The Association of British Insurers (ABI) took a stand against the involvement of solicitors in false whiplash claims in the annual Motor Accident Solicitors Society (MAAS) conference. James Dalton, the ABI’s assistant director of motor and liability, highlighted that some solicitors aid or initiate bogus whiplash claims. This raises the question – are solicitors more of a problem than a solution?
Solicitors are under the supervision of the Solicitors Regulation Authority (SRA). The goal of SRA is to maintain that all legal professionals adhere to a specific level of performance. Solicitors should be well-versed, proficient and truthful when communicating with clients. As such, the SRA can scrutinize any conduct deemed as inept, misleading or unethical. However, deceptive whiplash claims appear to skip the SRA’s radar. Is this because they are too minor or there’s no genuine case to look into?
In 2011, ABI branded the UK as the “whiplash capital of Europe”. Research by Baizer Kolar P.C. suggests that about 1,200 whiplash compensation claims are filed in the UK daily, causing a £2 billion annual dent in insurers. The authenticity of these numbers hasn’t been fundamentally contradicted yet, the figures do little to highlight the frequency of false claims, as there’s no foolproof system to detect them. So, why did Dalton zero in on solicitors at the MAAS conference?
One possible reason is the increasing insurance premiums which are typically blamed on uninsured drivers, offenders and whiplash fraudsters. Insurance companies often go silent on their habit of amplifying premiums to safeguard or even augment their profit margins. In fact, Admiral reported a pre-tax profit of £160.6 million for the first half of that year while concurrently hinting at a surge in personal injury claims. Given that insurance companies operate to make profits, it’s not entirely shocking that Dalton blatantly targeted what he perceives to be bogus whiplash claims whilst insurers continually amass enormous profits from their clients.
It’s intriguing, however, that solicitors have been attacked when typically, insurance companies are the ones directing whiplash claim cases to law firms and accident management companies. Dalton justified this by saying that insurers need to recoup some costs, but if fraud is such a rampant problem in whiplash claims, why do insurers still supply solicitors with business? The answer lies in the referral fee which is paid by firms to insurers for new personal injury claimants.
Insurance companies profit regardless of the claims’ validity because their costs are easily covered by referral fees and insurance premiums. The fact that a few groups own most of the UK’s leading insurance companies also means costs can be circulated between subsidiaries. This somewhat veiled economy can benefit companies striving to rationalize increased premiums, especially when the NHS only spends £8 million on treating injuries worth £2 billion.
From an outsider’s perspective, it can be challenging to deduce whether solicitors are acting in good faith.
Turning back to the main issue, a differentiation should be made between accident management firms and solicitors. With recent legal alterations, the call a victim might get about their compensation claim is likely to come from an accident management firm, not a solicitor. These firms, untethered by some regulations that bind solicitors, reportedly play a significant role in fraudulent claims. While some solicitors might be implicated in fraud, they’re surely not the primary villains.
This guest post was written by Denver Burke on behalf of Ead Merseyside Solicitors. He’s a proactive content creator, covering various topics on the web. He aims to share his passion and expertise on the subject.
