- Nearly 1000 processed claims later, the system is system working well
- CMC’s biggest driver of fraudulent claims
- There would be consequences to significantly reduced fees
Fraud
I understand the considerable concern expressed by the Association of British Insurers and also the Government about the level of fraud in Road Traffic Accidents. This is both in terms of fraudulent claims and exaggeration of injuries.
The most important persons in the fight against fraud and exaggeration are not the insurers nor the law makers, but Claimant solicitors. It is Claimant solicitors who have the first contact with the client, it is they who put forward the Claimant’s claim and process the claims. The current fee structure enables Claimants solicitors to take reasonable steps to prevent fraudulent claims and identify exaggeration. What the insurers fail to understand and what the Government appears to overlook is that we have no interest in dealing with fraudulent or exaggerated cases. Ultimately it is the Claimant’s Solicitor who is likely to be out of pocket through unrecoverable disbursements and referral fees.
Be Careful What You Wish For
I have processed nearly 1000 claims under the new Process. The current fee structure enables my Firm to see the Claimant in person in every case. This is done by a Solicitor not an unqualified person. This obviously assists in respect of client care and client relations. However in our experience by seeing the Claimant in person it enables us to identify potential fraudulent claims. Indeed we reject scores of cases every year after seeing individuals in person if we feel either that the Claimant is not genuine or the injuries are being exaggerated. It would be much more difficult if not impossible to do this over the phone or by ‘form filling’. Moreover, the current fee structure enables us to employ a member of staff to obtain and check all medical records and notes. Once again this is part of the fight against fraudulent claims. We ask Claimants about their claim history and this information is checked against the medical records and notes. The medical records and notes also enable us to check to make sure that there are no inconsistencies with regards to the instructions provided at the original meeting. Because we are able to meet the Claimant in person we can be sure what information was given to us at the original discussion. Finally the current fee structure enables us to instruct an Orthopaedic Surgeon in the majority of cases. He adopts a robust approach in respect of exaggeration. A significant reduction in fees could in fact increase the level of fraud, increase costs and ultimately increase insurance premiums not reduce it.
Beware of Unintended Consequences
A significant reduction in the Portal Costs would mean that it is unlikely that a solicitor would be able to be employed to process the claim. For example in our scenario a solicitor would not be able to see the Claimant in person. Nor would it be possible to obtain and review medical records and notes. This would increase significantly instructions taken on the telephone. The whole process would be reduced to a form filling exercise. Gone would be the numerous checks that we have in place to detect exaggeration and fraud. This would significantly increase the number of claims not decrease it. Removing the solicitor from the process would result in an increase in the number of claims that would be entered into the Portal.
If the number of fraudulent claims did increase then the percentage of claims exiting the current RTA Claims Process would also increase. This would remove a large number of cases from the RTA Claims Portal and of course those costs would be subject to the current predictable costs scheme which is, on average, higher than the RTA Claims Portal costs. Therefore a significant reduction in fees or indeed any reduction any fees is likely to result in increased costs, increase in the number of claims and, most importantly, an increase in the number of fraudulent claims. By reducing the Portal costs the Government could actually make matters significantly worse.
Fraudulent claims likely to rise
If the Government reduced the Portal costs significantly then it would increase the differential between the RTA Claims Portal costs and predictable costs. It is likely that the way the claims are processed would change. If the Defendant failed to comply with the strict timetable laid down in the RTA Claims Process then it is much more likely that the Claimant’s solicitors would exit. They would exit so that predictable costs were to apply to the claim rather than RTA Claims Process costs. This is likely to increase costs and also increase satellite litigation. Another unintended consequence is the attitude of the insurer to claims that maybe fraudulent or where the Claimant was possibly exaggerating. In those circumstances the insurer is likely to simply accept the claim and make payment in order to prevent the matter from exiting the RTA Claims Process. By exiting the costs would significantly increase. The number of claims and the number of fraudulent claims are likely to increase in such circumstances.
The System is Working
The current system although met with some scepticism from APIL members is, in my view, working well. I have processed nearly 1000 claims through the Portal. The process is streamlined and much simpler for the Claimant. There has been a significant reduction in disputed cases and the need to proceed to a fast track trial to determine quantum. We have had a number of hearings through the Portal but these are simpler and the costs are significantly less it is also quicker and more straightforward for the Claimant. The Government should pause for thought before altering the system and more importantly the costs as in my view if the costs were significantly reduced or reduced at all then the attitude of co-operation developed over the last 2 years and the fight against fraud is likely to disappear.
Pause for Thought / Referral Fee Ban
My own view is that Claims Management Companies are the biggest driver of fraudulent claims. They are incentivised by seeking a referral by selling details of the Claimant to a Solicitor for the highest fee. They do not care whether the Claimant’s claim is genuine or exaggerated as the referral fees are paid by the Solicitor as the beginning of the case. The banning of the referral fees should, in my view, reduce the number of claims. This will only work in my view if the ban is properly enforced and that any sort of payment is made unlawful. It must be remembered that the biggest 2 claims management companies (the Accident Group and Claims Direct) existed at a time when referral fees were banned. The referral fee was dressed up as an Accident Investigation Fee. A review of the fee structure should take place 12 months after the referral fee ban has come into effect.
I trust this information assists. The views expressed are mine and necessarily the view of my firm. My firm does not accept referrals from Claims Management Companies nor Insurers.
