Archive for Legal Protection

Solicitors Are To Blame For Car Insurance Premium Hikes!

Many people have been in shock this year when their annual car insurance renewal document lands on the doormat. Premiums have risen by as much as a third this year if reports by some major UK car insurers are to be believed. This has even led to former Home and Foreign Secretary Blackburn MP Jack Straw to write to the Times today calling for a reform to the motor insurance industry.

So what has gone so wrong? Why are we paying more for motor cover?

Well first we were told it was uninsured drivers, two million of them apparently, that were pushing up the costs of car insurance because the Insurance Companies were having to pay more into the collective fund, administered by the Motor Insurance Bureau, to cover the costs of claims against drivers with no cover.

So after much pressure from interested parties, the Continous Insurance Enforcement legislation has been passed but to date we see no evidence of reduced premiums.

Then we are told that criminal gangs (mostly johnny foreigners if the British press is to be believed) are fraudulently staging car crashes that are adding to claims costs. Given the amount that Insurance Companies have invested in detecting fraud in recent years, Insurance Blog cannot believe that these claims are more than marginal costs.

Next we are told that the actual reason for increasing  car insurance costs is the amount that has to be paid out in claims and held in reserve for personal injury claims due to road traffic accidents.

Could we be somewhere near the truth?  The problem with this is that given the latest figures, in 2009 the number of road accidents involving personal injury was 31% down on the average for 1994-98 primarily due to better car and road safety.

So it’s not the number of claims but the costs of claims. The cost of personal injury claims to Insurance companies has doubled in the last ten years from £7bn to £14bn.

So why are the costs of PI claims rising so fast and leading to expensive car insurance for us all?

Well Mr Jack Straw would have us believe that its all the fault of the Claims Management companies that have sprung up in recent years, the so called ambulance chasers. Claims management companies collect details of claims and typically sell these onto solicitors for a fee ranging from £100 to £1000 per case.

Mr Straw has called these a racket and demands that referral fees should be banned as was proposed by Lord Jackson in the 2009 report on court costs prepared for Mr Straw’s government.

Yes, maybe those who refer the accidents to the claims farmers for a fee such as the insurance companies themselves, hospitals, police and repair garages, should be denied the introducer fee but do you really believe that an extra hundred pounds or so is the reason for £7 billion pounds worth of extra claims expense? Who really is benefiting from these PI cases?

Insurance Blog thinks that this is all smoking mirrors, and that the real reasons for the increasing costs of claims and car insurance are something quite different, even though they are mentioned in the Jackson Report, and they are:

1) The ridiculous fees charged by Solicitors. How can any profession especially one that just creates more work for itself justify charging £150 to £200 per hour? Solicitors costs should be fixed for civil litigation as they are for criminal at around a quarter of what they currently charge. Civil Solicitors are the racket and social pariahs!

2) The question of proportionality. How on earth can the UK courts allow claimants to bring cases that run up solicitors and expert witness costs on both sides that are often 1000% more than the value of the claim. (see the figures in the Jackson Report appendices)

This is morally wrong and makes a joke of British Justice. No costs for both parties combined should ever be allowed to exceed the value of a claim and where an award for damages is less than the amount claimed then costs against the defence should not be awarded.

Mr Straw like when he was Home ‘Class B’ Secretary has failed to grasp the real facts and jumped on the populist bandwagon of lets attack the claims management companies and conditional fee arrangements (CFA).

Access to justice at a fair rate should be written into humans rights law and if you were injured you would be glad of a CFA. Because Solicitors charge exhorbitant rates, a CFA is often the only way to get justice if you’ve been injured by someone else.

As for cheaper car insurance, shop around, compare car insurance quotes and if you don’t want to pay more at renewal ask the Insurance company what its current claims exposure is!

 

Insurance Industry reacts to ‘immoral’ claims farmers:

Ever since they first began appearing from murky corners of the industry back in the late nineties, ambulance chasers have never been particularly good at making friends. The thorny issue of claims farming has consistently remained on the lips of insurers and brokers alike ever since they first boomed from our TV sets advising us to sue everyone and anyone.

If there’s blame there’s a claim. The epitome of the nanny state. They exist at the heart of compensation culture. In fact they are the wholly accountable for the whole bloody system. Professional parasites feeding off us all.

As you may have guessed I’m not a fan.

Yet somehow they defiantly remain a part of the industry and worryingly it seems some brokers are leaning towards the easy ‘quick fix’ solution they can offer. Lets be honest times are tough and the majority of us are having to work that little bit harder for a hell of a lot less. With the  ridiculous increases in the FSCS being the latest over the top fee handed out to the broker community by the ever incompetent FSA, a little extra revenue from those damn ambulance chasers could prove highly tempting right now, but what is the real cost of this short term financial injection?

Trevor Cutts, business development director at independent broker network 1 Answer Network recently commented that the practice of claims farming threatened to undermine not only the claims process but also the very ‘integrity of the industry’ itself. For an industry dependant upon consumer trust, anything that can damage the broker/client relationship is of course inherently dangerous.

Of course as Mr. Cutts is quick to address there is a massive difference between a broker operating a legal expense policy, working in tandem with a reputable claims management company and the more ‘questionable approaches’  made to claimants years after their claim, looking to seek unmerited awards retrospectively.

Often one will find that a law firm will have a surge in claims, and when this is the case there often tends to be generally one particular insurer involved. Whether the lists are generated by an insurer or a broker, the suggestion would certainly be that someone in the chain is selling on these claims for a quick buck. Neglecting the clients needs entirely – how quickly will it take that client to lose faith in both their broker, insurer and even the industry itself?

Commenting on the subject, Mike Keating, Head of Personal lines intermediary at Axa, actually went as far as labelling any company who make money from the practice of claims farming as ‘immoral’.

Describing what he sees as an ‘alarming feature of the market’ he acknowledged that the rise in claims farmers is a  ‘disturbing trend’. In fact Axa are now one of a number of insurers who are introducing clearly differentiated pricing, aiming to penalise those brokers that claim farm and benefit those that don’t.

The good news is that the public are slowly starting to turn away from these parasites also. Whether it is the numerous horror stories of people being out of pocket even after having won their case, or perhaps just the sheer mindless, monotony of those bloody adverts, the reputations of many claims farmers are now in tatters.

Hopefully with the industry seemingly united on ensuring that the claims farmers are driven out of town the reputations of brokers and insurers will escape relatively unscathed.

Mr. Keating states that he ‘doesn’t think brokers believe that any model reliant on claims farming is sustainable.’

For the sake of the industry lets hope he’s right.

Legal Expenses – Are you at Risk?

Have you checked the amount of legal protection you have for yourself and your family under your house insurance policy recently?

Well if you haven’t we’d advise you to think again and to look. Legal Expenses, Legal Costs or Legal or Family Legal Protection as it is also known, is one of the least understood yet one of the most important types of insurance that you will need in these days of American style litigation.

Every time you sign a piece of paper you are exposing yourself to the possibility of a claim against you with the subsequent possibility of a trial and legal costs being awarded against you. This has happened to many many people in the UK and lives have been ruined.

Because of the important nature of this type of insurance in protecting your lifestyle its a subject that we are going to return to again and again.

So have you checked your home insurance policy? you particularly need to find out the figure for Indemnity Limit. This is the most that an insurance company will cover you for in the event it agrees that your case has a good chance of success.

So you’re covered OK.

Well lets just leave you with this word of advice. If your limit of indemnity for legal costs is less than £100,000 then you are seriously exposing yourself and your family to ruin. At this current time the average costs to take a small fast track case to trial are around £75000 and if you lose you are going to have to pay the other sides costs of at least £75000 as well – serious risk.

Think very carefully before you contact the pariah solicitors thinking you are covered…………..