Probe is a response to complaints about insurers restricting policyholders’ right to choose a lawyer

The Law Society has launched the first half of a major survey exploring “harmful” practices by legal expenses insurers.

The society said it had launched the survey in response to “consistent feedback about harmful insurer practices affecting consumers, including restricting people’s rights to choose their own solicitor”.

It said it was concerned that insurers are putting pressure on policyholders to use lawyers chosen by the insurer, and that the insurance industry “may be using financial barriers to inhibit freedom of choice. The only option appears in many cases to use the lawyer provided by the insurer.”

The society pointed out that under EU law and the law of England and Wales, a policyholder’s right to choose their solicitor is protected.

It added that recent case law has emphasised that insurers should not offer to pay so little under a policy that clients cannot meaningfully choose their own solicitor.

Law Society president Nicholas Fluck said: “Even at the point of issuing proceedings on a case, when insurers can no longer argue against you choosing your own solicitor, we have seen instances where they’ll try to discourage you from changing over by introducing hidden costs and transfer fees.

“We’ve heard a lot from our members informally about these issues, and we’re running the survey so we can understand the extent of the problems. We need all our members with experience of LEI-funded work to feed in.

“This will apply to many PI and employment solicitors that may have experienced problems of this type. Even if they haven’t actually worked under LEI, they may have had to decline instructions precisely because the insurers wouldn’t provide sustainable hourly rates. The better our data, the greater the chance it can be used to improve the situation.”