UK’s Justice Action Group Rebuts ABI’s Stance on Personal Injury Claims

September 6, 2011

The Access to Justice Action Group (AJAG) responded swiftly to the study and the bulletin published by the Association of British Insurers and a coalition of UK business groups, seeking to amend Britain’s personal injury laws through the passage of the “LASPO Bill.” (See above article)

AJAG Co-coordinator Andrew Dismore set forth the organization’s position in a strongly worded attack on the UK’s insurance industry as represented by the ABI. He described the organization as being in “overdrive in its well-financed campaign to blame the public, lawyers and the government for rises in insurance premiums: everyone but themselves.”

He accused the insurers of seeking to be “their own judge and jury,” adding that, contrary to the ABI’s position, “the present system protects claimants and ensures they receive what the law says they are entitled to, not what the insurance company says it is prepared to pay.

‘The government’s proposals promoted by the ABI will affect access to justice for up to 600,000 people a year,” Dismore continued. “The government acknowledges, in terms, that the winners will be the insurance companies (and their shareholders) and the losers will be claimants. The number of genuine claims will fall by 25 percent.”

He pointed out that the current “no win, no fee system that the ABI and Government want to abolish” governs more than the legal proceedings of people involved in auto accidents. It is often the main, if not the only, “recourse available to victims of breaches of privacy like phone hacking, those who have suffered from professional negligence, victims of asbestos poisoning, the families of those killed at work, consumers, small businesses, those seeking to recover debts, victims of medical malpractice, victims of environmental damage including from the developing world, people seeking judicial review of unfair official decisions, whistleblowers, and those acting in the public interest such as exposing scandals like MP’s [Members of Parliament] expenses. In their determination to cut the rights of road accident victims, the ABI would deny all these others their rights too.”

Dismore took specific issue with the ABI’s description of a developing “compensation culture” in the UK. He pointed out that “23 percent of road accident victims do not bother to claim and only 52 percent claim for an accident at work, even when they each know another person is to blame. The biggest barriers claimants identify are fears of legal costs and inadequate compensation levels, set to be made worse by the Bill.”

He also contested the ABI’s assertions that widespread fraud exists in the claims for personal injuries, noting that “only 12 in every 10,000 applications and claims” could be deemed fraudulent.

Dismore also pointed out that “the liability insurers have not indicated by how much they would reduce premiums, or even that premiums would be reduced at all, if the changes they demand are implemented. Indeed, there is evidence that premiums may actually increase. Insurance premiums have never gone down after a reform or major court victory in the insurance industry’s favor.”

He also defended the need for many insureds to obtain counsel in seeking recompense as “33 percent of claims need court proceedings to get a satisfactory offer. In 47 percent of cases, the insurers’ offer was inadequate; and 2 percent needed a full court judgment to get a fair sum. The Personal Injury Bar Association (PIBA) found that in 99 percent of 1349 cases where offers were made on the basis of the insurers’ computer model, the claimant beat the offer.

‘Cases only go to court when the insurers deny liability or refuse to pay adequate compensation,” Dismore continued. “The insurers have only themselves to blame for legal costs: if they accept liability and make early reasonable offers, then the costs are contained. As three senior costs judges wrote in response to the consultation: ‘the fault lies with defendants such as these and not with the recoverability regime as a whole.'”

Dismore defended the use of claims management companies (CMCs), which the ABI has said are “not needed because the public know where to go when they have a claim;” however, he observed, the insurance industry also blames the “CMCs for the increase in the number of claims.”

Turning to the subject of banning referral fees, Dismore stated that the “insurance industry’s dirty secret” is that they “make huge profits from referral fees themselves. Ancillary income including referral fees made up 54 percent of Admiral’s first half year UK motor profit before tax. Admiral Insurance Chief Operating Officer David Stevens said ‘banning referral fees is not a fundamental reform – it will not have that material an impact on car insurance premiums.'”

In conclusion Dismore took issue with the ABI’s position that reforming the system would result in savings for tax payers. He pointed out that “they have overlooked the losses to the tax payer. AJAG has calculated that the net cost to the NHS, even after allowing for any anticipated savings, will be almost £100 million [app. $162 million].”

In addition he stated: “As the Government acknowledge, the changes mean millions more for the liability insurers’ shareholders at the expense of individual claimants. There is a better way of controlling costs without losing wholesale access to justice. AJAG has produced a comprehensive package of proposals, set out in our main brief, which achieves this key policy objective.’

Source: Access to Justice Action Group

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