20 BROKERS’ MONTHLY
Legal Costs – again
In a consumer dominant world, a system where it costs 40% to
process claimants’ compensation is surely not sustainable. The
insurance industry finds itself in this position largely of its own
making, and in the first of two articles Roger Snook considers the
options by Roger Snook
Motor Claims Consultant
ike so many of us, I find myself insurer to be identified quickly
L
mulling over whether we will and easily
c) Cont’d. – those charged by the
ever again reach a stage where
claimant lawyers, which does
● Is liability a problem? It can be,
motor compensation claims can be
due to the well understood
suggest that a lot of hay is being
resolved without the increasingly
tendency of drivers to believe that
made
expensive intervention of the legal
they cannot possibly be
profession.
However, I feel that the abiding
responsible for their actions.
At present, regardless of what may
problem with legal costs has been
However, insurers are used to
be said - and irrespective of how we
created by insurers originally failing to
dealing with this and in most cases
have managed to get here - the legal
deal with third party claimants sensibly,
are able to bring some sense to
costs are the biggest impediment to the
and then seeking to capitalise on that
their policyholders. That said,
sensible settling of cases today, and are
failing by marketing a product by
where there is a genuine
one of the main weapons in the
which the claimant is directed to the
difference, the lack of a timely
compensation battle.
most expensive means of achieving a
police report can lead to
How can we avoid expending
settlement possible. A bit simplistic and
entrenched positions and
not the only reason maybe, but is it a
excessive time, money and effort in
encourages claimants to seek legal
significant reason, and can we do
dealing with routine claims, bearing in
advice
anything about it?
mind that the person funding all this is
● Is quantum a difficulty? Hardly. There is further the issue of
the ordinary person, usually our
So long as the medical issues are referral fees. Many complaints are
policyholder, be he the claimant or the
straightforward, and especially made about the high level of such fees
defendant?
now we have the JSB Guidelines paid to introducers, but I do not hear
We all know the problem, you say.
and insurers are “assisted” by much about insurers being the
Legal services are a business and must
expert claims systems recipients. With fees for quite minor
make profit. Of course, insurance too is
a business and must make a profit. So,
So, why is a lawyer needed? This
claims at c.£600 a time, I suppose it is
both have a common interest, which is
is the crux of the matter. I suggest that
not surprising that some motor insurers
to make money. But the success of the
some of the reasons are:-
have climbed on the bandwagon and
accept this income stream.
solicitors’ business has, I suggest,
a) The public, having a folk memory
Is the real problem now that it is
become detrimental to the greater good
of how insurers used to behave
too late to do something as we have so
and certainly to the motor liability
(and sadly in some instances still
many people employed in the
insurers.
do) have a profound mistrust of
compensation process? After all, a
ut, are we right in blaming the
insurers, fostered I dare say, by
system removing disputes from the
B
lawyers? Let’s start by looking at
vested interests
motor liability market will adversely
the main questions that arise in b) Insurers, satisfying a need that
affect employment in the legal expense
dealing with a motor claim, on the they have created - albeit
insurance market, as well as in the legal
assumption that the vast majority of unwittingly - vigorously market
profession.
motor claims are neither of enormous legal expense insurance, both
Putting that rather cynical thought
value, nor involve complex questions of before and after the event
to one side, I think we can agree that a
law:-
system which requires 40% of the
c) Lawyers, retained to service this
money spent to move the compensation
● Is indemnity and the position of market created by the insurers,
from the compensator to the claimant
the insurer a major problem? I say can hardly be blamed for making
is not sustainable.
not. The advent of the MID has the most of it, although I note
In the next article I will look at
removed a great deal of that defendant costs are
some of the solutions that might
uncertainty by allowing the consistently only around 25% of
improve matters.
IBM
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