The debate around third party capture is set to hot up
This week the Association of Personal Injury Lawyers (Apil) attached the insurance industry and the FSA over the practice known as third party capture.
One of tne of the most controversial aspects of the personal injury claim system, third party capture is where an insurer approaches directly a party who has been injured by a policyholder of the insurer in order to settle the claim before a lawyer becomes involved.
Insurers use this technique in order to speed up the claims settlement process and cut out costly claimant lawyers.
Apil president Amanda Stevens claimed insurers bullied claimants into accepting lower compensation than they were entitled to and that the FSA turned a blind eye to this.
Insurers insist that they deal fairly with the injured party and that the compensation offered is fair.
The FSA began an investigation into third party capture at the end of 2007, calling for evidence of bad practice from claimant lawyers and trade unions. It has yet to publish its findings.
The debate around third party capture is set to intensify over the coming months, as the practice is likely to become more prevalent.
The economic downturn means insurers will be looking to reduce claims costs by speeding up the settlement process and reducing legal costs.
The fact that the government’s overhaul of the personal injury system failed to delivery many of the reforms that the insurance industry had hoped for will also encourage insurers to find their own ways to improve the settlement process which includes dealing directly with claimants.
There are clear reputational risks associated with third party capture. If claimants are not treated fairly then the public relations damage to insurers will be immense. Insurers know this.
Claimant lawyers – who stand to lose out from this practice – and trade unions will be keeping a close eye on what insurers are doing. The insurance industry cannot afford to slip up.