We can still take One Off ATE Applications
The CFA must have been signed on or
before March 31st 2013
Any offer of ATE cover will still have the benefit of being fully deferred to end of case. The premium will still be recoverable from the opponent and will not be paid for by you or the client.
Law firms are rallying around a campaign to warn the government that 100,000 jobs across the legal services industry will be lost over the next year as a result of its “savage” civil justice reforms, Legal Futurescan reveal.
The ‘Save the Legal Industry’ campaign said law firms are already making layoffs and going bust ahead of the changes, with non-legal staff such as secretaries and administrative staff bearing the brunt – a situation that increasing the small claims limit for whiplash cases from £1,000 to £5,000 will exacerbate severely, it predicted.
Highlighting the “human toll” of the reform programme, it accused the government of ignoring the widespread impact of the changes across the sector, including claims management companies, medical reporting agencies, credit hire companies and others.
Following a meeting of managing partners in Manchester last week, well-known personal injury firms such as Amelans, Antony Hodari, Fentons, Jeffries Solicitors, Tollers and Gorman Hamilton have all backed the campaign, which is headed by Martin Coyne, managing partner of Manchester-based Ralli.
The campaign aims to gather at least 10,000 names on a petition that will be delivered to 10 Downing Street next Thursday, just four days before the Legal Aid, Sentencing and Punishment of Offenders Act 2012 comes into force. This would require the government to issue a response to the petition; 100,000 signatures triggers consideration of a parliamentary debate. (Pending approval of the government e-petition, you can sign here.)
Mr Coyne said he has already had to make a fifth of his 85-strong personal injury department redundant as he contends with a likely 33% reduction in turnover because of the new portal fees. “I am doing everything I can to sustain the business. A lot of other firms are in the same boat.”
He continued: “The ultimate aim of the reforms, according to the government, is to reduce car insurance premiums. But the likes of Direct Line have already admitted that they will make no difference. What’s left is an attack on the economy at a time when the country can afford it least.
“Where do David Cameron and Chris Grayling think this many people will be able to find new jobs? In pandering to the wishes of the insurance lobby, this government will imperil many families and only end up increasing the welfare bill.”
Mr Coyne said he and his colleagues were taking up the cudgels because solicitors had been badly let down by their representative body. “The Law Society should have been at the forefront of this fight, but instead they’ve sat back and left it to others. This shameful inaction should have the same kind of consequences it is having for those it purports to represent, and so we call on the leadership of the Law Society to take responsibility.”
Others to have signed up to the campaign include law firms Russell & Russell, Beers, Edwards Hoyle and The Clarke Partnership, as well as Cobden House Chambers and after-the-event insurance company Keystone Legal.
By Neil Rose
Source: http://www.legalfutures.co.uk/latest-news/exclusive-save-legal-industry-campaign-warns-cameron-100000-jobs-losses-2
Applications for after-the-event insurance may miss the 1 April Jackson deadline if they are not made by next Monday, brokers have warned.
Commercial litigation broker The Judge has written to all solicitor clients warning of a backlog of files set to slow down the system in March.
Any ATE insurance taken out after 1 April will not be recoverable from the losing defendant, meaning firms are bundling several applications together in a bid to beat the deadline.
In a letter to solicitors sent last week, Hannah Lee-Davey, head of professional negligence applications for The Judge said: ‘We strongly urge that any outstanding applications are made by Monday, 4 March, as underwriters are already inundated with late referrals.
‘Indeed, given the large volumes of cases already being processed by insurers, it cannot be guaranteed that even applications made by this date will be assessed in time.’
James Delaney, a director of the firm, said lawyers were sending up to four applications each at a time and that demand had been ‘unprecedented’ in the past month. But with so little time before the Jackson reforms come into force, he said some would not be processed before 1 April.
‘We think some clients are going to miss the deadline and say they were not suitably advised,’ he added. ‘There will be cases that might have gone ahead prior to 1 April that will too expensive, and there could be negligence claims that come in after 1 April.’
Daniel Morris, director and co-founder of ATE insurer Box Legal, agreed that solicitors could face claims from clients if they have not acted quickly enough to process insurance.
He said his firm was advising the 250 practices on its panel to ‘check their cabinet’ and make sure everything is insured with sufficient limits for completing the case.
‘We can accommodate new business up to the day before and we’re open the weekend before 1 April to allow people to make their cases,’ he added.
Source http://www.lawgazette.co.uk/news/time-running-out-ate-beat-jackson?keepThis=true&TB_iframe=true&height=650&width=850&caption=News+%7C+Law+Gazette
Claims management companies (CMC) made more than £7.4m from UK consumers claiming compensation for mis-sold payment protection insurance (PPI) in 2012.
Figures from the Financial Services Compensation Scheme (FSCS) revealed that of 19,000 claims submitted over PPI last year, 59% came from CMCs.
The number of claims made via CMCs has fallen since 2011, when 76% were made by such firms.
The average payout to those making their own claim in 2012 was almost £4,895, compared to £3,837 to those who used a CMC.
With CMCs taking an average of 25% of compensation, the average claimant pays almost £960 of their compensation to the firm they have used to make the claim.
Since 2008 consumers making PPI claims have paid upwards of £22m to CMCs.
Mark Neale, chief executive of the FSCS, said: “Claims management companies take a sizeable chunk of any pay-out. Consumers who make a claim directly to FSCS keep every penny of their compensation.
“Some people may prefer to use a claims management company, but it is important that they understand the charges from the outset and are happy to pay them.”
He added: “Making a PPI claim to FSCS is free and simple. We have a dedicated customer services team to help guide claimants throughout the application process.
“Once it has been submitted, people will be contacted if FSCS needs any further information to process the claim.”
AFTER THE EVENT INSURANCE CAN BE PURCHASE FROM CASE FUNDING LIMITED
Read more and Source: http://www.insuranceage.co.uk/insurance-age/news/2241823/cmcs-pocketed-gbp74m-from-ppi-claims-in-2012#ixzz2KEUxn3XA
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Elite Insurance, one of the UK’s largest, leading ATE insurers has described the latest attempts by Sabre Insurance Company Limited as scandalous to deprive claimants of the ability to pursue personal injury claims with the protection of After the Event Insurance.
Elite has been sent a copy of a letter from Sabre dated 23 January 2013 which, astoundingly, is sent directly to the claimant as well, encouraging the claimant to cancel any After the Event insurance policy as well as any CFA [success fee] in return for an increase in general damages of 10%.
Elite Insurance considers this mere cost saving exercise is, in fact, extremely detrimental to the claimant’s prospect of settling their claim on the most favourable terms, having been funded by a CFA and with the protection of an After the Event insurance policy. Indeed, it is evident that there will be a vibrant After the Event insurance market post commencement of LASPO, as there are still numerous litigation risks including Part 36 and disbursements on discontinuance as well as defendant behavioural risks.
Chief Operating Officer of Elite Insurance, Russell Smart, commented:
“The After the Event insurance market has seen a number of dirty tricks campaigns by liability insurers over the last thirteen years, but this has gone beyond the principle of a level playing field and claimant solicitors should be aware that by cancelling an ATE policy will leave the client exposed and in a very weak position in terms of negotiation. In fact, as the majority of road traffic accident claims are settled well below £3k, a 10% increase of £200 – £300 in damages will clearly be less than the success fee and ATE premium that is recoverable. Therefore it is clear as to why Sabre insurance is taking this approach. By then leaving the claimant without costs protection they will inevitably settle their claim on less favourable terms in any event. So this presents a ‘win win’ for the insurer.
We are certain the FSA will consider these practices to be inappropriate and unacceptable and we await their comment in this regard…”
Will the two concessions made yesterday on the legal aid, sentencing and punishment of offenders bill be the start of many, or will they prove to be a false dawn for campaigners against the bill?
With the bill reaching its crucial report stage in the Lords on Monday – and government defeats a distinct possibility – its opponents are making a final push on on both the scope of legal aid and the plans to abolish no win-no fee (properly known as conditional fee agreements or CFAs).
Though legal aid remains the chief focus, and social welfare law in particular, the implications of part 2 of the bill – which are based on Lord Justice Jackson’s review of civil costs – are beginning to sink in too. The core element of the latter is that claimants will have to pay their lawyer’s success fee out of their own damages and the after-the-event (ATE) insurance premium that covers them for the risk of losing and having to pay the other side’s costs. Currently, the losing defendant pays them.
Clinical negligence is an area where the two overlap, as most cases are brought under CFAs already – and the rest will be in future, except for the narrow (if significant) category of serious obstetric cases that were yesterday brought back within the scope of legal aid. A Lords vote on bringing back clinical negligence as a whole is likely and Peter Walsh, chief executive of patients’ charity Action against Medical Accidents, says he is “cautiously optimistic” that it will be won.
But before anyone gets too excited by either this concession or the prospect of more, there is a sting in the tail. The government announced last year that it would establish a supplementary legal aid scheme (SLAS), which will take (or rob, as Walsh puts it) 25% of the damages of anyone bringing a civil claim with legal aid. The SLAS has been largely forgotten in the debate; its stated aim is to ensure equality with the new rules for CFAs, which will limit solicitors from taking more than 25% of a claimant’s damages as their success fee.
The difference, however, is that the latter is an upper limit rather than a fixed amount, and competition is likely to push percentages down. So would someone with a clinical negligence claim be better off on a CFA even if legal aid is available? Walsh says it is important that there is a choice, while legal aid would also ensure cases receive funding for the crucial investigative stage. “A decision could be made later whether to continue on legal aid or switch to a CFA,” he says. “Without legal aid to cover the investigation of very complex and borderline cases, many clients may be unable to get a solicitor to take them on under a CFA.”
But might anything else happen over part 2? Earlier this week, the Law Society, the Association of Personal Injury Lawyers and the Motor Accident Solicitors Society agreed a compromise position on the Jackson reforms that they will put to the government and parliament. Though all are fundamentally opposed to the reforms, it was a recognition that the government is determined to push ahead with them, and represents an attempt to make the best of what they see as a bad job.
The question is whether the government has any interest in listening. And do peers feel as strongly about part 2 as they do about part 1? I sense hope, rather than optimism. But Lord Justice Jackson himself has always touted his reforms as an interlocking package and the way in, possibly, is through an element of it which is reportedly causing problems behind the scenes: qualified one-way costs-shifting (QOCS).
QOCS means that in personal injury cases a claimant will not be at risk of paying the other side’s costs if they lose; the aim is to do away with the need for ATE insurance. However, the Q of QOCS is the difficult bit – this is meant to provide exceptions to the rule where a claimant has conducted the case unreasonably, or where they are wealthy. By all accounts, finding a way to make this work in practice is proving very tough, compounded by fears that any uncertainty could mean that claimants will still need to take out ATE insurance, just in case. This is part of the reason why implementation was put back six months to April 2013. Campaigners hope that if one piece of the Jackson package needs to be rethought, then the door will open for other amendments.
ATE insurers are also unhappy. In a joint statement released today, 10 leading providers complain that they have been ignored throughout the process and argue that the changes will actually increase costs because the likes of the NHS and local authorities will not be able to reclaim their legal fees when they win cases. ATE premiums could also eat up claimants’ damages, while the future of much of the industry is under threat; the companies say that unless some form of ATE premium recoverability is preserved, “access to justice will be significantly affected” for both personal injury and non-personal injury cases.
This is pretty technical stuff, and a worry among campaigners is that many peers will not be sufficiently up to speed to press the government. However, they have already shown themselves to be more interested in the fact that several very significant changes – such as the SLAS, QOCS and the planned 10% increase in damages – will not be on the face of the bill, a key demand from the likes of the Consumer Justice Alliance.
Andrew Dismore, who runs the Access to Justice Action Group, does not expect much from a “government playing hardball”, but observes that even once the bill becomes law, there will still be opportunities to influence how it is implemented. “We have to play to the final whistle,” he says.
Neil Rose is the editor of www.legalfutures.co.uk
The Conservative justice minister piloting controversial plans to cut legal aid and curb payouts that could benefit the insurance industry to the tune of a billion pounds a year will personally profit from the changes, a Guardian investigation can reveal.
Jonathan Djanogly, the legal services minister, is pushing a bill through parliament which will attempt to slash the budget for legal aid by £350m as well as forcing claimants to pay out of any awarded damages their lawyers’ success fees and insurance policies that cover court costs. Experts say this will benefit the insurance industry by at least “hundreds of millions of pounds”.
The Association of British Insurers admits that industry will benefit from the reforms – and if Ireland’s experience is any guide the proposals in the legal aid, sentencing and punishment of offenders bill offer a chance to cut premiums by 16%.
Djanogly, who is considered to be one of the 10 richest MPs with interests in a property, a string of stockmarket investments and a Scottish forestry portfolio, also has a personal stake in the insurance industry.
In the Commons register of members’ interests, he lists that he is a “minority partner in The Djanogly Family LLP (member of Lloyd’s)”. This means he takes one sixth of the profits from an Lloyds underwriting partnership that deals in accident, health and motor claims.
In the past three years Djanogly has been entitled to an average annual payout from the underwriters of £41,000. In 2009 Djanogly was eligible to almost £97,000 from the profits of the partnership – more than his current ministerial salary of £89,000.
The ministerial code, issued by the Cabinet Office when the coalition took power last May, clearly states: “Ministers must ensure that no conflict arises, or could reasonably be perceived to arise, between their public duties and their private interests, financial or otherwise.”
Labour said the only people arguing for these changes “are the insurance industry and Conservative ministers”. Andrew Slaughter, the shadow justice minister, said: “There are serious questions for the minister to answer. It would be a serious matter if the minister were pursuing legislation from which he might benefit financially.”
Djanogly issued a statement to the Guardian. “My financial interests are a matter of public record. I have made declarations both as a minister and as an MP.
“The government’s reforms to the no win no fee system are designed to tackle the fear of a compensation culture which inflates legal costs and forces defendants to settle even when they know they have done nothing wrong. The reforms are based on an independent review by Sir Rupert Jackson.”
Lord Justice Jackson, an appeal court judge, was tasked to look at curbing litigation costs by the former master of the rolls, Sir Anthony Clarke. His report was produced in January 2010 and Labour declined to endorse it.
However the coalition has accepted almost all of the controversial recommendations and went further by cutting back on legal aid, something that Jackson has publicly criticised.
In a lecture in Cambridge earlier this month Jackson challenged the government’s plans saying: “The cutbacks in legal aid are contrary to the recommendations in my report. I do, however, stress the vital necessity of making no further cutbacks in legal aid availability or eligibility. The legal aid system plays a crucial role in promoting access to justice at proportionate costs in key areas.”
Legal experts say Jackson’s radical change breaks with “centuries of English legal tradition” where payouts are meant to reflect injuries not the cost of a case. The UN has warned that the reforms will prevent claims, such as those in the Trafigura case, where solicitors took the case on a no win no fee basis on behalf of 30,0000 poor Africans, being brought against multinational businesses. The settlement of £30m made by the commodity trader was seen a landmark in global justice.
Ken Oliphant, current on secondment from Bristol University to head up the Institute for European Tort Law of the Austrian Academy of Sciences, told the Guardian: “Insurers around the world are trying to put pressure on governments to save on liability costs. You have to understand that legal aid was cut and no win no fee arrangements were meant to replace them, to allow people access to justice.
“If you remove that right then you will not allow ordinary people to have access to justice. If they have to pay for legal costs out of damages it may not be worth going to court.”
Since having been selected for Huntingdon, the safest of safe seats, after former prime minister Sir John Major stepped down, Djanogly, 46, rose through the ranks of the Tory party to sit on the justice team. Privately educated and with a law degree from Oxford Polytechnic, Djanogly was a partner in a City law firm until 2009.
He faced calls last year to step down for hiring private investigators to spy on local Conservatives while mired in the parliamentary expenses scandal. Djanogly’s father Harry is the founder of Coats Viyella and reputed to be the owner of the world’s largest collection of Lowry paintings.
Source: http://www.guardian.co.uk/politics/2011/sep/16/conservative-mp-legal-aid-cuts
The present proposals by the Ministry of Justice to abolish the recovery by successful claimants of the success fees on “no win no fee” libel and privacy cases and the recovery of “after the event” (ATE) insurance premiums represents a damaging and dangerous attack on access to justice for ordinary citizens of modest means.
Inevitably these reforms will irrevocably shift the balance of power to an even greater extent in favour of large media corporations (often foreign owned) as against the individual. Fewer lawyers will be able to take the risk of acting on “no win no fee” agreements. The ATE insurance market in this area of the law will disappear.
These reforms are contained in the legal aid, sentencing and punishment of offenders bill 2011, which has already had a second reading in the House of Commons and is in danger of being passed without proper scrutiny or debate. MPs may not fully appreciate the implications of these changes for their constituents, conditioned as they are by the incessant media contention that the libel and privacy laws are the plaything of undeserving celebrities and footballers.
Instead of the loser paying as now, the successful claimant will have to fund a significant proportion of his or her own costs out of any damages – and contrary to common perception damages in libel and privacy cases are generally very modest. The absence of ATE insurance will prevent most claimants from taking action against the media, unless they are willing to risk their home and face bankruptcy, in the event the case is lost. That suits the tabloid press, because there will be no remedy for the ordinary individual – a great saving to media corporations but at great cost and a terrible injustice to the public. Libel and privacy claims will once again become the preserve of the very rich.
These changes are being pushed through at a time when the behaviour of the tabloid press is under unprecedented scrutiny focusing on allegations of phone-hacking and the devastation caused to many individuals’ lives by privacy invasions and fabricated stories. Many are concerned that what is presented as a battle for freedom of speech is really about preserving the profits of large media organisations.
The events of the last few days have changed the landscape and matters have been reported which parts of the press would prefer to have remained buried.
With all the furore generated, parliament will be debating a number of issues in the near future, including:
â The phone hacking scandal
â Libel law reform
â Privacy law reform
â The use of so-called superinjunctions
â Civil court funding and conditional fee agreements
Of all these issues, the last (which looks the most dull) is in fact the most urgent and serious and reforms will have the most dramatic effect if parliament gets things wrong – by taking the media campaign line –and following the Jackson proposals.
For many years now, ordinary individuals have had access to the courts (free of charge, and at no cost to the state) in publication proceedings, through the use of conditional fee agreements (CFAs).
There are many examples of individuals who have benefited from using CFAs. These include:
â The parents of murdered schoolgirl Milly Dowler
â Most of the claimants in the phone-hacking litigation
â Kate and Gerry McCann
â A Muslim bus driver, falsely accused by The Sun of forcing his passengers off his bus so that he could pray and which implied that he might be a terrorist. Included grossly intrusive photographs and (online) video footage of him at prayer
â The senior social worker in the Baby P case falsely accused in The Sun newspaper in 80 articles of being “criminally negligent” with regard to her care for Baby P
â A Danish radiologist sued by US conglomerate GE Healthcare over allegations concerning one of its products
â A comprehensive school teacher, falsely accused in an internal memorandum of inappropriate contact with female pupils
â A taxi driver whose photograph appeared in The Sun newspaper, falsely depicting him as a convicted paedophile
â A charity falsely accused by the Daily Express of improper use of charitable donations
â An unemployed woman falsely accused by a regional newspaper of attempted murder
â A local councillor (disabled and on incapacity benefits) who suffered serial libel and harassment over several years by a multi-millionaire businessman who accused her of theft and corruption
â A management consultant whom a local newspaper falsely alleged had been accused of raping a child
â A junior PR worker whose privacy was grossly infringed when the Evening Standard published a photograph of and named her, wrongly stating that she had been raped
â An unemployed man who was the subject of false statements on ITV concerning a medical condition
â An army officer falsely accused by The Guardian of being responsible for the abuse of prisoners
â Elaine Chase, a community nurse falsely accused by The Sun of hastening the deaths of 17 terminally ill children by over-administering morphine
â A family whose son’s suicide was invasively reported in a national tabloid
â Families of soldiers killed on active service, whose phones may have been hacked at a time when they were grieving for their loss
None of these individuals would have had access to the courts before the reforms of the Access to Justice Act 1999 which encouraged the use of CFAs to relieve the state of the burden of providing legal aid funding.
Until the last week or so, the press has been getting away with claims that our privacy laws are simply made up by judges against the will of parliament and our libel laws are a joke. Recent developments mean that few now hold those views or at any rate are prepared to print them.
Recently, three costs judges in the senior court costs office commented: “…The CFA has undergone many changes and improvements since implementation. Having taken a decade for these to have been achieved, now is not the time to make radical changes which give no guarantee that access to justice at reduced cost will be delivered” and said many of Jackson’s proposals – most of which have been adopted by the MoJ were “inappropriate”.
Other opposition from the Law Society and Bar Council has been ignored by the MoJ.
CFA costs have, of course, been a big press target. A CFA enables a lawyer to conduct a case without charging their client any fees, recovering their costs from the losing party only if they are successful. According to the usual rule the loser pays, and must pay the success fee. The lawyer takes the risk (which can be substantial) that if his or her client does not win, then he or she will not be paid. This imposes a natural filter on the claims which are pursued. They tend to be cases with good merits and prospects of success.
But for CFAs many cases of media abuse (the recent phone-hacking scandal being the major and current example) would not have been exposed. Some newspapers have a habit of dragging out cases for years to deter individuals from pursuing claims, taking advantage of the vast disparity in resources between the press and the claimant. In the phone-hacking scandal it took the News of the World four years to admit the scandal was not limited to just one rogue reporter. It did so only when it was faced with overwhelming evidence obtained through civil court action largely funded by lawyers acting for clients under CFAs.
There are already strict controls on costs through the courts (as the costs judges have rightly said) and there is no justification for implementing the government’s interpretation of the Jackson costs proposals in publication cases, as these will have devastating impact on access to justice.
There is now common agreement that the Press Complaints Commission in its present form has failed, some regard it as a “toothless poodle”. It will be some time before the PCC is replaced with a body which can address any of these issues.
Lawyers acting under CFAs currently provide the only effective form of regulation against press abuses for the individual of modest means, ie for holding to account serious abuses by the press of their considerable power.
Unless and until there is proper independent press regulation in place, CFAs and the availability of ATE insurance must be preserved and the legal aid bill must be amended.
Steven Heffer is chair of Lawyers for Media Standards and head of the defamation and reputation management team at Collyer Bristow LLP
Original Article: The Guardian
Following the Jackson review of costs in England and Wales, the Scottish government has launched its own review of expenses and funding of civil litigation north of the border. This review was one of the measures recommended by Lord Gill’s Report of the Scottish Civil Courts Review, which was published in September 2009.
It began in May 2011 and will be headed up by former Sheriff Principal of Glasgow & Strathkelvin, James Taylor. It is anticipated the review will last for approximately 18 months.
The intention is that this should compare the Scottish expenses regime with those of other jurisdictions. It is anticipated that many of the issues that arose in the Jackson review will be considered. In particular, the review will consider issues in relation to the affordability of litigation, the barriers that prevent access to the courts for some, the recoverability and assessment of expenses and different models of funding litigation.
The latter topic will include discussion of contingency, speculative and conditional fees. It will also address before and after-the-event insurance plus referral fees from case management companies. At the moment several of these issues â including conditional fee arrangements â do not exist in Scotland. However, the review will also consider whether it would be advantageous to introduce them.
It will also explore the extent to which alternatives to public funding may secure appropriate access to justice. In particular it will focus on the availability or otherwise of legal aid to those involved in civil disputes.
In addition, the review will investigate the reasons why, historically, parties have chosen not to litigate in Scotland and how, going forward, modernising the expenses regime there may assist in encouraging confidence in the Scottish judicial system.
In undertaking the review, Sheriff Principal Taylor intends to consult widely. A reference group including academics, solicitors, advocates, insurers and the legal services agency has been appointed to assist in formulating recommendations.
Speaking at Simpson & Marwick’s Glasgow conference on 2 June 2011, he actively encouraged anyone with an interest or a view on any of the matters to be discussed, to contact him with their views.
Duncan Batchelor is a partner in the Edinburgh office of Simpson and Marwick
Original Article: Post
Former Home Secretary Jack Straw has called for a ban on the ‘racket’ of insurance companies selling details of personal injuries to ‘ambulance chasing’ claims management firms.
The Labour MP for Blackburn began investigating the situation in Blackburn, Lancashire, after being contacted by constituent Phil Riley.
Mr Riley complained to Mr Straw that he was ‘bombarded with texts and personal calls’ from claims management firms following a minor ‘fender bender’ in which he suffered no injury. His details had been sold to the firms by his insurance company.
Mr Straw said the selling of details was the insurance industry’s ‘dirty secret’ as premiums continue to rocket because of a rise in injury claims.
Insurance companies admitted that they themselves sell on clients’ details to personal injury firms for between £200 and £1,000 a time. Mr Straw said the cost of personal injury claims had doubled to £14billion in just ten years.
Last month, This is Money reported that the UK is now the ‘whiplash capital of Europe’ and premiums have risen by 40% in just one year as fraudulent claims continue to drive up insurance prices.
The cost of treating whiplash to the NHS is £8million, but the cost of related claims to the insurance industry is £2billion, Mr Straw added. This cost is then passed on to customers in the form of higher premiums.
Following contact from Mr Riley, Mr Straw went to see two major insurers who admitted selling customers’ details.
Mr Straw branded the system ‘a racket’ and called for regulation to prevent insurance companies from profiting from the initial sale and again from higher premiums.
He said: ‘This is not a system. It’s a racket. The quicker it’s ended, the better it will be for the law abiding motorist.
’Motor insurers themselves are amongst the major traders in personal information about those involved in accidents, in return for which they receive referral fees.
‘This information is then used as a platform for claims against the self-same insurance companies.’
The number of claims companies has doubled over the last two years to 3,400. Mr Straw wants their high pressure sales techniques and ‘referral fees’ of selling customers’ details to be banned.
He said the north west has ‘particularly high concentration of claims companies’ who ring and text people saying they could earn thousands of pounds by claiming whiplash and other injuries suffered in a crash.
This practice has driven up premiums for East Lancashire motorists to an average of £1,700 for a 25-year-old and £800 for a 50-year-old, Mr Straw said.
The MP has branded the impact on people of within East Lancashire as ‘unfair and discriminatory’ and has called for an overhaul of the system.
He is proposing outlawing referral fees and an overhaul of the no-win-no-fee system, as well as changing the law on whiplash damages to require a stricter burden of proof.
Mr Straw also wants a clampdown on the trade in personal data and tighter regulations of claims companies.
Nick Starling, a director general for insurance at the Association of British Insurers, welcomed Mr Straw’s call for referral fees to be banned.
He said: ’It is not right that people take cash for tipping off lawyers about accidents which fuel personal injury claims, driving up costs for all motorists.
Original Article: The Daily Mail
