The claims management sector has one final chance to make self regulation work, or the government will step in to regulate the sector, the government has warned.
Speaking at the Insurance Times Future of Personal Injury Claims conference, Constitutional Affairs Secretary Lord Falconer said: “If the claims management sector does not put its own house in order we will consider how new formal regulation could be introduced”.
Falconer said the government wanted to see “a major change in quality and behaviour so that the service provided to consumers is improved significantly”.
He said the perception of a compensation culture in the UK could not be allowed to continue. The perception of a compensation culture made organisations risk averse, as well as undermining genuine claims.
“We need to send a strong message that provided people act with reasonable care, they cannot be successfully sued even if someone is hurt. And if an injured person has not acted sensibly themselves then that too will be a defence, at least in part, to any claim.”
In setting out the government's response to the Better Regulation Task Force report “Better Routes to Redress”, Lord Falconer set the government will:
· Ensure proper regulation of claims management companies to stop frivolous claims being encouraged. These companies have a last chance to regulate themselves through the new Claims Standards Council. If they fail to do so the Government will consider how formal regulation could be introduced, taking into account the recommendations of the Clementi review.
· Discourag advertising in hospitals that encourage patients to claim against doctors and doctors being paid to refer patients to a solicitor.
· Improve the system for dealing with genuine claims by: exploring how earlier and better rehabilitation can be provided to help the injured and reduce claims; and how we can encourage much greater use of alternative dispute resolution as often an explanation and an apology are what people most want. Where claims go to court, we will ensure the procedures and costs are proportionate. This will include researching whether to increase the small claims personal injury limit from £1000 as well as considering other options for dealing with these claims.
· Tackle the causes of the underlying problems by reducing accidents in the first place through better health and safety measures and proportionate risk assessment procedures.
· Promote the availability of affordable insurance by working with the insurance industry to explore how premiums can be linked more effectively to risk.
In order to see that these initiatives are carried out, the government will form a Ministerial Steering Group, led by Constitutional Affairs Minister David Lammy, said Falconer.
An Action Group drawn both from within government and from outside organisations will inform the steering group. Members of the legal profession, claims management companies, insurers, local authorities, the Confederation of British Industry, the Trades Union Congress, and consumer groups will be askes to participate.
Lord Falconer said the claims industry needed to return to a simple principle, that “where there is wrong-doing, which causes loss, people are entitled to compensation”.
He added: “My view is clear – I am opposed to the idea, or anything that promotes the idea that where there is an accident, there is always compensation.
“We do not want to go down the road where our responsibilities to one another are reduced to who can get what from whom, regardless of negligence or wrong doing.
“We do not want to promote the law as a lottery where claimants are encourage to take a punt.”
A copy of the government's response to the Better Regulation Task Force report is available from www.dca.gov.uk/majrepfr.htm
