal practices or car hire firms, generating more referral fees. Road traffic claims are not difficult. This is work which any no win, no fee lawyer will do for you without charge.

The Transport Select Committee has recommended that insurers should publish on their website a list of the firms with which they have referral arrangements, an indication of the level of fees paid and a clear explanation of how referral arrangements work and their purpose. They should make it clear that claimants need not use the recommended solicitor, vehicle repairer or credit hire firm .

As you read this someone is receiving a text from a claims management company encouraging a claim to be made.

This is a system which provides profit opportunities for vendors of fresh air at every stage. The Transport Select Committee has described it as “a dysfunctional merry –go-round”. The problem is currently being addressed in England under the “ Legal Aid Sentencing and Punishment of Offenders Bill 2011”, which amongst other things outlaws referral fees. It remains to be seen whether this will cure the English patient.

So when you get your renewal premium don’t blame your fellow motorist, or at least those of us living in Scotland.

And has the time not come for concerted agitation for much more significant postcode discounts?

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This government seems determined to keep reviewing health and safety legislation until it gets the answer it wants

In October 2010, Lord Young’  

 

 

Britain’s ‘compensation culture’ is fuelled by media stories about individuals receiving large compensation payouts for personal injury claims…The problem of the compensation culture prevalent in society today is, however, one of perception rather than reality…(page 19). 

The Government welcomed the report.

 

In November 2011

“Pieces of eight…pieces of eight…” – Pirate ship or flag of convenience as Admiral ponders legal launch?

Photo: The Telegraph

Is it now any port in a storm for under-pressure insurer Admiral?

Saturday’s Telegraph reported that Admiral, the FTSE 100 motor insurer, is considering branching into the legal sector as it “faces up to the loss of the lucrative referral fees that generate millions of pounds in profits each year.”
 
According to industry insiders, Admiral must move quickly to replace the loss of income from the fees paid to insurers for information of potential personal injury claimants. 

The Cardiff-based group is exploring plans either to set up its own personal injury law firm where it could potentially direct customers with claims or become a majority backer in one, following the implementation of the Legal Services Act in October this year., when the implementation of “Tesco law” widened the provision of legal services to new investors including retailers, banks, insurers and outsourcing companies – The Four Horsemen of the Apocalypse as far as independent legal advice in the UK is concerned. 

However, as the story of Britain’s over-hyped, and mythical so-called compensation culture rumbles on, insurance companies are becoming increasingly uncomfortable when quizzed about their involvement in various referral fee schemes…and Admiral seems to be no different. We wonder why.

Despite periodic denials that it sells client information, according to official Admiral sources, about 5.6% of its overall profits come from these fees. So who are we to believe when Admiral contradicts its own statements?

Speaking after the referral fee ban was announced in September, the company said: “Admiral does not sell customer data; if one of our policyholders has a non-fault accident, suffers a bodily injury and they require assistance, we will put them in touch with a personal injury lawyer.” So what about the income from referral fees then?

Admiral would not be the first insurer to push into the legal industry. Axa owns Knight Legal Services, a defendant law firm. It has always denied it refers its customers to Knight Legal Services and says it has no plans to start doing so…but what will happen if insuers own law firms?

How can injured people be confident that their accident compensation claims will be handled fairly and with their best interests at heart? It might be tricky to find independent legal advice when the representatives of those causing injury are also investors in law firms that pursue claimants’ rights, or even worse perhaps, set up theit own personal injury law firms…

It would appear that Admiral’s plans are at an early stage and are one of several being considered. However, the news is likely to raise eyebrows across the City with Admiral’s shares having fallen heavily in recent months. A case of who’s next?

So me hearties, let’s observe this “rum do” as they set sail on a steady course for berating personal injury lawyers, stigmatising their clients, perpetuating the myth of a compensation culture and,

oh yes,    …becoming personal injury lawyers themselves??

Can all this be about profit and an attempt to make a flawed business model work? Well, it’s not quite “Neverland”, but you can see it on the horizon, allegedly…

 

 

If you want to deliver legal services but can’t be bothered meeting clients, then perhaps you too could become an ABS…

At a time when many lawyers don’t even want to be lawyers, we ask the question “what is driving the demand for Alternative Business Structures?”

Today, legal expenses insurer DAS has taken the next step in its preparations to become an alternative business structure (ABS) by acquiring online legal services company Everything Legal.

Do they really want to be lawyers or do they want to target the soft underbelly of the legal services market – ‘the low-hanging fruit’ as they see it – and leave the tricky, problematic and challenging lawyering stuff to local firms who employ qualified solicitors? 

We have seen Amanda Holden wax lyrical on Good Morning recently as she ‘helpfully’ and uninvitedly highlighted the evils of High Street law firms whilst extolling the as yet unproven virtues of her new employers.

These would be the very same employers who are relying on said High Street firms signing up for their new franchise in order to deliver legal services in towns and cities the length and breadth of the UK.

Will the public get a better service because law firms have a shiny new sign above the door?

Are the public THAT gullible?

There are quite a few legal brands jostling for position in a market they claim is ripe for re-structuring. They claim that the public have been ripped-off for years by unscrupulous, money-grabbing shysters who fleece their clients and pocket fat fees for old rope.

However, the truly ‘ironical bit’ is that they actually think that their brand new brand will instantly engender client loyalty and referrals as they seek to deal the ‘coup de grace’ to local solicitors…by positioning themselves as trusted legal advisors.   

The mixed message that these brands must sell is this:

“Existing lawyers bad – new lawyers good.”

As for the big beasts in the jungle, aka the ‘supermarket sweepers’, whose legal services business model is predicated on hoovering up everything that they think they can plaster their brand across – AND DELIVER AS CHEAPLY AS POSSIBLE… 

can the public trust the lawbreakers when it comes to upholding their legal rights? 

Sorry, we know that this might sound a bit petty and small-minded and self-serving or even insular and parochial, but actually we don’t wish any of them well in their endeavours.

Why?

Easy one this…

It’s because we and firms like us the length and breadth of Britain are the best legal services option for the British public. 

Experience, expertise and empathy with a client’s case go a long way to reassuring people that solicitors have their best interests at heart.

When all is said and done, in the brave new world of ABS, is the public going to be any the wiser about how to choose a lawyer? 

On 24th November, the legal sector’s consumer watchdog warned that voluntary quality
marks should not be made mandatory to access part of the market as this could ‘usurp’ the role of regulators.

Elisabeth Davies, chair of the Legal Services Consumer Panel, said:

‘Consumers tell us that specialist expertise is important to them when choosing lawyers.However, in their current form, some voluntary membership scheme claims that their members are better than the market average just can’t be relied upon by consumers.’

The watchword for the public here is ask for a personal referral from family and friends and / or trust the tried and tested specialist legal regulators.

Despite the blurb, do not rely on a ‘flag of convenience.’  

Lord Young of ‘Gaffem’ back in favour at Number 10

Good news and bad news for worker safety in the UK

Bad news: Lord Young is back

Good news: there is no good news, well not much anyway… 

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‘Never had it so good’ peer Lord Young of Graffam returned to Downing Street last week on Prime Minister’s Mates’ Service or PIMMS… 

His mission, having chosen to accept it, is to help businesses thrive by ridding them of red tape and stifling health and safety regulations.

Thus a fundamentally flawed premise is enshrined in the noble Lord’s brief – Health & Safety costs money and costs jobs.   

In stark contrast to the UK’s government’s stance on health and safety in the workplace, David Michaels, assistant secretary of labor for the US Department of Labor’s Occupational Safety and Health Administration (OSHA), said on 15th February this year:

‘Despite concerns about the effect of regulation on American business, there is clear evidence that OSHA’s commonsense regulations have made working conditions in this country today far safer than 40 years ago when the agency was created, while at the same time protecting American jobs.’

Unfazed by the irony in resurrecting Lord Young’s career in the run up to Halloween, Number 10 officials have set up a new office for the 79-year-old peer who will spearhead a new push to remove barriers to growth for small and medium size companies.

His focus will be on working to ensure businesses are not stifled by regulation and he will look closely at the way health and safety rules impact on firms.

No agenda there then?

Last year his report Common sense, Common Safety, was welcomed by Mr. Cameron who has asked the Conservative peer to cut through the rule book and see where ministers can help businesses.

Unfortunately neither Mr. Cameron, the insurance industry lobby nor the bulk of commentators who regularly line up to vilify accident victims actually noticed that Lord Young didn’t agree with them…

For the record, this is what he said on page 19 of ‘Common Sense, Common Safety’:

Britain’s ‘compensation culture’ is fuelled by media stories about individuals receiving large compensation payouts for personal injury claims…

The problem of the compensation culture prevalent in society today is, however, one of perception rather than reality…

The public believes that the number of claims and the amount paid out in damages have also risen significantly.

The really unfortunate thing however is that Lord Young singularly failed to get this ‘common sense’ message across.

He wrote that the compensation culture is more myth than reality yet he remained mute and supine on the core issue when the report’s findings were made public. Perhaps this is why he is so suited to the task of fixing the non-problem of the ‘burden’ of Health & Safety legislation? 

Last November Lord Young of Gaffem pronounced:

For the vast majority of people in the country today, they have never had it so good ever since this recession – this so-called recession – started…”

We await with baited breath, his magisterial musings on the tiresome burden imposed by laws designed to keep people safe and well at work in the UK.

However, Mr. Cameron has clearly decided Lord Young has served his time and will welcome him back…just when we thought he had gone for good last October…  

 So farewell then Lord Young of Gaffem. 

 You resigned after you made a gaffe.

 You claimed that most people had ‘never had it so good.’ 

 Unfortunately this just isn’t true,

 Like much of your ‘Common Sense Common Safety’ review.

 Adieu.

But not so fast, the prodigal returns.

Expect many more workplace cuts, crushes, crashes and burns.