How the insurers are screwing honest claimants

OnanTheBarbarian

This post will divide opinion I am certain.

Maybe you heard that in the Autumn Statement, the government announced a planned change to the personal injury small claims limit from £1000 to £5000?

Maybe you believe all the tripe that the insurance industry constantly pipe into the media about "fraudulent whiplash claims"?

Well the government - duly aided by some lovely financial contributions from the insurer lobby - have decided to launch an assault on justice by saying the small claims limit for personal injury claims will rise from £1000 to £5000 next year. Beyond that, they plan to legislate to ban claiming for "minor whiplash injuries"

This has arisen not from a formal consultation and hearing arguments from both sides, but from listening to what the insurers want and secret meetings.

So what? you may ask... My motor insurance premiums will go down and world peace will be restored. Yeah, that's a load of smelly brown stuff.

I agree, there are some scoundrels out there who pedal bent claims and the pond life who make cold calls and essentially talk people into making a claim need dealing with properly, but did you realise that this little coup for the insurers is going to screw over anybody who has a personal injury claim (not just a road accident whiplash claim)

Currently, the threshold for payment of some small fixed costs to the lawyer on an injury claim is that the level of compensation needs to be £1k+ - putting this into perspective - a £1k award would be applicable to someone with a soft tissue neck or back injury where the symptoms took 1 month to recover.

So if you have an injury similar or worse than this, you will get represented by a lawyer and in the worst case scenario, they may take up to 25% of your settlement, plus the small level of costs the insurer has to pay them.

Now, what will happen when the £5k limit comes in as that on any injury claim where the level of damages is less than £5k, the solicitor is not entitled to any costs from the compensating insurer. So the claimant will have to see their damages pilfered, but the level of deduction may be more than the current 25%.

If you don't have a lawyer, you will be left alone in the small claims court to represent yourself against a tooled up insurer.

£5k is a pretty serious injury - such as whiplash lasting 2 years, or a fractured wrist or broken fingers.

It is going to be very interesting to see what happens to people who have purchased legal cover on their motor insurance. Currently these policies pass you to a lawyer to deal with your claim and the lawyers only get paid by the insurer of the party at fault for the claim. the actual underwriters never pay the panel lawyer for dealing with your claim and they don't pay any costs to your lawyers if they lose your claim - the lawyer just has to take the hit - so the legal expenses insurer never ever pays out any legal costs to anybody in claims litigation (but that's another scandal)

So if the rules change and the solicitor who got appointed under the policy can never get paid any costs even if they win your case, who is going to pay them?

I know from nearly 20 years of working for clients who have legal expenses insurance/ motor legal protection that these policies never pay the nominated solicitor. The policy you paid £30 for cost your insurer or broker around £0.50p, the reason the underwriters were happy to just charge £0.50p is they know they will never have to pay out any legal costs.

But in the future, will the panel solicitors have to be paid out by the underwriters of your legal expenses policy? If so, will this see premiums rocket and as a result fewer people will buy such a product? Or will they exclude cover for injury claims that fall within the small claims track? - Some policies already do this!

So what are your views?

Do you think your premiums will go down by up to £50 on average due to these changes or, like me, do you feel there will be another excuse from the insurers as to the next threat?

Are you happy to see these reforms knowing that if you do suffer a pretty significant injury which could keep you off work for months, you'll have to either go it alone and fight your own case, or lose a greater degree of your damages to fund representations?