If you've ever watched The Real
Hustle you've probably been amazed at some of the things that people can
get away with if they have the confidence to try. Who dares wins?
The latest scam from liability
insurers is a bold attack on the fixed costs schemes that presently apply to a
number of categories of personal injury claims, starting with low-value road
traffic - or “Portal” - claims.
This comes on the back of the
announcement of a ban on referral fees for which of course insurers quickly voiced
support, hoping to distract attention from the extent of their sly profits that
were suddenly exposed to the daylight.
Now they seek to turn it all to
their advantage by arguing that since some, not all, claimants’ solicitors will
no longer be paying referral fees to acquire the business, the fixed costs
should be reduced.
Which of course will produce a
saving for insurers – on ALL claims, not just those that might have been bought
by payment of a referral fee.
That fact demonstrates where the
logic of the present argument crumbles. It won’t just be lawyers who previously
paid for claims continuing to run them in the future. There will be all the
others, like me, who never did and whose overheads don’t change as a result of
the ban.
Those overheads still include
other forms of marketing – areas in which many firms who previously purchased
from claims management companies will find themselves spending similar amounts
in the future as they look for alternative business leads.
So, the insurers’ point is a duff
one regardless of how the original fixed-fee deal was conceived
and structured.
Perhaps that’s why we are hearing
and reading the contention that the existing scheme factored in an allowance
for referral fees. The MOJ will quickly swallow it where there is no resource
or political will to challenge the insurance industry.
Representatives of respectable
and fair players such as APIL are quite clear in their account that referral
fees formed no part of the Portal fees deal of which they were one of the
architects, along with insurers. Why ever should it have done?
The costs were calculated having
regard to the amount of time required to run the claims and the expense of it.
That has proved inadequate, many
will say, because of the antics of insurers looking to exploit loopholes and
push the bounds as they so often do. No wonder they say the system works well –
pity nobody has seen them reduce levels of premia as a result.
One comes to expect all that but
this latest assault is a serious threat to justice and the MOJ needs to wake up
to it. Bear in mind that the insurance industry wants to extend these lower
cost claims environments to higher value and more types of injury claim.
If it sounds too good to be true,
it probably is.
