As per our recent blog on the referral fees issue, we read now that Jack Straw’s parliamentary motion to abolish referral fees has gotten past it’s most recent test in the House of Commons after what is known as a Ten Minute Rule Motion.
Apparently, the ‘Motor Insurance Regulation’ Bill will be brought forward 20 January 2012. This doesn’t mean it will come in to force, but that Parliament will have to debate it.
The ‘bill’ has five provisions in the motion and they are as follows: to make it unlawful and a criminal offence to solicit, offer, or pay referral fees relating to a personal injury traffic claim; to introduce objective evidence for whiplash claims; to half the MoJ fixed fee for road traffic claims pursued through the portal;to prohibit insurers from isolating risk on the basis of a geographic area smaller than a region; and to bring forward certain provisions in Data Protection Act.
So in a nutshell, Insurers want to pay half what they already pay in legal fees to Solicitors successfully pursuing a Personal Injury RTA claim on the fast-track system (claim value under £10k). Strangely, the fixed fees on RTA claims was only agreed with the Insurance sector a year ago. Mmmm… The Insurance industry have whacked up Motor Insurance premiums by something like 40% on average in that last year and made an absolute mint from it to boot. You can bet your bottom dollar that they wouldn’t reduce premiums if they reduced the amount that they pay out in legal fees… they’d do what they always do – boost profits and benefit their shareholders and directors.
In answer to this recent development, we have heard from the Association of Personal Injury Lawyers. To quote them, they said: “Jack Straw is deluded if he thinks a lawyer could possibly give advice to an injured person for the price of £100. In all cases the solicitor needs to talk to the client to understand the symptoms, and the impact of the injury on the client’s life, as well as obtaining a medical report. These were the factors taken into account when fixed costs for road traffic accidents were agreed with the insurance industry only last year. “Mr Straw should also be aware of the Association of British Insurers’ own report of 2008. In Tackling Whiplash: Care, Prevention, Compensation it is said that “vehicle bodies have become stiffer since the late 1980s, increasing crashworthiness in high speed rear-end crashes. This helps reduce the incidence of serious injuries, but may increase the incidence of whiplash, due to higher relative transfer of energy in a crash.” “Surely Mr Straw would not prefer to see a return to increased serious injuries? Of course fraud must be discouraged, and we support the Transport Select Committee’s recommendation that insurers must take a lead in this. Insurers should be under a duty to inform claimant lawyers the minute that they have suspicions that a claimant is fraudulent. Fraud is crime and claimant lawyers are also on the front line. They can’t help to fight it with their hands tied behind their backs.”
We discourage fraud too, but we also discourage the Government acting as a puppet for the Insurance Industry and reducing individuals access to Justice…