Third part claims capture by insurers exposed by Mail on Sunday, 07 January 2007

Legal Expenses Insurance Group

News Release : 07 January 2007

Third part claims capture by insurers exposed by Mail on Sunday

A mail on Sunday investigation published on 7 January featured the practice of insurers selling third party claims to solicitors. They found that insurers have been secretly selling off the details of road crash victims to lawyers who then represent them in high-earning court cases.

The investigation by Financial Mail revealed that some solicitors pay up to £10,000 in an 'auction' to represent badly injured people - without the victims themselves knowing - in the hope of a slice of a big financial settlement. Most of the big insurers, including Direct Line, Tesco, Norwich Union and the AA, invite bids from law firms to represent their policyholders in court.

Under Law Society regulatory requirements, insurers and solicitors are supposed to disclose the fact that such fees are paid. But research by the Solicitors Regulation Authority, formerly the Law Society, shows that fewer than 6% of firms are complying.

And there are fears that injury cases are given to the highest bidder rather than the solicitor that may be the best suited for it.

Critics also argue that if large referral fees are paid, it reduces the amount a solicitor will be prepared to spend seeking compensation for the victim

.

David Williams, claims director at Axa is quoted as saying:

'The system is so wrong. We have an industry built around these fees. There is no transparency, the customer does not realise payments are made and it does nothing for the industry's reputation.

'The worst example I heard is someone paralysed from the neck down whose case was auctioned to lawyers for £10,000. But you can get up to £700 for almost any minor injury.'

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