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By: Richard Godden
For years now insurance companies have blamed 'ambulance chasing' lawyers for the so called 'compensation culture'. It is therefore very refreshing to have recent press reports reveal to the public that rather than lawyers pushing people to make claims for compensation, it is in fact insurance companies, and claims companies, that have been doing so in order to be paid a 'referral fee' by the solicitor that they refer the client to.

It has also been amusing to watch insurance companies trying to put a positive spin on their actions. One large company has nobly declared that it will "cease to accept" payments from personal injury lawyers in return for client referrals, as if lawyers had been forcing these payments on them, rather than insurance companies demanding them.

Another has tried to take advantage of the situation by suggesting that a good way to tackle the "compensation culture" would be to force claimants to pay their own legal costs, rather than expecting the guilty party to do it. That proposal impressed Jonathan Djanogly MP, if few others. "Claimant's lawyers will be more cautious about taking on cases. Claimants will have an interest in what they're paying their lawyer. That will be the key for reducing costs", he said. The more cynical among us might have added that its main achievement would be to save insurance companies lots of money by forcing claimants to accept derisory offers, and that if insurance companies want to avoid cost the best way of doing so would be to settle honest claims promptly and adequately. The insurance industry has also been doing its best to discredit personal injury claimants by suggesting that neck whiplash, one of the most common injuries in car accidents, is somehow dishonest or imaginary. Dubious "medical experts" have taken to the airwaves over the past few months and have made statements which many doctors treating patients with serious neck pain will find surprising, to say the least.

Some people have seen first-hand over the last few weeks how aggressive these insurance companies are at pushing people to make claims for compensation who otherwise might not do so. One lady was sitting in her car when a car insured by a well-known company reversed into her. Thankfully she was not injured and the insurance company immediately admitted responsibility (they had little choice in the circumstances). However, since then every time they have spoken to her they have asked if she was injured, if there was anyone else in the car with her and were they injured, and was there anyone in their insured's car, how old were they and were they injured too?

It is to be hoped that Insurance companies will be banned from passing the details of their customers to their favourite firm of solicitors, charging a referral fee, and then forcing their insured to use those particular solicitors to handle their injury claim.

Claims companies also charge solicitors referral fees for passing them clients, and at first glance this may seem a fair enough way of being paid. However, the system in fact works directly against the interests of the public. Few claimants realise that when they contact a claims company, that company will do little more than pass them to a firm of solicitors that has paid a few hundred pounds for the case. The claimant has no choice over what firm he is referred to and has little or no contact with his solicitor. Because the referral fees are so high, only the largest firms can afford to pay them, and even then they can only make money out of them by turning over the maximum volume of cases in the shortest time. The client is therefore likely to find himself part of an impersonal production line, under pressure from a solicitor who is concerned about making enough out of the claim to cover the referral fee. If he had simply telephoned his local solicitor direct, he would have got a much better deal.

In a civilised society, people who have been injured by the carelessness of others deserve reasonable compensation in order to be able to rebuild their lives. Statements from insurance companies who do not like having to pay out should be treated with the deepest suspicion. Rather than listening exclusively to the powerful insurance lobby, and collecting annual fees from claims management companies, the government should seriously consider whether they operate in the interests of the public at all.


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