“Don’t Get Mugged By An Insurer”

It has not gone unnoticed that in the past few years, insurance premiums have risen while statistics prove that profit levels at the UK’s largest insurance companies have risen considerably.

For some time, insurers have pressed for changes in the way legal actions are funded and compensated and they seem to have got their way. Recent changes in Civil Litigation funding effectively denies people who have been injured in accidents their right to keep 100% of their compensation.

Not only are insurance companies making it less beneficial for injured people to claim, they are also using the recent changes to undermine injured victims’ right to fair compensation up and down the country.

In reaction to this, BRM Solicitors are fully supporting the Law Society’s recently launched “Don’t get Mugged by an Insurer, Use a Solicitor” campaign. This campaign is to make innocent accident victims aware of the insurance industry’s ever increasing attempts to bully them into settling their personal injury claims for less than they deserve.

The government promised a crackdown on the so called ‘Compensation Culture’ and finally, it states that it has been delivered. What has changed? Before 1 April 2013 accident victims could enter into an agreement with their lawyers called a “conditional fee agreement”. The way this worked was that the lawyers would only get paid if they won. In return for sharing this risk the agreement provided that the lawyers got a success fee. This was recovered from the person at fault (usually his insurers).

Since 1 April, people who are successful in claiming compensation for their injuries will no longer be able to recover success fees from the responsible insurer.

What does all this mean? In a nutshell, it means the erosion of our individual legal rights and a cash bonanza for the insurance industry. Here’s why…

First, successful claimants cannot recover their solicitor’s success fee from the losing opponent or their insurers. Instead, they will have to pay this fee out of their own damages, up to a maximum of 25% of the amount recovered.

Second, the government has increased damages levels by about 10% for injuries suffered. The idea was that this would help fund the payment of the success fee but if that was so, why not increase damages by 25%?

Third, the government has buckled under pressure from the insurance industry by passing the success fee back to the innocent victims, saving the insurers billions. These same insurers have promised the government that they will be able to reduce all our insurance premiums. Needless to say there is no sign of this promise being fulfilled or enforced by the government. Did you know that legal costs in the vast majority of road accident claims have been fixed for years? This was done at the demand of the insurance industry which promised that savings would be passed back to their customers. Meanwhile their profits are up and guess what? So are our premiums!

The best bit is yet to come.

Now that the government has been duped into doing the insurance industry’s bidding we can all get ready for the next money spinning ploy. It is called “3rd party capture”. Here is how it works.

You have an accident. You exchange insurance details with the other driver who is at fault. His insurer gets in touch with you and tells you that they will settle your claim, pay for your injuries and medical treatment and that all of this can be done without you having to see your solicitor. They pay for your medical treatment. They pay you compensation. The trouble is, they have decided how much you get and everything is settled on their terms, not yours.

Do you also know that if solicitors tried this sort of game they would be severely punished, possibly even struck off? It doesn’t take much imagination to understand that if it is a serious offence for solicitors to advise clients in order to serve their own interests it must be pretty bad that insurers are being allowed to get away with it.

One real life example makes the point. A client was catastrophically injured following an accident.  The insurers made an “early settlement offer” of £650,000.00 within a few months of being notified of the accident.

To someone who is severely injured, needs urgent expensive medical treatment and is facing an uncertain future, this offer would seem very appealing. After all, it is a life changing sum of money. On our advice the individual rejected the insurer’s attempts to significantly under settle his case. We went on to recover nearly £5 million in damages including interim payments for treatment and lost earnings whilst the case was being resolved.

The result?

Allowing insurers to settle claims directly means that you get less than you were entitled to and insurers save even more. Just don’t be surprised when your renewal letter comes in asking for a further increase in premium next year!

You may have guessed that this article must have been written by a lawyer. If so, you’re right. But the reason that I have taken the time to spell these facts out is because I am so damned angry, as all of you should be too.

For centuries the law has been there to protect innocent victims of accidents. It still is but you must understand that the system is now set up to encourage us not to use it.

Legal rights are fundamental to a civilised society. Preserve them.
Get advice that is in your interests, not in the interests of insurers whose motivation is to increase the billions they already make from us all.