Crash for Cash - Panorama programme 11th July 2011


Very interesting programme on this week from the BBC Panorama team. They showed how the fraudsters in the motor insurance claims world scammed insurers out of millions each year by staging accidents.

These gangs are clever and resourceful. They rake in money for vehicle recovery / repairs / storage and then switch attention to the personal injury side of the business.

This kind of scam was first discussed on TV as far back as 1998 in a World in Action programme on ITV. At that time legal spy worked very much on the defendant (ie insurer) side of the fence and attended the Association of British Insurers HQ for a crisis meeting to discuss the strategy for dealing with these practices. What is extraordinary is that 13 years on the insurance industry is pretty much no further ahead and these gangs are still getting away with it.

The Insurance Fraud Bureau has made great headway in tackling some of the issues but generally the scammers are still winning.

The Panorama team also got stuck into whiplash claims generally saying they were a kind of "acceptable" cultural fraud  and that everyone now wants their slice. This is complete tosh ..... the majority of whiplash accident victims are very genuine. There are a minority of less convincing claimants but thats the law of averages for you.

People know their rights nowadays and have the t'internet to make legal enquiries. This boosts claim numbers considerably.

Oh and lets not forget that the insurance industry has recently been found out ..... selling on policyholders personal data to solicitors for big bucks. A practice defended by the ABI.

Interesting ..and downright hypocritical

PPI Claims: Should you go it alone?

There’s been plenty of scaremongering in the press in the past fortnight regarding the use of claims management companies for making PPI claims. We’ve already seen how the public can be taken advantage of by money hungry banks; my question is how can they now be trusted to repay what’s owed to their PPI claims customers if there are no legal officials involved? Although claims management companies do charge a fee for their services, like any professionals in their field they also have the tools to claim the maximum possible amount for those they work for. This includes financial knowledge and a thorough approach to investigating exactly what’s owed to clients in PPI compensation – many of whom might have taken out several PPI policies which they were unaware of. The likelihood of a lender drawing attention to these additional policies is slim, as it means they will be forced to pay out more in PPI compensation. Whereas this is not in the interests of a lender who has mis-sold PPI, it is in the interests of a claims management company – this is because they will only win money if you do too. 

PPI claims management companies are methodical in their approach and will challenge any offer of compensation which does not include the interest paid on a loan or overlooks a person’s borrowing history – in short, they tend to explore all angles when dealing with claims and this inevitably leads to claiming larger sums of PPI compensation for those involved.  

All this is sobering advice for those who are going without legal aid; there’s no evidence as yet that what the banks offer via the Financial Ombudsman Service is in line with what’s really owed to someone who’s been wrongly sold PPI, and plenty of evidence to suggest that if lenders can offer less, they will. Just how hard an already inundated body such as the FOS is going to work on behalf of someone making PPI claims isn’t yet clear and we don’t know what the fruits of their efforts will be on a grand scale. 

I would therefore be less worried about paying a fee to a trusted professional and more worried about attempting to go it alone and negotiate PPI compensation without legal advice. 

There is potentially thousands of pounds at stake for each victim of PPI mis-selling; why risk letting the banks win yet again?

The RTA Claims Portal: 1 Year On

Most readers will know that I was a vocal opponent of the RTA claims portal when it came into being more than 12 months ago. The portal is designed to be a simple mechanism entirely online that allowed both road accident solicitors and motor insurers to communicate via a database rather through expensive and wasteful correspondence which bogged everybody down. Effectively the plan was to turn simple road accident cases into conveyor belt processed claims.

At its inception in April 2010 it was frankly - a complete shambles. The system took at least 6 weeks to bed down. The IT didnt work, the training didnt happen, the industry wasnt prepared and it was very difficult to think of any positive things to say about the whole concept.

So 1 year into what I would call full on business workflow ...how are things now?

Well, I have to admit that this portal really isnt all that bad. Yes it has dumbed the industry down considerably, yes it has automated our world to a degree but the pro's far outweigh the con's in my opinion.

We are settling claims at the lower end much quicker - we are not having to deal with poorly trained insurer staff (because we no longer need to speak to them in most cases) and finally we are getting interim costs paid upon admission of liability which has injected cash into the business well ahead of settling the actual claim.

The IT works better and in fact has recently been upgraded.

All in all - things are pretty good in the RTA world and rumours of its demise were indeed grossly exaggerated.

The one bit of good news from the forthcoming No win No fee reforms

Part 36 Offers

Almost unnoticed in the furore caused by Ken Clarke's recent assault on No win No fee lawyers came the news that "Part 36 offers" are to be given more weight in litigated cases. Harking back to the early phase of the Woolf Reforms when insurers actually believed that P36 proposals mattered.

Clarke's proposals introduce two changes that act as enticements:

A defendant that does not beat a claimant's Part 36 offer is already liable to pay the claimant's costs on the indemnity basis and interest on those costs and damages awarded at a rate of up to 10% above base rate. 

Now though an additional costs sanction of 10% of the value of the claim will be paid by defendants who do not accept a claimant's Part 36 offer that is not beaten at trial. 

If a money offer is beaten at trial, even by a small margin, the costs sanctions under Part 36 will apply. This reverses "Carver" and ensures that the P36 mechanism remains a very useful tool in accelerating settlements.

Whilst not easily digestible by The Sun and other rags, it is nonetheless a significant part of the reform process and one that Legal Spy welcomes.

No win No fee witch hunt ... the winner loses


Ken Clarke the Lord Chancellor announced this week that the government were to implement many of the recommendations presented by the Jackson Review 2010. This blueprint document set out radical reforms which apparently are badly needed in the No win No fee litigation sector.

As a battle hardened personal injury litigator I can see why there is a need to reform. The disappointment for me is the complete failure once again for the pro personal injury lobbyists to compete with the insurance big wigs who pretty much call the shots at the Ministry of Justice. We have been trampled over and made to look like dead eyed sharks.

The main points are pretty radical.

At the moment when you pursue a personal injury claim, your solicitor will offer you a “No win No fee arrangement” which in short means they will take your case on without charging you if they lose the case. However the solicitor is entitled to a success fee in addition to base costs to reflect the risk they have taken in pursuing the case on a “no win no fee” basis. Both base costs and the success fee are paid by the defendant insurers if the case succeeds.

The claimant is also encouraged to take out an insurance policy that protects them if they proceed to court. This is known as an After the Event (ATE) policy.  The cover provided by the ATE basically pays the defence legal fees if you have a bad day in court and lose at trial. The ATE premium is also paid by the defendant insurers if the case succeeds – the premium is not recovered at all if the case fails.

The key change in the reforms reverses the principle that the loser pays. Instead, it is proposed that the claimant rather than defendants should pay lawyers success fees and cover ATE insurance costs in order to pursue their case.  Lawyers can charge a success fee against damages up to 25% of the sum awarded. Base costs can still be recovered from the insurers but the intention is to remove the current “free to claim” and “win 100% of your award” mentality that prevails in the market. To accommodate this radical move, compensation awards will be increased across the board by up to 10%. The idea being that the 10% increase ultimately cushions the blow suffered by the claimant in having to fork out the extra charges.

Once these reforms are made law, it will no longer be free to claim and successful claimants will no longer win 100% of their compensation award. Those days are gone.

So why do this..? Well the reasoning is simple. The government and the all powerful insurance lobby want to discourage claimants and lawyers from making – what they deem to be – frivolous and unnecessary claims. These are the cases that, they say, fuel the “compensation culture”.

So will this work…?   Absolutely not.

All that will happen is that lawyers will forgo the success fee in many low value cases and probably take on even more frivolous / risky claims to make up the difference. Seriously injured claimants will lose out twice over because they will be stuck paying up to 25% of much needed damages to their lawyer and then have to cover the cost of the ATE.

Pity those that are seriously injured and need to make a claim to cover much needed treatment costs and lost wages.

The industry will need to adapt and of course that’s exactly what it will do. The lost revenues will be made up in other ways and of course.... we will still as always be perceived as sharks.  

Whiplash Claim Advice ... watch out for the insurance company wolf in sheep's clothing

I am seeing more and more examples of insurance companies seeking to buy off road accident claimants with cheap nasty offers before they even get chance to seek legal advice.

The tactic is known in industry circles as third party capture. The objective of the insurer is very simple: to dispose of the claim quickly and preferably before the claimant speaks to a lawyer. The lie promoted by the insurers and supported by none other than the Association of British Insurers (ABI) is that they are putting money in the pocket of deserving claimants rather than paying out legal fees thus inflating claim costs.

This is pure bunkum! It cannot be right that insurers are able to shove money into the faces of hard up injured claimants and dangle the carrot of a quick and speedy settlement. Some insurance companies actually knock on the door of claimants with a chequebook in their hands to talk turkey.

In many instances this tactic goes badly wrong with injured people accepting settlements long before they have finished their treatment let alone recovered from their symptoms.

So watch out for this and report any abuse of the process. Our friends at APIL are only too happy to cross swords with the sanctimonious crowd at the ABI.