The compensation culture debate has once again reared its head with the issue of a report by the UKs Transport Select Committee in relation to the rising cost of motor insurance. This report comes on the back of a recent campaign by former Home, Foreign and Justice Secretary, Jack Straw. The conclusions of this call for “sharp practices” to come an end and the Committee “look to the insurance industry to start showing … leadership”.
Compensation for injuries
The compensation culture debate has taken place about the relative ease in which individuals obtain compensation for injuries they have suffered following a road traffic accident and the increased numbers of personal injury claims resulting from these accidents. However the question that seems to have been ignored is why..
Personal injury firms do not provide compensation to their clients; they simply provide legal advice to their clients. The compensators are the insurers. In pursuing claims the onus is on the pursuer (or claimant) to show firstly that they were involved in an accident that was not their fault, and secondly, that they have suffered injury as a result of this accident.
To prove that an injury has been sustained medical evidence must be obtained from a consultant (and not, as Jack Straw states, ”third-rate doctors in the pay of the claims management companies and personal injury lawyers”). Medical evidence is submitted to the ‘at fault’ insurer who will thereafter make an offer of settlement based on case law and judicial guidelines which are referred to using a personal injury claim calculator.
The compensation culture debate
Certain insurers have deviated from this long-established practice, particularly in cases where the injuries are relatively minor. Instead they to offer compensation on what is known as a “pre-medical” basis in order to quickly dispose of these cases. This practice encourages claims with the promise of compensation without proof of injury. The Transport Select Committee state that “the bar to receiving compensation in whiplash cases should be raised” highlighting their ignorance that certain insurers, have removed the bar altogether.
Add to this the practice of 3rd party capture whereby at-fault insurers will contact the non-fault party directly in order to offer compensation, often before they have had the chance to seek legal or medical assistance following the accident. This drives up insurance costs without the involvement of the so-called ’vultures’ that receive the blame publicly for rising insurance costs, namely claims management companies and personal injury solicitors.
Claim referrals and alleged fictitious whiplash claims
Consider this, perhaps Jack Straw has missed the real target in his quest to expose “dirty secret” of claim referrals and alleged fictitious whiplash claims.
Perhaps the real culprits are the insurers who have chosen to adopt practices which eliminate the need for proof of injury, consider themselves immune to data protection legislation and continue to post record profits year-on-year.
As a final thought, consider also why Jack Straw chose to do nothing about these practices he considers to be a “racket” when he was in power as Justice Secretary?