Admiral insurance and the truth about referral fees

Regular blog readers will be aware on my feelings about Claims Management Companies and the forthcoming Personal Injury referral fee ban. But what’s interesting, whilst all the conversation is about the money Claims Management Companies make from the referral fee process and that insurance premiums are higher as a result, little is said about the money the insurance companies themselves make from referral fees. Bearing in mind also that much of the pressure for the ban has come from insurance companies complaining about referral fees, the latest figures from the insurance colossus Admiral, has revealed some very interesting information. Apparently it makes an average of £7 by way of referral fees for personal injury claims for every single vehicle covered by its insurance.

This is not guesswork or scandal mongering – this remarkable statistic comes from Admiral’s own six monthly financial report! Given that Admiral is responsible for the insurance of 3.5 million UK vehicles, my calculation is suggest that it is earning a whopping £24.5 million each and every year, purely from accident claim referral fees.

It was also interesting to hear when asked about how they are going to deal with the loss of this referral fee work, or whether it planned on setting up or buying its own personal injury law firm, Admiral simply refused to comment.

So the next time you hear insurance companies whingeing about the evils of referral fees [which we refuse to pay by the way], don’t forget the huge bundles of cash Admiral are making from leads for personal injury compensation cases.

Legal Ombudsman to clampdown on claims management companies

At long last, some well overdue commonsense from the Ministry of Justice – which today set out its eagerly awaited plan to hand over responsibility for complaints against Claims Management Companies to the Legal Ombudsman with effect from April 2013.

Currently, any complaints against claims management companies (or CMCs) are dealt with by the Claims Management Regulation Unit, an internal unit of the MoJ itself. Apparently the plan is that this unit will stay within the Ministry of Justice but with a different focus – including taking “wider action” against those CMC’s break the industry guidelines and rules. The transfer of responsibility for complaints to the Legal Ombudsman will mean that in the case of a proven complaint, the Ombudsman can compel a CMC to pay compensation to the injured party.

The legal industry have heartily welcomed this move. The Ombudsman has a reputation in some parts of the legal profession for taking what many consider to be an overly hard-line against law firms for any allegation of poor service, however small, in huge contrast to the Ministry of Justice approach to CMC’s who seem regularly get away with mis-selling and fraud.

In fact, on Radio 4 this morning, the Legal Ombudsman confirmed that there were already CMCs being paid for passing on to solicitors, claims against other claims management companies for mis-selling! Some people believe that much of the claims culture is a myth – but this kind of ludicrous situation beggars belief.

The sooner the Legal Ombudsman clamps down on many CMCs who are simply parasites, the better.

Increase in UK road accident injury claims

Statistics just released by the Institute of Actuaries indicate that the number of UK road traffic accidents which involved some form of personal injury increased last year by a full 18% – and that in contrast, the actual number of compensation claims made dipped by 11%.

These figures prompted a strong response by the Motor Accidents Solicitors Society [ MASS] which claims that the an important factor in the rise was the heightened level of activity by claims management companies [CMCs]. Rounding on the behaviour of some rogue claims companies, MASS chair Donna Scully pointed out that although the Information Commissioner received around 25,000 complaints from the public about unsolicited text and cold calling from certain claims companies over a 12 month period, not a single prosecution was issued as a result. She also supported the suggestion by the Association of British Insurers for a compulsory medical examination of the claimant before any compensation is awarded.

Despite the referral fee ban and crackdown on no win no fee personal injury litigation expected next April, there are, as yet, no plans from the government to clamp down further on rogue claims management companies nor to introduce compulsory medical examinations.

More than one commentator has observed that despite record profits for various insurance companies including LV and Aviva, there is no suggestion that there will be any reduction in insurance premiums. Calls from some quarters of the industry for a complete ban on unsolicited text messaging, cold calls and television advertising for personal injury cases appear to have been ignored by the government.

Have you suffered a UK Road Accident Injury? Call FREEPHONE FREEPHONE 0800 1404544 for FREE compensation claim advice from our specialist Road Accident Injury Claim Solicitors.

MoJ “Cancels” 20% of claims management companies

In the last 12 months it has become apparent that the Ministry of Justice (MoJ) have closed down approximately 20% of claims management companies registered with the MoJ, according to extraordinary Ministry of Justice figures obtained by the Law Society Gazette.

734 separate claims management businesses have been confirmed by the MoJ as being “cancelled” in the year ending March 2012. Although on March 31, 2012, 3018 claims management companies were still registered with the MoJ – that compares with approximately 11,000 law firms in England and Wales. The closures of these firms were a result of 9570 public complaints relating to the behaviour of these claims management companies.

Also, it became apparent that the number of staff employed by the MoJ in relation to claims management regulation has increased by 25 2012. The MoJ has similarly estimated that the actual cost of regulating these (of which the regulation is financed by the companies themselves) increased to an astounding £2.5 million per annum, up 17%.

Predominantly selling on accident claim and medical negligence compensation leads to personal injury solicitors for a huge referral fee, claims management companies also sell on personal protection insurance claims and other areas of law, including employment law and a variety of other claims.

This website is entirely owned and run by Personal Injury Solicitors Bonallack and Bishop. We are proud that none of our accident compensation or medical negligence claim cases come from such claims management companies – we don’t pay for personal injury claims – as we simply don’t need to, and again unlike many other law firms, our personal injury claim caseload continues to grow. We have been concerned by the behaviour of many of these companies for some time – especially by the unnecessary level of costs they impose on all areas of law.

Our advice – avoid all claims management companies and for advice you can trust go straight to a reputable firm of specialist accident solicitors – like us !

Government changes position on mesothelioma compensation claims

Earlier this week, the government finally gave way to pressure with regard to its planned reforms to no win no fee claims for mesothelioma victims. As a result, the planned changes to the recoverability of success fees in no win no fee cases, will be delayed, pending a review into the impact these changes will have on the access justice of those suffering from mesothelioma.

This change of heart appears to be the result of arguments that those suffering from mesothelioma (an industrial disease arising out of exposure to asbestos at work) would not be in a position to bring what referred to as ‘frivolous or fraudulent’ compensation claims, that it was not reasonable for those victims with just months to live to spend time shopping around for the solicitor with the lowest success fee, and therefore it was not reasonable for them to be put in the position of potentially losing up to a quarter of any damages one in order to fund their personal injury solicitors‘ success fee under a no win no fee claim.

The Legal Aid, Sentencing and Punishment of Offenders Bill, as amended, is now expected to receive Royal assent in the next few weeks and to become law next April.

 

Will medical negligence claims be reduced by 50%?

That’s the question that is currently being asked by Peter Smith – a senior member of the Civil Justice Council. Speaking at the Bar Conference, Mr Smith [who is also the managing director of First Assist Legal Expenses Insurance] predicted that the forthcoming proposed removal of medical negligence claims from legal aid [or public funding as it is now properly known] along with the proposed changes in regulations proposed by the so-called Jackson reforms, could reduce the number of medical negligence compensation claims annually – from 6000 to just 3000. In particular he predicted that 2000 claimants would no longer have funding to make compensation claims for medical negligence due to the removal of legal aid, and that a further 1000 claims would probably be lost as a direct result of planned changes to conditional fee [or no win no fee ] arrangements and after the event insurance.

Mr Smith also predicted that so-called “before the event “[BTE] insurance premiums were likely to rise by “seven or eight fold”, partly due to the planned ban on personal injury referral fees. He concluded that he could see no insurance mechanism allowing those with” decent claims to bring them” adding that the proposed Jackson reforms and removal of legal aid for medical negligence would have a “dreadful [and] chilling effect”.

If you think you have been a victim of medical negligence, contact our specialist medical negligence solicitors today on FREEPHONE FREEPHONE 0800 1404544 for a free first interview.

 

Banning referral fees – why is Jack Straw so obsessed?

Jack Straw certainly seems pretty obsessed by the whole issue of banning referral fees for accident claims – though he didn’t seem to notice any problem he was Home Secretary. Could it that he’s really embarrassed by the Labour Party’s position – according to the daily Telegraph the Labour Party apparently received had over £355,000 in personal injury referral fees from accident claim lawyers Flint Bishop – who paid a £250 referral fee whenever it received a injury compensation referral from the Labour Party.

Remarkably, this injury claim referral fee arrangement appeared on the Labour Party’s own website – where party members were recommended onto what appears to be the website of an affiliated organisation, Labour Legal Services who in turn asked members to get in touch with the Derby-based personal injury solicitors.

Is Jack Straw just feeling guilty – or, is it pure hypocrisy?

 

Will claims management companies turn into the marketing departments of law firms?

The latest stage in the unfolding saga of accident claim referral fees, and government plans to ban them, came in the form of an admission by Darren Werth, who is the chairman of the Claims Standards Council [the trade association for claims management companies] that a number of leading claims management companies have struck deals with the solicitors firms to transform into what is referred as an alternative business structure [also known as an ABS] in early 2012.

In an attempt to get round the proposed referral fee ban for accident claims, these claims management companies will, in effect, transform into the marketing and advertising wings of the solicitors practices in question.

However, formation of ABS businesses can’t go ahead, following the introduction of The Legal Services Act, until a licence to authorise the creation of ABS structures is granted to the Solicitors Regulation Authority – which authority has been delayed.

The Government’s Minister of Justice, Jonathan Djanogly, welcomed the plan to merge law firms and claims management companies, and was positive, in particular, about the way in which such mergers would bring claims management companies [which are currently regulated directly by the Ministry of Justice] under the control of the Solicitors Regulation Authority.

Interestingly, Mr. Djanogly seemed to rule out the possibility of making the payment of accident claims referral fees by personal injury solicitors a criminal offence – accepting that, in reality, the criminal law burden of proof would make successful prosecutions for pain or receiving referral fees for injury compensation claims difficult.

However, uncertainty remains – in particular about the possible timescale for such a ban, and on the definition of a referral fee itself.