Fraudulent Whiplash Claims, Compensation Culture And Nuisance Advertising and Marketing Techniques

The insurance industry is without doubt a very powerful lobbying body that has for hundreds of years been making Goliath-size profits by underwriting risk. Should these huge profits ever come under threat nothing can stand in its way, with its tentacles of power and influence reaching the very heart of the British government.
To safeguard its financial strength the industry is not afraid to impose hikes in insurance premiums, beyond what many may consider fair. With the general public currently already being squeezed financially from every which direction, the latest 40% hike in car insurance premiums is a bitter pill to swallow.
But along comes high profile advertising on a person’s right to claim compensation for injury due to an accident, together with the burgeoning use of unsolicited calls and text messages by Claims Management Companies and their ilk that drives everyone insane including lawyers, with their unrelenting persistence.
Suddenly, here’s an opportunity handed on a plate to the insurance industry. Blame the ridiculous increase in car insurance premiums, which is reported to have increased by as much as 40% in 2011 alone, on lawyers and their accident claims binge.
Brilliant I say, except that no one has yet been able to find any decent anecdotal or statistical evidence to support the insurance industry’s assertions, with the exception of whiplash injuries. Even so, while I’m not condoning for one moment specious claims for whiplash, how much financial damage has this increase in whiplash claims really caused the insurance industry, and is it really sufficient justification for the sharp rises in car insurance?
The reality is that behind the public scene, there’s been a longstanding battle between solicitors and the insurance industry over costs since early 2000 when legal aid was removed as a source of funding in personal injury claims. Suddenly, solicitors were being asked by the Government to help victims of accidents on a no win no fee basis but allowing solicitors to recover a percentage uplift to compensate them for having to take on cases with the risk that they may not recover the costs in those cases that they lose. This idea of factoring in risk for determining the cost to charge isn’t new. The insurance industry has been doing it for centuries and making a lot of money out of doing so.
Needless to say, the insurance industry doesn’t like it and can’t see why it should keep picking up the whole tab for the mistakes of its insured. As always, the insurance industry wants to get away with paying as little as possible much like how it manages to wangle many of its own deserving customers out of legitimate claims by having ridiculously mind-blowing exhaustive lists of exemption clauses written into its policies.
The timing of the insurance companies’ protestations at the increasing burden of legal costs in accident claims could not have come at a better time. The public are being besieged by unethical claims management practices that gives the perception that we are in the grips of a “compensation culture” – but that is all it is, a perception. There is and has never been a compensation culture. It is pure fantasy created because it serves a purpose and gives legitimate authority to those that are looking to protect their own interests.
What is critically important to understand is that solicitors assess each case, only taking on cases that appear to have more than a 50:50 chance Rear End Lawsuit of success based on the evidence. In other words, solicitors cannot afford to take on specious claims or anything that looks fraudulent.
The mere fact that here is greater public awareness of accident claims, partly unfortunately due to unethical marketing practices of claims management companies, doesn’t mean that the insurance industry is being bombarded by specious and fraudulent claims.
But that is exactly what the insurance industry would want you to believe, as it gives them strong legitimacy to hike up their premiums and make lots of noise in Parliament Trial Lawyer Salary on the need to curtail claims and solicitors legal costs. And unfortunately they’ve been getting their way, principally because they have powerful connections.
But if this is all scaremongering and hot air by the insurance industry why has the Government bought into their arguments lock stock and barrel?
Well let me suggest to you this. The government has got itself into a very tight financial corner after bailing out the reckless and greedy bankers that saw the shift of huge bank debts and losses to the tax payer. As a result the Government now finds itself having to push through some very unpopular measures to bring public finances back under control. It will seize on every opportunity to divert the public’s attention away from these unpopular measures and if it can also be seen as a protector of the public in the process, then that’s a bonus.
Sharp rises in cost of motor insurance and the portrayal of the accident claims market as being filled with greedy unethical individuals is a fantastic opportunity for the Government to divert attention on to the legal profession. The battle cry is that lawyers charge too much and something must be done about it!
Lord Jackson proposals which are being accepted in their entirety by the Government in sweeping changes to civil litigation cost reforms, have been met with significant opposition from all quarters including Judges.
Civil rights and consumer rights organizations, as well as senior judges,The Law Society and lawyers generally are warning the Government that if it permits these reforms to go through without amendment and without addressing the main issues of concern, serious damage will be done to the principle of access to justice for all, as it will leave us with a legal system that only the rich can afford.
Some of key changes recommended by Lord Jackson are:
1. End referral fees,
2. End the recovery of Success Fees and After the Event insurance in No Win No Fee agreements, suggesting that the Claimant pay for this out of the damages that they are awarded.
The emphasis is to shift the financial burden of claiming compensation away from the insurance industry and onto the innocent victim of an injury.
In addition to the above, solicitors will have the success fee element capped at 25% of damages in No Win No Fee agreements with clients.
The result of all this is to shift the burden onto solicitors and clients. In the new legal environment solicitors are unlikely to be in a position to offer No Win No Fee agreements to many innocent victims of accidents particularly in lower value claims and in those cases that don’t display a strong prospect of success.
Access to justice will therefore be seriously curtailed for many that are in most need, leaving all but the rich with the ability exercise their rights.
Once again we see the preservation of power, money and influence in large corporate bodies at the expense of the general public at large.

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