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Blog: Claims Management Companies – the Dragon that Needs Slaying

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Claims Management Companies – the Dragon that Needs Slaying
Neil Sugarman | 19 Dec 2016
In around 1995 the first “large player” personal injury claims management company (CMC) in the form of the original Claims Direct came to the fore. Bank-rolled by large financial institutions, little did we know that it would revolutionise the world of personal injury litigation. But back then did we think that it would bring that world to its knees, and with it possibly the rights of thousands of innocent injured people? 

The warning signs were there. That original Claims Direct crashed spectacularly in 2001. It was later followed with an even more ignominious fall from grace by The Accident Group. The business models of these companies, founded on high pressure selling and preying on the vulnerable were flawed and doomed to failure, but at the same time they caused many casualties, in terms of employees, firms of solicitors and injured people. 

The Blackwell Commission in the late nineties had warned the then Government about the need to regulate the claims management industry. Then it was mainly personal injury. Nobody listened. Since that time there has been call after call for better and stricter regulation. APIL has been demanding this for well over ten years. The recent Brady Commission made some proposals, but they have no real teeth.

Still the phone calls and texts keep coming. The voice on the end of the phone is often a young person who frankly does not really seem to understand what he is doing, other than reading a script. 

APIL’s Can the Spam campaign has been highly praised and is universally welcomed because everyone recognises the evil at which it is aimed. The Government does too, but complains that this is an industry that is just too difficult to clamp down on effectively. So the answer – don’t bother and just hit the soft target of innocent, injured people, because it’s so much easier! 

CMCs, regulated or unregulated, need air to breathe. That air is the legal profession and for so long as it continues the supply the CMCs will thrive and grow. Not only will they do that, but they will begin to suffocate the supplier. Noises are already being made about CMCs moving into the space that will be created in a new environment which would see an increased small claims limit and possibly a tariff system. 

CMCs won’t need their solicitor consumers any more because they will envisage doing the work themselves and taking the profit. Will they do it properly? That is another question. Will they remember, or bother to recover, for example, subrogated outlays or repayments owed to employers, or do they just want a quick kill?

We should be in no doubt that the insurance industry actually regards CMCs as the villain of the piece. They might be quite content to live and work with respectable, regulated solicitors, but their aim is to cut off the supply that keeps CMCs in business CMCs are simply not necessary to the rights of injured people. Let’s slay the dragon.

Past blog entries

The picture is getting clearer, 01 Aug 2017
Future reform to the bringing of clinical negligence claims?, 26 Jun 2017
There is a cost to caring, but it is a cost worth paying, 28 Feb 2017
Decisions to come in 2017, 06 Jan 2017
Personal injury reform: Back to the dark ages , 23 Nov 2016
If the NHS was an airline, we'd never dare to fly, 03 Oct 2016
Car insurance premiums - a matter of trust?, 31 Aug 2016
New Government, new opportunity?, 11 Aug 2016

About this blog

Neil Sugarman

Neil Sugarman is APIL's current president and is managing partner of GLP Solicitors in Bury. Neil has been involved closely in APIL’s work in the field of rehabilitation.