First up, I'd like to talk about pre-medical offers, or, as the insurance industry calls this practice, 'third party assistance'.
Third party assistance happens when insurers make direct contact people who have potential claims. According to the Association of British Insurers (which has a code for its members on the practice), insurers contact people in this way for benign reasons. As the ABI put it in 2009, in a statement which is still on its website and therefore must be taken as policy:
Legal rights? Or legal wrongs?
"If an insurer contacts an injured third party it will be to ensure that they get fair compensation and the best possible rehabilitative care more quickly than through the legal process. In doing so, insurers will ensure that the person is fully aware of their legal rights and options.
"The FSA's guidance, combined with our own code of practice which we will be publishing shortly will ensure that claimants get the best possible deal as quickly as possible. It will also reduce legal costs, which all customers end up paying for through higher premiums."
Not to put too fine a point on it, this is ridiculous. Third party assistance only ever renders justice and better rehabilitative care inadvertently. Its sole aim is to buy off claims before the injured person instructs a lawyer.
Despite the Law Society's recent 'Don't Get Mugged By An Insurer' campaign, not to mention criticism in parliament (MPs, when appraised of the practice of third party assistance, were aghast), insurers have carried on regardless. This was abundantly clear to me following a number of discussions with practitioners at last week’s Motor Claims conference.
The reality of third party assistance
Let's be clear about the reality of third party assistance. If conducted skilfully by an insurer's representative, it means that an injured person's claim is settled in the absence of a medical report as to the extent and ramifications of the injuries - and before legal advice has been obtained.
This cannot be right - and available data reveals just how unjust it is. The Law Society has demonstrated that people who seek a solicitor's advice receive two to three times more compensation than those who accept an insurer's first offer. Moreover, a survey of APIL members in August 2013 showed that overall 25% of respondents indicated that insurers make pre-medical offers in up to one fifth of all claims. Given that in 2012/13 there were 1,048,309 claims (as detailed by Compensation Recovery Unit annual statistics), this means that over 200,000 injured people would be subject to a pre-medical offer.
Moreover, the continuing practice of making low pre-medical offers fuels the very 'compensation culture' that insurers would have us believe exists. A member of my own firm tells a classic story, in which she was contacted by an insurer within a day of having been in an accident. Fortunately for my colleague, neither she nor her son had been injured - and yet the insurer was straight on the phone, making an offer to settle a claim she might contemplate bringing, for a sum in the region of £3,000.
Given that insurers themselves do this, is it any wonder that people might start to have an eye for what they can get out of an accident?
The fact is that an injured person should be encouraged to seek independent legal advice after an accident. Medical evidence is invaluable in assessing the extent of that person's injuries, and should be obtained. It's disingenuous for insurers to contend that they're helping people - 'holding their hands that little bit more', as one insurer put it. Third party assistance, pre-medical offers, whatever you want to call it - the sole aim is to pay a claimant as little as possible. The ABI should adopt greater transparency, admit this and ensure that its members end the practice as soon as possible.
Next time, I'll discuss something else that doesn't bear scrutiny - the idea that whiplash claims continue to rise.
**The above piece was also published in The Law Society Gazette 11th March 2014**