One of our goals this year has been to try to cut through
the rhetoric between insurers and lawyers with the aim of working with each
other, rather than positioning ourselves as natural enemies. It’s not always
the easiest option, and we have already hit a bump in the road.
Several big, well known insurers have embarked on a new
approach - writing directly to the people that their clients have injured,
rather than to their lawyers. They send letters asking the injured person to
confirm that they have indeed instructed that firm of solicitors (because, they
assert, firms sometimes make that sort of thing up). This appears to be a
standard letter, rather than targeted towards cases that are in the ‘high risk
of fraud’ category. The letters are strongly worded and vaguely threatening.
Yes, the honest client has nothing to fear, but the tone of the letter will
undoubtedly put off some genuine clients from proceeding.
The injured person is then formally required by the letter
to ring up the wrong-doer’s insurer to confirm that they have indeed instructed
the solicitor. There is no legal requirement for the injured person to do this,
and not phoning the insurer will not prevent the claim from proceeding. But the
client will not know this.
Several things are then happening. Firstly, the client is
being asked to explain how they instructed the firm - i.e if a referral was
made, and by whom. The insurance industry has long wanted this commercially
sensitive information and is now demanding that the client provides it in order
that the claim can proceed. Again, the client is actually under no obligation
to provide this information.
Worse still, we are now hearing reports that when clients
contact some insurers, they are then encouraged to stop instructing the
solicitor and deal with the insurer direct. The insurers use the 14 day
cancellation period tactically to encourage the client to deal with them
direct. A measure put in place to protect consumers is now being used against
them. This leaves the client unrepresented, with no clear advice as to whether
the settlement on the table is good, bad or indeed ugly.
These letters do not play fair. They hoodwink the injured
person into thinking that they have to do what is demanded in the letter. Even
though the insurer knows that the client is represented, nothing in the letters
tells the client to discuss it with their lawyer. This is not about deterring
fraud, this is about saving money for the insurers through putting off
genuinely injured people from pursuing a claim. It is about saving money
through cutting out the lawyers to save legal costs, whilst leaving the injured
person bereft of advice and at risk of their claim being under settled. The whole point of having insurance is to
compensate those who get injured through no fault of their own. Not just to
offer them a cheque but to compensate them properly, following a medical
examination to ascertain whether they are injured, the scale of the injuries,
and how quickly they will recover, if at all.
Insurers had started to recognise that offering compensation
to clients without them undergoing a medical created an environment of easy
money which could perpetuate fraud. Lawyers and medics provide checks and
balances. Are we going full circle back to the days where insurers try to tempt
clients away from lawyers by showing them an open cheque book with no strings
attached? Last time this proved short sighted - driving claims up, and
ultimately premiums up.
I am hopeful to discuss such practices face to face with
insurers, practices that discredit the industry and undermine the trust between
insurer, lawyer and client. Facing such issues head on and having honest
discussions is the best way to deal with them.