The Association of British Insurers (ABI) recently voiced concerns over solicitors involved in false whiplash claims at the annual Motor Accident Solicitors Society (MAAS) conference. James Dalton, the ABI’s assistant director of motor and liability, pointed out that some solicitors either support or initiate these bogus claims. This situation raises the question of whether solicitors are creating more problems than they’re solving.
Solicitors in the UK are regulated by the Solicitors Regulation Authority (SRA), which ensures all legal professionals meet certain standards. They are expected to be knowledgeable, competent, and honest when dealing with clients. The SRA can investigate any behavior considered unprofessional, misleading, or unethical. However, fake whiplash claims seem to evade their attention. Is this because these cases are deemed too minor or because there’s no real evidence to pursue?
In 2011, the ABI dubbed the UK the “whiplash capital of Europe.” Research indicates that around 1,200 whiplash compensation claims are filed daily in the UK, costing insurers £2 billion annually. While these figures haven’t been seriously disputed, they don’t necessarily highlight the number of fraudulent claims, as there’s no foolproof system to detect them. So, why did Dalton single out solicitors at the MAAS conference?
One reason could be the rising cost of insurance premiums, often blamed on uninsured drivers, offenders, and whiplash fraud. Insurance companies don’t usually mention their tendency to inflate premiums to protect or increase their profits. For instance, Admiral reported a pre-tax profit of £160.6 million in the first half of the year while hinting at a rise in personal injury claims. Given that insurers aim to be profitable, it’s not surprising that Dalton targeted what he views as fraudulent whiplash claims while insurers continue to earn significant profits from their customers.
Interestingly, solicitors have come under fire even though insurance companies typically send whiplash cases to law firms and accident management companies. Dalton explained that insurers need to recover some costs, but if fraud is so widespread in whiplash claims, then why do insurers continue to provide solicitors with business? The answer lies in the referral fees that firms pay insurers for new personal injury clients.
Insurance companies profit regardless of the legitimacy of the claims because their costs are easily offset by referral fees and premiums. The fact that a few groups own most of the UK’s leading insurance companies allows costs to be distributed among subsidiaries. This somewhat hidden economy helps companies justify increased premiums, especially when the NHS only spends £8 million treating injuries worth £2 billion.
From an outsider’s perspective, it can be tough to determine if solicitors are acting in good faith.
It’s important to distinguish between accident management firms and solicitors. Recent legal changes mean that a call about a compensation claim is more likely from an accident management firm rather than a solicitor. These firms, not bound by the same regulations as solicitors, are often cited as key players in fraudulent claims. While some solicitors might be involved in fraud, they aren’t the main culprits.