Insurers say targets are too ambitious and could lead to more fraudulent claims
Insurers have warned one of the central planks of the government’s personal injury claims consultation paper could prove untenable.
Senior claims figures have said that revised deadlines for the admission of liability cannot be met.
According to the draft proposal, released in May, insurers must admit liability within 15 days for road traffic accident (RTA) claims and 30 days for employers’ liability (EL) and public liability claims.
But insurers have for the first time since the consultation paper was published expressed concerns that these targets are too ambitious and could lead to increased levels of fraud.
Steve Thomas, general insurance technical manager at Zurich, said: “We think that the limits are too tight. If the process is forced too quickly, it could hamper our ability to process claims. We need more time until behaviour – particularly that of claimant lawyers – starts to change.”
He added: “Do we need more people? That’s a debate many insurers are asking.”
A typical personal injury claims can take up to 90 days to process.
Thomas said Zurich would be recommending the government to extend the periods to 25 and 45 days for RTA and EL claims, respectively.
Justin Jacobs, head of liability, motor and risking pricing at the ABI said: “We recognise that timescale will be challenging. And it should be. The key is to makes sure the insured lets the insurer know.”
He added: “There needs to be sensible discretion on both sides. Deadlines cannot be absolute. The timescales have to be long enough to conduct initial fraud tests.”
Mike Noonan, head of claims at QBE, suggested that, although changes would be made to the paper, at least 75% of its recommendations would remain intact. “It is a zero sum game. There are serious implications if insurers can’t meet the deadlines. But it will also drive competition – those who can’t comply will get hurt.”
Thomas played down the impact of fraud, suggesting that there were adequate resources in place to combat the problem. “We have a concern about fraud. But insurers have been asking for this for years. Now we’ve got it. It’s time to gear up.”
Andrew Welch, head of litigation at Stephensons, added: “It’s pie in the sky. Insurers will have to take a broad brush approach. It’s almost a charter for the fraudster.
“The rules don’t outline clearly what will happen if the deadlines are missed.”
Insurers must submit their responses by 13 July.
Claims by numbers
•1,000 days – the average time taken to settle a personal injury claim
•£2bn every year paid to claims handlers – nearly 40p in every pound paid in personal injury compensation
•£6bn – annual cost of personal injury claims
•£4.5bn – annual cost of motor injury claims
•£1.4bn – annual cost of employers’ liability claims