Some years ago defendant insurers kicked up a fuss about the cost of success fees and After the Event (ATE) premiums in RTA cases. Apparently this raised the costs of all motor insurance and we all had to pay for it.
In April 2013 the Jackson reforms provided the solution and the defendant insurers were happy, car insurance premiums would fall for all.
18 months later, defendant insurers are again complaining.
Shock horror, fixed fees and the portal have had the desired effect, costs are falling but damages have started to increase. With success fees coming from damages (up to 25%) and damages going up by 10% to compensate for such, what did the defendant insurers expect claimant lawyers to do? If a business model works all is fine, if the income falls (reduced fees) then something has to give. Firms could go out of business with all the consequent problems or fight back and change the business model. It’s called survival.
This is not the only reason damages are increasing, previously unused heads of claim are being put forward. More sophisticated arguments are being used, psychological loss is more prominent but how is it quantified?.
This reminds me of the ‘cold war’ arms race. All it does is increase costs to BOTH sides. What is needed is a compromise, everybody gets a fair share and all are happy, is that too much to ask?
When I get home tonight I will be checking the bottom of the garden to see how the fairies are getting on!!
One way for claimant solicitors to push harder for their clients is to insure early, this protects clients and gives them the means to fight. Currently it is possible to have cover of £50,000 for between £90 and £500 for straightforward cases. Policies provide cover for own disbursements and other sides’ costs on failure to beat a Part 36 Offer. If you wait until a Part 36 Offer is received then the cover may be more expensive or not available.
The market is constantly changing, so the best way forward?
Use QLP to keep up to date with the market.

Modern insurance is thought to have started in Genoa around the 14th century. The big break came in the 17th century London mercantile market, in a coffee house run by a certain Mr Lloyd, way before Costa or Starbucks.
Over time the basic principle of insurance turned on ‘utmost good faith’ and ‘my word is my bond’. A hand shake secured a contract. Simple contracts were set out showing terms and conditions, the insurers looked it over and if they agreed, they signed at the bottom and so the term ‘underwriter’ was born.
In our modern world we have complicated the business (compliance and litigation) with quotes, (very) long wordings, subjectivities ad infinitum now the norm. Does ‘upmost good faith’ still exist?
We certainly hope so, Underwriters issue quotes once happy with the application, clients then sign the quote agreeing the terms and a contract is made. If someone then changes their mind, all trust is lost and it is difficult to maintain and rely on relationships.
A London newspaper recently highlighted a company’s plight and declined insurance claim, all because on a hot day a door had been propped open with a fire extinguisher. The extinguisher, we think, was returned to its proper place but the insurer dismissed a subsequent claim on the basis of this improper use and technical breach of terms and conditions, despite the claim being caused by something else.
Utmost good faith is therefore still essential: we need trust between insurers, insureds, brokers and solicitors, if people have a policy of insurance, they must be able to rely on it. I think of insurance as ‘a sleep easy’, if I doubt its reliability how can I ‘sleep easy’?
We here at QLP really do believe in the principle of utmost good faith, without it the insurance industry suffers and is devalued. As brokers we continue to have an important role making each side adhere to contract terms, long after the event of the sale (no pun intended).

Whiplash has always been controversial, in September for instance, we know of a case where of 4 people make a claim against a lorry driver after he crashed into the back of their car. Unfortunately for the claimants the driver had a video camera in his cab. It showed the car deliberately swerving in front of the lorry causing the crash. Case finished.

There is a perceived problem with whiplash. The newspapers carry stories about how much we pay from our car insurance premium to cover the cost of whiplash. The Rt. Hon. Jack Straw MP has been vociferous in his condemnation of whiplash claims.

So, I suppose it was only to be expected that the Government would come up with a ‘solution’. The Ministry of Justice (MoJ) has started (and by the time you read this, finished) a consultation on a new IT solution. A new Government IT system working and on budget, (if only), that would be a surprise. A new company will be formed and it will be independent (MedCo).

Anyway to detail, claimant solicitors will be able to check a client’s 5 year ‘whiplash history’. This magnificent new system will also be able to allocate medical experts to claims. This super dooper new company will also be responsible for a mandatory accreditation scheme for medical experts.

The whole new system is being funded by the Association of British Insurers (ABI) and ongoing funding will be paid for by accreditation fees.

There will be set fees for all, ranging from £180 to £420 for reports which seems a little optimistic for a consultant’s report. If we are not careful a new sausage machine will evolve , with the consequent lowering of standards.

In an effort to ensure fair play, there are complex rules about ownership of companies supplying medical reporting services. It seems that already we are in danger of disappearing somewhere very unpleasant.

Let’s look at the other side of the coin, a nasty solicitor firm can own an ‘expert’ company but is not allowed to use it for their clients. However the firm (MedCo) that runs the system and runs the expert accreditation system is on the side of defendants, no conflict of interest there then!

So a quick question, does anybody think that any savings this new system makes will be reflected in our car insurance premiums? If you do, I hope Father Christmas brings all your wishes this festive season. Less than 70 shopping days until the big day!

Here at QLP we are coming to the end of the Solicitors’ professional indemnity season and looking ahead, what next? Well the obvious answer is Christmas!

But on a more cheerful note, what is happening. Here at QLP we have put in a new computer system. Re done the wiring even have new chairs but everything seems the same. Good news I suppose, nothing has broken down(yet!!!)

So what challenges does all the new kit face?

Over the years we have settled into a nice easy system of working, all the little kinks have been ironed out and life was calm. Then things started happening, Jackson came into force and nothing was left untouched. To be honest the post Jackson world was fun, new avenues had to be found, all the old certainties went, business was much more a rollercoaster.

18 months down the line, new ideas are in place, underwriters come and go, new faces are everywhere. There has been a lot of innovation, new ideas, policies etc.

I think the main thing to come out of all the turmoil is ‘the answer is never no’. As lawyers come up with strange requests, a little thought and a conversation with an underwriter can sometimes produce a new angle on an old theme.

For example, direct access to barristers, most underwriters automatically say no, why? Secondly, some underwriters say that their premium would be disproportionate in a case, as the client pays the premium, surely it is their decision. If a case is likely to succeed, should not the client have the right to justice?

Today we are very nearly back to where we were before Jackson in terms of cases and policies. For smaller cases we now use schemes, ‘if it fits the criteria it’s in’, think of it as a sausage machine.

For larger cases, clinical negligence, commercial etc. it is now possible to insure and provide funding (cash!) to help run the case. This can remove pressure on the firm’s balance sheet (both lawyer and client)

The rule going forward must be, ‘ask otherwise the answer is always no’.

If the above is not enough, as I said earlier, it’s nearly Christmas!

According to a recent poll only a quarter of people with a viable compensation claim (this was not defined and there is no way of telling if “viable” is one which a solicitor would run under a CFA or a broker think “brokable”) actually go on to make a claim. Quite how this balances out with the same media forever telling us that the compensation culture is overwhelming the country I am again not sure. I am sure that a proportion of our car insurance premiums do go towards paying off whiplash claims.

So what is actually going on? As usual, I think the answer is somewhere in the middle. We all know that bad news is good news for newspapers and the rest of media, so we hear all about fraud, people over egging their injuries and lavish awards paid out for what seems trivial reasons.

It needs to be said that, in our experience, the vast majority of cases are honest, settle at reasonable levels and help the claimant. It’s not ‘free money’ and not seen as such by claimants who need help to recover after accidents, adjust to new circumstances, to put themselves back to the position before ‘it’ happened. Often the only way to do this is via the courts, this costs money!

All the hoo-hah about huge fees and premiums paid to lawyers and insurers ignores the actuality that, these are paid to firms who: employ people, pay tax and national insurance, pay rent and rates, pay claims (insurers) and many other ‘incidentals’ that keep people in employment, who in their turn contribute to the economy and UK plc.

This is about more than the purity of the law, it is also a business and justice does need to be seen to be done.

Therefore do not despair, we should keep going, we all make a difference and in some cases if we did not do as we do, there would be a distressing number of injustices for the media to highlight and complain about.

This is a real ‘downer’ of a blog but remember we do a useful job, we help people who are in trouble, this cannot be said of some of the detractors but they have to make a living as well.