Insurers need to “look closer to home” to reduce premium costs

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Insurers need to “look closer to home” to reduce premium costs

26th June 2012

The president of the not-for-profit group APIL (Association of Personal Injury lawyers) has criticised a leading insurance company’s chief executive for comments he made regarding cutting and capping damages an injured person is entitled to.

Karl Tonks was moved to make the response following David McMillan’s comments in the Post insurance journal in an opinion piece entitled ‘View from the top – righting wrongs in the insurance market’.

“How can Aviva chief executive David McMillan say it would be a positive move to cut and cap an injured person’s damages?” said Karl, a partner with Fentons Solicitors LLP. “In his ‘view from the top’ it seems he cannot see the reality on the ground.”

Karl pointed out that whilst Mr McMillan chose to label whiplash “the most damaging” issue affecting the industry, a blanket response to claims would simply penalise further those people who sustained soft tissue injuries, particularly those who suffered long-term effects.

“Anyone with a genuine claim for whiplash should be compensated according to the merits of their own case,” said Karl. “Whiplash injuries can vary in severity and research shows that around a third of victims can go on to develop a chronic condition. To cap damages for whiplash may deny a genuine claimant the proper compensation to which they are entitled.

“Before calling for the Government, courts and medical profession to ‘restore sanity’ to assessing claims for whiplash, Mr McMillan should instead look closer to home.”

Karl said that the growing practice of insurers making pre-medical offers, which specialist personal injury lawyers often see in the lower value road traffic accident (RTA) claims process, strips the system of one of the important checks and balances which helps to weed out dishonest and unmeritorious claims.

“Claimants are also unlikely to receive the correct amount of compensation when the case is concluded on the basis of a pre-medical offer,” he said.

“The suggestion that genuinely injured people should be under a legal obligation to contact defendant insurers so they can deal with the claim directly would increase the risk of unscrupulous insurers trying to under-settle genuine cases.

“Insurers know that injured people lack the legal and medical knowledge necessary to determine whether an offer is suitable. It would be completely inappropriate for the law to be changed in a way that would allow an unprincipled insurer to exploit this blatant conflict of interest.”

Karl said that another of Mr McMillan’s suggestions - to increase the small claims limit - would undoubtedly damage an injured person’s access to justice. “In the small claims court the claimant, who is almost always an uninformed, one-time user of the system, is pitted against the ‘Goliath’ insurance company which knows exactly how to exploit this situation to win the case,” he said. “The injured individual is completely out-gunned.

“Mr McMillan claims that a reduction in costs would lead to a fall in premiums. But more than two years ago costs were slashed when the streamlined process for lower value RTA claims was introduced. Were motor premiums ever reduced accordingly? Of course not.

“The purpose of insurance is to provide redress for injured people who have to call on the system when things go wrong,” said Karl. “The insurance industry’s relentless and unedifying campaign to avoid paying compensation is, in effect, a constant threat to pull the rug from under injured people’s feet.”

Read more at: Post Online