Legal Expenses Insurance, Motor Legal Protection, and the practice of insurers allocating you a solicitor after a road accident is a topic we regularly cover as an independent firm that refuses outright to get involved in this practice. We have been advising people about the downfalls of letting your insurers refer a solicitor to you for years, and it now transpires that former Justice Secretary Jack Straw has done some investigation into the matter, and has spoken out against what he has labelled as the insurers industry dirty little secret.
Following complaints from his constituents, which Mr Straw followed up aand he has publically brought to light and blasted what he has termed as the “huge racket” of insurers passing on details to personal injury lawyers for extortionate fees; a practice we have been speaking out against for years. The BBC and The Guardian are currently reporting on the matter as we speak (http://news.bbc.co.uk/today/hi/today/newsid_9524000/9524476.stm), (http://www.guardian.co.uk/uk/2011/jun/28/jack-straw-insurance-customer-details).
The reports confirm that Straw has said that “the practice had driven a surge in no-win, no-fee claims this year which put up premiums – all with the insurers’ knowledge”. We often see the insurers complaining that personal injury claims are driving up premiums – as you can see, it’s the insurers themselves that are akin to this apparent problem.
We, as independent lawyers, will always maintain that claiming with an independent lawyer is your right to access the compensation you are legally entitled to have; which is covered by insurance premiums anyway. However, the reports coming to light this week are also confirming that “unscrupulous buyers began exploiting lax rules on proving “whiplash” injuries to drive a sharp increase in claims and payouts” according to headlines from The Guardian. It seems we are facing situations were insurers are so desperate to sell details to lawyer for claims, we are facing potentially fraudulent claims from pushy insurance companies.
Whilst whiplash is a real and difficult injury to live with (I know, I’ve still got mine!), people are trying to wrongfully cash in on it.
The figures that we have been disclosing about referral fees for years are now coming to light, with reports suggesting insurers could make between £200 to £1,000 per referral; a significant sum of money.
Investigations from Mr Straw brought him to the Association of British Insurers, and two of the UK’s largest insurance companies, whom admitted to selling on their own customers personal details to solicitors for profit.
An extract from an article hosted on Google from Mr Straw (http://www.google.com/hostednews/afp/article/ALeqM5jy2DtjyOX7wGbZ842heR68D_GqIA?docId=CNG.d0a782f2b3a81662d9e71b9df1267535.a1~).
“I went to see the Association of British Insurers (ABI), and senior executives of two of Britain’s largest motor insurers,” Straw wrote in The Times.
“I asked them. A long pause, a look of embarrassment, then one of these executives said: ‘This is the industry’s dirty secret. It’s we, the insurance companies, who sell on this personal information.’
“It is gobsmacking,” Straw said. “The insurers are complicit in something that is against their interests. In my view, what they are doing, in principle, is contrary to the spirit of data protection.”
The above, I believe, pretty much says it all.
Whilst insurers are probably the biggest complicit in the activity, reports have also confirmed the involvement of the police, breakdown and recovery firms, and other companies that can get hold of your details doing exactly the same thing: selling them to solicitors for a profit. We have been aware of this practice for some time; again, we refuse to be involved. We do get a lot of cold calls offering this service.
Claims management companies have also been addressed. These companies exist to simply pass details over to lawyers for a profit. They too add little or no value to claims, and are making a huge amount of money in passing the personal details of accident victims to lawyers for cash. Ever had one of those texts or phone calls claiming you could be entitled to thousands of pounds in compensation if you reply to them? Unless you’ve put your details in to a law firms website, it’s a claims company trying to fish for claims. I know this because it’s happened to me before – and this was before I had my accident in May this year!
But, returning to the issue at hand, I am personally glad that this has finally come to light. I have been advising people for years that this activity has the serious potential to limit your access to justice, and reduce the quality of legal services on offer.
Here are a few more extracts from the news articles for today:
BBC:
“…insurers pass on clients to accident managers who pipe the claim to an approved body shop and sell on personal injury claims to accident lawyers, often persuading them to take legal action the claimant had not considered. “
The Guardian:
“The car insurance industry is heading for the most almighty crash – and much of it looks to be self-inflicted, according to Jack Straw. The former justice secretary has lifted the lid on an industry that has been caught selling on the personal details of customers to claims-management companies and “ambulance chasing” lawyers.
If your car insurance premium has shot up this year, this is the reason why.”
OK – so it’s come to light that the insurance premiums increases can be attributable to the insurers themselves, and we know that there is a huge racket of middlemen and referrals that are making companies millions by passing on the poor victim’s details; but how does this affect you and your claim?
Well, apart from being pushed in to a particular solicitor, you end up with a lawyer that has wasted a large proportion of their budget on buying your case. This results in either a deduction from your payout, or a potentially poor service – and even a lower payout because your solicitor cannot afford to fight hard enough for your claim!
We will no doubt be returning to this story over the next few weeks; as an independent firm, we do not involve ourselves in referral fees, and we never pay middlemen or anyone for claims.
All of our clients come directly to us.
You do have the right to change over to another lawyer. So, if you have been unfortunate to have been caught up in this practice and you want to switch, please do get in touch.
