John Hancock asks: will the ABI's proposals on compensation improve the deal and, if so, for whom?
Personal injury claims have become a business in their own right but a business that evokes a range of views. On the one hand, lawyers who operate in this market would say their efforts have ensured that ordinary folk are more likely to be treated fairly if they can have access to professional legal expertise.
On the other hand, insurers - who, largely, are the ones who pay the compensation and the legal bills - argue the current claims environment does justice to neither the insurance companies nor to claimants.
When the ABI launched a paper entitled Care and Compensation last December, it was this latter point it had uppermost in its thoughts. The whole purpose, as the ABI's Malcolm Tarling puts it is: "Not a lawyer knocking exercise.
But the current system is not working in the interests of genuine claimants.
It is too lengthy and we believe that everyone, insurers and lawyers alike, need to consider how we can offer claimants a better deal."
The ABI's concern reflects some of the statistics that define this issue.
The average personal injury compensation claim takes three years to settle.
This, the ABI avers, is just too long. They believe that it could be reduced to about six months with some changes.
At the centre of its proposals the ABI seeks to include the elevation of care and rehabilitation to a position that does not leave it as a secondary element after financial compensation.
Plus, and rather crucially, a reduction in the current legal costs. This is not surprising given the figures the ABI cites: for claims under £5,000, claims costs average 93p for every £1 awarded. And, again, while this is no anti-lawyer document, the paper does suggest that the current system is too complex and adversarial and that there are some frivolous claims that give genuine claimants a bad name.
Gravy train
Many lawyers are wary of this type of proposal. Cynics sense concern based on the length and frequency of a gravy train. However, there are always two sides to a case.
The Law Society's response to a December 2004 proposal from Norwich Union on compensation, in which the insurer suggested that, "anyone suffering a loss of under £1,000 should not be able to obtain compensation at all and those with claims under £5,000 should not be able to get independent legal advice," perhaps sums up the core of legal objection.
Edward Nally, president of the Law Society, says: "Denying people their right to seek compensation for claims under £1,000 would prevent us from getting to the root cause of injuries. Likewise, it would be wrong to make people with more complex claims of up to £5,000 navigate a complex process without legal assistance, when insurers will have expert in-house advice and specialist advice from lawyers."
But there is something even more worrying here according to Paul Darlington, head of litigation at Preston-based personal injury lawyer Turners. "There is a tendency for insurers to treat even well supported and properly documented claims as if they were fraudulent."
He also makes the point on the matter of reducing the whole timescale to six months. "Some injuries need at least 12 months before a proper prognosis can be made." Darlington adds, in regard to compensation, that: "Each claimant is an individual and injury damages are for 'pain, suffering and loss of amenity."
Unequivocal opposition
The TUC reaction to this proposal has been unequivocally opposition.
Unsurprisingly, the organisation whose member unions win over £300m a year in compensation for members, expresses alarm at the prospect of more claims being removed from any formal legal net.
"We want to work with the government and insurers to ensure that justice can be made speedier and cheaper for all, but that cannot be done unless all workers have access to good legal advice and support." says TUC general secretary Brendan Barber.
But unlike some lawyers, the TUC agrees there needs to be alternatives presented to the current system. "The TUC is keen to work with insurers and the Department for Work and Pensions to develop effective new rehabilitation proposals," says the TUC's own paper on personal injury released in March 2006.
However, the unions' misgivings and where they consider the cause of delays should be placed can be summed up in the TUC's immediate response to the ABI proposals, "The insurance industry seems to be doing everything apart from admitting early liability. This would be key to both reducing costs and ensuring early access to rehabilitation."
This early admission of liability, the unions claim, would speed up the process. Although insurers would counter that too much speed would just support the type of chequebook claims handling that they are trying to get away from.
Peter Staddon, head of technical services at Biba, adds a new ingredient.
"Insurers have partly got themselves to blame (for the present situation) by making it too easy for personal injury lawyers to effect the insurance policies that back up their 'no win-no fee' offers." He can see the case for compensation, but agrees with the ABI that compensation should not become a lottery win that undermines the need for rehabilitation.
Staddon believes that the UK would benefit from the introduction of Australian style claims case managers, among whose tasks would be to make sure that claimants know what is going on. Sometimes it is the sense of being kept in the dark that gives angry claimants a wholly jaundiced view of a process which, may well be working for them but not with them.
The elevation of rehabilitation to the main concern from day one would be a good thing and balance what some see as lawyers' and the TUC's mild 'compensationitis'. That is, measuring success by monetary outcome rather than by how well the claimant has been restored as well as recompensed.
Unfair burden
Suzanne Kearney, head of technical casualty at Crawford & Company, brings the argument to reality. "Claims are paid for by policyholders," which she says places an unfair burden on them. "While most lawyers and insurers operate reputably, small groups on both sides do not."
Kearney feels that both sides in this discussion should consider not their potential for loss but rather what they could bring to the process that would improve the lot of all policyholders, immediate claimants and those that are paying but not claiming. That sounds a lot like common sense, but will it stand a chance?
