Inter Law – Whiplash sufferers targeted for third-party capture

Insurance companies that are dealing directly with whiplash victims straight after an accident has happened, are set to be investigated after allegations were made that they are placing undue pressure on people to waive their right to compensation or to make settlement for claims for less than they should be.

The Financial Services Authority (FSA) were handed a file from trade unions and claimant lawyers with alleged evidence of such action taking place. One of the trade unions, Unite, highlighted the names of insurance companies who had tried to settle applications from injured people before they had the opportunity to seek independent legal advice. This practice, known in the industry as вЂ?third party capture’ included one accident victim being offered £4,000 by insurance company Zurich in a вЂ?full and final settlement’, only for the case to be eventually settled for £35,000.

Further evidence included in the dossier handed to the FSA was submitted by The Association of Personal Injury Lawyers (Apil) who told of an extreme case where bereaved parents who had lost their three children in a road traffic accident were only offered £21,000 by Irish company Quinn Direct. The claim was later settled for £60,000.

Unite and Apil underlined their concerns about insurance companies who employ the tactics of representative’s cold-calling вЂ?third party’ victims almost immediately after an incident.

An example of this included in the report was the story of a lady who had been in a road traffic accident with a learner driver who had driven into the back of her car. Both she and her son suffered whiplash as a result of the collision. The day after the incident the lady was visited at home by a representative from an insurance company asking if she would like the use of a hire car and if she was planning to make a claim in the next six months. The form was signed and in turn the lady had unknowingly waived her right to compensation. Her lawyer later advised that the waiver was not effective.

The claimants’ solicitor, Jason London commented, “A considerable amount of pressure was put on my client. Visiting an accidents victim’s house in the after math of a car crash is clearly outrageous.”

Despite being unsure as to whether there is the need to close an apparent regulatory gap, an FSA spokesman said, “We are continuing to investigate the extent of the alleged customer detriment. To reach an informed conclusion, we shall have to gain a better understanding from insurance companies themselves of how they treat third-party claims and we are considering how best to go about this.”

Unite’s deputy general secretary, Graham Goddard is convinced that they have put forward a strong case to the FSA for them to take action to bridge the gap in the regulatory regime. He said, “Accident victims are losing out because if they aren’t receiving truly independent advice, they don’t know the true value of the claims. Our evidence is that sometimes they are being told they don’t have a good case when they do.”

But Malcolm Tarling, a spokesman for the Association of British Insurers hit back at the claims. Whilst acknowledging that вЂ?third-party capture’ is becoming an increasing part of an insurers business model, this he argues is a direct response the rise in costs of processing claims. By going directly to the accident victim, they are simply bypassing the expensive middle-man; the lawyer. He says, “No insurer wants to be accused of pressurising claimants into accepting compensation payments. Insurers want to identify those claims they believe are straightforward, where liability may not be in dispute and injuries are relatively minor. They want to settle these cases as quickly as possible.”

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