Cowboy Claims Companies Blamed for Spike in PI

by jimloxley on July 9, 2012

Claims management companies are coming under fire once more as a set of figures published by the Institute of Actuaries last week demonstrate a sharp rise in personal injury claims of late. It was reported that the proportion of personal injury accident compensation claims rose by around 18 per cent last year. Also reported in the published figures was a drop in third-party claims by around 11 per cent from same time period. The report arrives not long after figures showing that car accident compensation cases have rose by around 18 per cent, in spite of a decrease in the number of car accidents happened, as was published in The Telegraph.

The worst offending UK areas on the list are Birmingham, Manchester and Liverpool, a trio of cities which were found to have a significantly higher proportion of such claims than anywhere else in the country. They even managed to overtake the equivalent claim-capital areas of America. The figures are being lauded as additional proof of the so-called ‘compensation culture’, a fact which is becoming increasingly difficult to deny. The Motor Accident Solicitors Society (MASS) has stated that it was “disappointed but not ultimately surprised” at the recently released figures.

Donna Scully, who is currently Chair of the organisation, stated that “Unprecedented activity by some claims management companies (CMCs), a group we have often said are implicated in the rise of personal injury cases and uplift in motor insurance premiums, has and continues to be an important factor in these unwanted increases.”

Scully is of the opinion that it’s the small number of cowboy claims management companies who are largely at fault for the spike in personal injury accident compensation claims. She’s called for swift and firm action to be instigated against practices such as cold calling or unsolicited text messages and asked why, in spite of some 2,000 complaints happening every month, the Information Commissioner is not taking any action. MASS has also stated that it supports the Association of British Insurers’ request that compulsory medical examinations be made before any accident compensation damages are awarded.

A partner from Hertfordshire firm Collins, Dani Holliday has voiced concerns that the impending ban on ‘no win no fee’ or Conditional Fee Arrangement cases which is to be implemented in 2013 will fail to address the underlying issues in the UK’s legal system. She went on to state that ‘There has been a lot of talk about the parasitic nature of spurious PI claims. It may cost the insurance industry £400m a year and it may be more. It is in reality all of us who pay through increased insurance premiums.

Jim Loxley is a Director at claims specialist, My Compensation

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